Is your company’s digital transformation hitting roadblocks? You’re not alone

How’s your company’s digital transformation going? If the truthful answer is slowly, you’re not alone. Over the past 24 months, the pace of digital transformation hasn’t been sustained. 

About 55% of executives said their digital strategy is always or often outpaced by the demands of the business, according to a new report by Workday, a global provider of enterprise cloud applications for finance and HR. A survey of 1,150 global senior finance, IT and HR leaders shed some light on what’s holding some companies back. A need for quick access to data, legacy constraints and data silos, organizational culture, skillsets, and burnout are some of the barriers.

In 2020, 36% of companies expected digital to account for 75% or more of their revenue within three years, Workday found. By 2021, just 13% of companies said the same, compared to 12% in 2019. An acceleration gap “between the pace of change driven by new opportunity and the ability of an organization to capitalize on it” has opened, according to the report. 

“CFOs and CIOs are prioritizing data, CHROs are prioritizing skills and employee experience to be able to get the right talent in-house to close the gap,” says Pete Schlampp, chief strategy officer at Workday, which partners with Fortune on CFO Daily.

CFOs surveyed noted their need to “respond quickly to change, what we would call the plan, execute, analyze cycle,” Schlampp says. “They put it in terms of data, which I think is a big theme in this report,” he says.

About 51% of finance leaders said new technologies that can help integrate data between disparate systems and break down internal data silos are key, the report found. But, 61% said their most pressing need is technology that unites financial, people, and operational data. And 64% noted that it takes weeks or more to get results at the end of a reporting period.

Reporting data is part of financial planning and analysis (FP&A), which is playing an increasingly big role in how the CFO’s office executes strategy, Michele Tam, a senior expert at McKinsey & Company, recently told me. What is beneficial to CFOs is “next-level FP&A teams,” Tam said. A trait of these teams is speed and agility. They don’t rely on legacy processes like using spreadsheets.

The war for talent is also making it increasingly challenging for digital transformation. About 38% of companies said a lack of relevant workforce skills is their biggest obstacle, Workday found. Among this group, 68% said that the pace of their digital transformation has slowed. And for businesses that noted cultural barriers as their major obstacle, 42% have experienced a digital slowdown.

“The skills HR leaders were looking for in employees included resilience and adaptability,” Schlampp says. “And CFOs were saying, ‘I need employees with more data and analytics skills.’” 

And burnout is an issue. “When you have a multi-year roadmap, you need to keep people energized and motivated to ensure productivity remains high, especially when you know, by design, you won’t see any meaningful impact for years,” Jennifer LaClair, CFO at digital financial services firm Ally Financial, told Workday. About 50% of HR leaders surveyed said positive employee experiences are most important to accelerating transformation across the business.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

Meet Me in the Metaverse, a new global study from Accenture explores how virtual reality will spur industries such as retail, consumer goods, and travel to increase investment in new capabilities. About 55% of consumers surveyed said more of their lives and livelihoods are moving into digital spaces, according to the report. And 90% of retail executives said they anticipate that leading organizations will push the boundaries of the virtual world. The majority of global executives (72%) said the metaverse will have a positive effect on business. Meanwhile, 45% said the metaverse is transformational. The findings are based on a survey of 11,000 respondents in 16 countries. 

Going deeper

In the report, Can the U.S. Avoid a Recession?, featured in the business journal of the Wharton School of the University of Pennsylvania, faculty weigh in on what’s ahead for the U.S. economy. “If war and pandemic shortages resolve, as the Fed expects, we can avoid an induced recession,” Susan Wachters, professor of real estate and finance at Wharton said. “If not, the longer inflation persists the more likely we are to enter into a wage-price spiral requiring the Fed to hit the brakes hard.”

Leaderboard

Marje Armstrong was named CFO at E2open Parent Holdings, Inc. (NYSE: ETWO), a network-based provider of a cloud-based, supply chain management platform, effective May 16. She will replace Jarett Janik, who previously announced his retirement. Armstrong currently serves as VP of finance at Dropbox, Inc. Previously she was head of investor relations, FP&A, corporate development and commercial finance at Afiniti Ltd. Prior to Afiniti, she spent five years at Morgan Stanley, Inc. and 10 years at Goldman Sachs.

Mor Lakritz was named CFO at SafeBreach, a breach and attack simulation company. Lakritz has 20 years of professional finance leadership and accounting experience. She most recently served as VP, finance at Exabeam and was responsible for all financial, accounting operations and facilities. Lakritz will lead SafeBreach's finance organization as the company continues its global expansion.

Overheard

“I think what we're also seeing is people project either their hopes and dreams or their worst nightmares. And it's like Elon and Web3 are the same.”

—Twitter co-founder and former CEO Evan Williams discussed Tesla CEO Elon Musk's deal this week to buy Twitter for $44 billion. Williams acknowledged that Musk has a polarizing reputation, comparing him to Web3, the idea of a more decentralized internet that has staunch believers and critics, as reported by Fortune.