Are you a tech leader or laggard?

The top 10% of “leapfroggers” are growing at 5x the rate of the bottom 25% of companies, according to a new Accenture report.

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You know that adage about the early bird catching the worm? There is clear evidence that’s been the case with tech adoption during the pandemic: The top 10% of companies leading the way in tech adoption have moved even further ahead of the pack, growing at 5x the rate of the bottom 25% of companies, a new Accenture study finds. If technology was a lifeline for every company during the pandemic, it’s now a competitive differentiator and performance enhancer. The Accenture study found that the leaders have moved ahead of the laggards on average for the past three years.

SEE: 5 tips for IT leaders adapting to their changing roles (TechRepublic)

These “leapfroggers” display two characteristics: their enterprise IT operates at the “requisite level of systems strength, affording them sufficient strategic agility and scalability,” the report said. Further, IT leaders are shifting their budget from operations to innovation activities. They include speeding up software development cycles, changing business processes and building new capabilities, according to the report.

Tech investments in core and emerging technologies

As the pandemic intensified, leaders doubled down on their tech investments. At a more granular level, the Accenture study found that 72% of leaders accelerated investments in cloud security, while 68% accelerated investments in hybrid cloud.

“In sharp contrast, many laggards invested in newer technologies for the first time just to keep their companies operational,” the report said. Accenture cited the example of the COO of a large bank who said during COVID-19 the focus of their IT budget was spent running the bank—not changing it. The initial moves to the cloud were made to keep the lights on, the COO said.

“This puts laggards in a position where they’re playing catchup and taking longer to recover to pre-pandemic growth rates,” the report said. As evidence, Accenture pointed to the same model it used in 2019 to compare the progress of leader and laggard companies.

Further, 70% increased investments in IoT, 59% accelerated investments in AI and machine learning and 60% expanding their investments in robotic process automation.

Their efforts have paid off. Pioneers showed higher profit margin and enterprise value growth between 2016 and 2020, according to the report. Their profit margin grew by 3.4% per year between 2016 and 2020. By contrast, business leaders who did not think beyond the bottom line suffered from an annual 10.9% reduction.

Their enterprise value went up 9.2% per year compared to 6.7% for the other companies, the report said.

The Accenture study also found a correlation between human and machine collaboration driving responsible acceleration with technologies like digital twins, machine learning and the internet of things (IoT). Companies that deploy these technologies can now make data-driven decisions to fundamentally change the way they design, source, plan, manufacture, supply and reclaim/recycle goods–known also as achieving “balanced value,” according to the report.

This allows companies to model the impact of changes or disruptions to the business—before they occur. Those that do are able to be more resilient when the unexpected happens, Accenture said.

How you begin is how you win

Companies that invest in re-platforming to the cloud and using their capabilities and efficiencies are best placed to compress transformation, the report said. This enables them to drive change across their business and thrive in the post-pandemic economy.

For those that maintain the status quo with their technology investments, methods and decisions, the performance gap with peers will widen. Companies must create digital fluency across the enterprise to continually evolve their collaboration and technology capabilities.

People are a big part of the equation, as business leaders have learned during the past year.  

Accenture’s analysis shows that evolving tech strategies with the three Rs is most successful when applying them in sequence. While each organization’s path will vary, the report advises starting with re-platforming to build systems strength, primarily by accelerating migration to the cloud.

Companies can then reframe how they view and leverage their IT by flipping the IT budget allocation toward innovation.

The combinatorial power of systems strength and flipping will allow companies to reach beyond traditional business priorities and create value for multiple stakeholders, the report said.

“This approach has been central to the success of companies that have not only proved resilient in the past year but that have embraced change to strengthen their competitive advantage,” the Accenture report said.

As organizations enter the post-pandemic era, business leaders must embed responsible practices and create multidimensional value at the core of their strategies, the report said. “Enterprise technology must move in lock-step, reaching beyond current priorities.”

Tech-enabling innovation should span all enterprise processes, the report said. “It requires innovation not just to improve people’s performance but also their well-being. And it calls for radically human systems that help meet the values of customers, partners and wider society.”

The Accenture research was conducted in early 2021 and included a survey of 4,300 respondents, the firm said.

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