Digitalization Misconceptions Are the Top Emerging Risk in 3Q19

Digitalization Misconceptions Are the Top Emerging Risk in 3Q19
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Concerns about digitalization misconceptions, as well as the pace of their organizations’ digitalization efforts, topped business leaders’ concerns, according to Gartner.

They have surveyed 144 senior executives across industries and geographies and the results showed that “digitalization misconceptions“ had risen to the top emerging risks in the 3Q19 Emerging Risks Monitor survey. “Lagging digitalization“ remains in second position. Last quarter’s top emerging risk, “pace of change,“ has now become an established risk after ranking on four previous emerging risk reports.

“While the threat of external macro risks such as the U.S.-China trade war are an increasing source of concern for executives, it’s notable that the top three risks in this quarter’s report are all centered around internal operations,“ said Matt Shinkman, vice president with Gartner’s Risk and Audit Practice. “Business leaders are most concerned with their strategies around digital and having the resources in place to execute these plans.“

Digitalization misconceptions was cited as a top risk by 52% of respondents in the Emerging Risks Monitor Report, with lagging digitalization close behind with a 51% frequency rate. Executives from the IT and telecom sectors were clearly most concerned with digitalization misconceptions, with 75% of executives surveyed indicating this as a risk. The banking and energy industries were most concerned with lagging digitalization, with nearly seven in 10 executives indicating this area as a top risk.

Additional data  reveals the extent of concerns with organizations’ digital strategies. Slow strategy execution and insufficient digital capabilities were tied among the top concerns of corporate strategists for 2019, with 60% of respondents indicating both areas as top concerns. Adding to the unease is the large percentage of organizations undergoing some form of digital business change. A large majority of strategists indicated that digitalization was impacting four distinct areas of their business model: business capabilities, profit models, value propositions and customer behavior.

While these changes are underway, uncertainty persists about a clear path from current to future business models. Only 35% of strategists said they felt confident about which investments and initiatives were needed to drive their future business model, while only 20% said they had clarity on how those changes would positively impact their organizations. Just 8% of strategists felt confident that senior leadership agreed with these changes.