Roughly 7 in 10 large enterprises consider digital initiatives to be either the “most important factor” (14.5%) or “of major importance” (55.1%) to their financial success in the next 5 years, finds Tata Consultancy Services (TCS) in a recent study. The survey – fielded among 820 respondents at companies in 4 major regions with mean revenue of $25.8 billion – finds that enterprises are on average spending more than $100 million on digital initiatives. So where’s the money going?
In terms of business functions, the marketing department will be getting the largest share (22.9%) of spending allocations between now and 2017, with this share highest in North America (25%). Sales (17.7%) is next, followed by customer service, support (after-sale; 15.6%) and R&D (14.5%).
When breaking up digital technology spending into 5 core areas, the study shows that big data and analytics software will be receiving the largest share of digital budgets in each of the 4 regions, ranging from a low of 24.4% in Latin America to a high of 29.3% in North America.
Social media and online communities get the next-largest share in North America (21.4%) and Latin America (19.7%), while mobile computing and miniature digital devices get the second-largest allocations in Europe (20.3%) and Asia-Pacific (20.7%).
The focus on big data, social, and mobile follows a general trend towards using these technologies to connect and track customers, with 95% of respondents using digital technologies in some way to do so. Currently, the most common way in which enterprises are gathering digital data from customers is via mobile applications for customers’ devices, with 50.4% already doing this and another 27.1% planning to do so by the end of the next year. Following closely, roughly half are currently gathering digital data from customers by continuously monitoring and analyzing customers’ comments in public social media sites, with an additional 26.1% planning on doing so by the end of 2015.
While the survey demonstrates that large enterprises are taking digital very seriously, it also shows that there’s plenty of room for growth: respondents estimate, for example, that only 21% of their marketing and selling processes are digitized, while they expect that in the future 43.4% of these processes can be digitized. Indeed, each of the 13 sectors analyzed have some way to go before reaching their potential future digital intensity, with the gap particularly large for the insurance and CPG industries.
About the Data: The study was based in part on an extensive online survey with 23 questions that was fielded by Research Now, a major survey panel firm. In all, TCS surveyed 13 industry sectors, both B2C and B2B), and 820 respondents completed all questions. The questions were close-ended, with multiple choice, Likert scale (mostly 1 to 5 scales), or numerical responses.
Executives were surveyed from a wide variety of functions: IT, finance, sales, marketing, service, R&D, manufacturing and logistics, risk and strategic planning.
Methodology: The online survey was completed by April 2014. In all, 6,599 managers attempted the survey from both business-to-business and business-to-consumer companies. B2B companies are those deriving the majority of their revenue from products and/or services sold to end consumers. B2C companies were defined as those that derive the majority of their revenue from products and/or services that are purchased by other organizations.