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News from Members Valoria survey: 63% of companies say they will change radically in the next 3-5 years due to digitalization

Valoria survey: 63% of companies say they will change radically in the next 3-5 years due to digitalization

by Valoria Business Solutions October 9, 2020

Website www.valoria.ro

According to the survey "The Barometer of digitalization 2020" conducted by Valoria in collaboration with Doingbusiness.ro, although only 4 out of 10 companies (41%) gave responsibility for this process to a member of management, 6 out of 10 (63%) say that their way it will change radically in the next 3-5 years due to digitalization.

"The Barometer of digitalization is the survey that shows how companies in Romania approach digitalization. The report shows relevant results by the distribution of respondents according to industry, revenue, leadership position as well as comparative data from the three editions conducted so far. Like a contrast agent, this study highlights the approach companies are taking now. The classification of companies by maturity levels, the identification of the obstacles they face and the measurement of the impact of digitalization on turnover, profit, number of employees or company value make the Barometer of digitalization a valuable reference”, says Constantin Măgdălina, Trends and Technologies Expert Emerging, co-author of the research.

Only 8% of companies are leaders in digitalization

The digitalization process is a complex one because it is related to many aspects of a company's life, from business model and field of activity, to strategy, processes and resources. Compared to the results of the 2018 study, in this year's edition the percentage of companies with inappropriate technologies that lead to a limited use of digital data decreases slightly, from 23% to 21%. The largest decrease, from 37% in 2018 to 31% in 2020, is seen in companies that have started to implement digital technologies and/or develop a strategy for digital transformation.

Although companies that are leaders in digitalization and have reaped substantial benefits from digital transformation have grown by only one percentage point to 9% as well as companies advanced on this path, the percentage of companies that have a strategic direction for digital transformation is growing by at 24% in 2018 to 30% in 2020.

Obstacles to digitalization

Furthermore, the main obstacle that companies see in the way of digital transformation is the very perception they have at the moment that they do not have digital consumers. This indicates the need for a better understanding of the mechanisms of digital interaction with consumers, given that the preference for online shopping is intensifying. In second place, 35% of companies in 2020 vs. 38% in 2018, say that the main obstacle is resistance to change, followed by third place of 33% in 2020 vs. 40% in 2018 who perceive the associated costs as too high.

In 2020, resistance to change is seen as an obstacle for 20% of companies strongly influenced by digitalization, but only for 13% and 7% of the medium and slightly influenced by this transformation process, respectively. The lack of digital skills in management has percentages ranging from 10% to heavily influenced companies, to 9% to medium-influenced ones and then to 13% in the case of those little influenced by digitalization.

Benefits of digitalization

The most important cumulated benefits of integrating the digitalization process in the next 5 years are: process simplification (61% in 2020 vs. 58% in 2018), cost reduction (52% vs. 48%), increased operational efficiency (49% vs. 48%), revenue growth (28% vs. 31%) and better measurement of company performance (26% vs. 28%). In the last place is the facilitation of the recruitment and retention process of employees (2% vs. 3%).

In 2020, 17% of companies strongly influenced by digitalization, 15% of medium-influenced and 18% of the least influenced believe that digitalization will contribute to the operational efficiency of the company. The companies that have been least influenced are those that believe the most that digitalization improves their decision-making process with the help of data analytics (10%). The companies most influenced by digitalization are those that consider that they will benefit from process simplification (24%), competitive advantage (7%) and innovative products (8%).

57% of companies say they have been heavily influenced by digitalization

In 2020, 57% of companies compared to 47% two years ago, say that digitalization has already had a big influence on them and 5%, compared to 2% in the previous study, say it had no influence. Moreover, 63% of companies, compared to 53% in 2018, say they are confident about digitalization because they have the knowledge to navigate this process. On the other hand, 37% still have difficulties related to the digital transformation. Of these, 19% are somewhat skeptical that they will capitalize on this trend. Only 2% of companies say they don't think digitalization is good for the company.

It is noteworthy that 78% of companies strongly influenced by digitalization are confident and consider that they have the necessary knowledge to go through this process. On the other hand, the percentages of those who are somewhat confident that they will capitalize on this trend are still the highest (57%) among companies that say they were medium influenced by digitalization, almost equal (46%) with the least influenced.

33% of companies say they have competitors very affected by digitalization

Most of the respondent companies (29% in 2020) believe that the companies that are their competitors have been affected to a relative extent by digitalization. On the other hand, 16% believe that they have competitors affected to a very large extent, and 9% that they have competitors affected to a small extent by digitalization. Only 1% believe that those who are their competitors have not been affected at all by this phenomenon.

If 64% of companies said in 2018 that they will change significantly in the next 3-5 years as a result of digitalization, the percentage remains at 63% in 2020. Of the companies strongly influenced by digitalization, 16% believe that they will remain at the level of digitalization to which they are now, but the percentage increases to 25% for medium-influenced companies and to 41% for those least influenced by digitalization.

In 2020, 65% of responding companies say they have leveraged digitalisation to gain a competitive advantage. The percentage increases to 90% in the case of companies strongly influenced by digitalization, decreases to 59% in the case of those medium influenced and to 38% in the case of those slightly influenced by this transformational process.

37% of companies say that digital business models have changed the industry in which they operate

Beyond the transformation at the level of technology and processes, the strongest transforming effect that digitalization has is at the level of the business model. Thus, in 2020, 37% of companies in Romania, compared to 25% in 2018, believe that digital business models have greatly changed the industries they belong to. However, the percentage of responding companies that consider digital business models as a threat decreases from 21% in 2018 to 5% in 2020, which shows that digitalization has become, at a perceptual level. part of the life of companies and is no longer considered something unusual, threatening or new.

The percentage of companies that expect digital business models to transform them, to a large extent the industry in which they operate in the next 1-3 years remains at 29% in 2020. The percentage of companies that say that digital business models will transform them decreases largely industry, from 33% in 2018 to 27% in 2020, and the percentage of those who believe that digital business models will affect them only to some extent industry in the next 1-3 years decreases from 10% to 9%.

The research conducted by Valoria and Doingbusiness.ro reveals that the percentage of companies that have made the digital transformation the central part of their business strategy remains at 30% in 2020, almost the same as in 2018 when it reached 29%. For the most influenced digitalization companies, the percentage is 76%, but the percentage decreases to 43% in the case of the medium influenced and to 24% for the least influenced by digitalization.

"In the pandemic, more and more companies have become convinced of the importance of digitalization. Firm options for a mode of operation that favors tangibility have collided with the new reality that proposes the intangible. The result of this realization is the growing need for companies to focus on digital transformation. According to the Barometer of digitalization, the digitalization process among Romanian companies is progressing timidly. Forced by circumstances, top managers take into consideration adopting digital products and allocating resources to digitally transforrn the companies they run”, says Dumitru Ion, CEO, Kompass Romania & Doingbusiness.ro, co-author of the research.

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About the survey

This survey gauges the perceptions of managers and top executives about the impact of digitalization on Romanian companies. The questionnaire, which received 433 responses, was applied between 10 July and 10 September 2020. The report refers to digitalization as the use of storage and processing technology, search and retrieval of information between online users. 5% of respondents come from companies with a turnover of more than EUR 100 million, 6% of companies with a turnover of EUR 50-100 million, 13% of companies with a turnover of EUR 10-50 million, 35% of companies with a turnover between 1-10 million EUR and 41% under 1 million EUR turnover. 27% of the respondents are CEO/President/Chief Executive Officer, 6% Vice-President/Chief Executive/Board Member and 31% Managers. This study has been conducted in collaboration with Doingbusiness.ro.

About Valoria

Valoria Business Solutions is a company providing training, consulting and executive coaching services. The company's mission is to transform the potential of teams and organizations into value. Competence, confidence, innovation and passion are the values that sustain us in everything we do. We believe in people, in their aspiration for personal and professional fulfillment, and their willingness to accelerate their potential. Learn more about us at: www.valoria.ro.

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