The Acceleration of Digital Transformation in Europe

Every January, the Prophet team sets out our predictions for what the year ahead might bring. This year one of the predictions we made was that 2020 would be the year when failed digital transformation initiatives would face a reckoning.

And then 2020 happened.

Since COVID-19 first emerged in Asia at the start of the year and then took hold in Europe in March, we have lived through a period of dramatic change – the pace of which nobody could have predicted.

This is especially true when it comes to the adoption of digital technologies in our professional and personal lives. In the UK, the e-commerce share of total retail jumped from 20 percent to 30 percent in just two months, and even as lockdown eased, online grocery purchases continued to rise, almost doubling from mid-May to mid-June. In France, in just one week, there were almost half a million online telemedicine consultations, compared to 40 thousand the month before. And, following a surge in-home streaming in March, Netflix agreed to reduce the bitrate for its streams across the EU to lessen the demand on networks.

In the 2020 State of Digital Transformation report, my colleagues at Altimeter, a Prophet company, have surveyed leaders across the globe to understand how their organizations are responding to the shifts and trends that are shaping how they transform. For those of us in Europe, it provides a fascinating snapshot of the way coronavirus has dramatically shaped the role technology plays in transforming businesses.

Agile Becomes More Than a Buzzword

One of the most significant shifts in this year’s study is the key drivers of transformation efforts. In 2019, the top driver for digital transformation was growth opportunities in new markets. But in 2020, in reaction to the global pandemic and the associated economic pressures, leaders have shifted their focus to operations.

It is in this area we see one of the key differences between the leaders of transformation efforts in Europe and their North American peers. In North America, the top transformation driver is increasing productivity and streamlining operations (41%), but in Europe, the need to work with greater agility is more likely to drive transformation efforts (35%).

“It has become vital for organizations to become more digitally mature.”

The need for agile business practices is particularly pressing in Europe, which experienced a faster and deeper lockdown than North America. This lockdown has required leadership to adapt its transformation efforts to address rapidly shifting customer demands.

Europe Leads the Way in Employee Collaboration

COVID-19 has accelerated the need to shift to virtual ways of working, which has been mirrored by a boom in virtual collaboration tools. The 2020 State of Digital Transformation report shows that Europe is leading the way in this area, with 58% of respondents reporting that platforms to enable employee collaboration was either a top strategic objective for digital investment, or that employees frequently connect over digital platforms. This is particularly pronounced in Germany, with 65% of respondents in the top two levels of employee collaboration and engagement.

Seamless Experiences Command a Price Premium

The rapid adoption of digital technologies throughout the pandemic has shone a light on the points at which experiences break, with issues around technology being the most commonly received complaint.

The 2020 State of Digital Transformation report reflects this, with 52% of respondents reporting that they were yet to achieve a seamless sales and service experience.

But the benefit of doing so is also clear, and it’s an area where Europe leads the way, reflecting a relatively higher adoption of digital tools for sales teams.

29% of European respondents reported that they were able to charge a higher price premium as a result of offering a seamless sales and service experience online, compared with only 15% in North America and 9% in China.