For all businesses, digital transformation is a step into the future, forcing organisations to re-assess for a more efficient business operation. Harnessing the power of digital technology has proven to be a challenge for many businesses in the UK.
Despite it being the centre of attention for the government and industries worldwide, the UK is still largely behind in adopting digitisation within a business. In 2022, the Minister for Tech and the Digital Economy within the UK’s digital strategy highlighted over £5 billion which has been spent in 2020 on digital R&D by UK businesses.
How has the Covid-19 pandemic affected businesses with the aspirations to digitalise?
The Covid pandemic has put through businesses from all industries on a global and national level some unpredictable challenges, and businesses are still navigating through the aftermath. Although there was a clear emphasis to go ‘further and faster’, the pandemic proved to bring further challenges to the businesses’ willingness to digitally adapt, with only 23% of British businesses taking action. The report from Manpower Group has also detailed the global digital transformation stats which stood at 33%, significantly higher than the UK. This comes with no surprise, as a study carried out by EY in 2022 shared that out of all CFOs in large organisations who have been surveyed, only 11% identified as being at the ‘advanced’ stage of digitisation.
Does the government lead by example?
Their initial enthusiasm and innovative spirit with high aspirations would suggest they should be, however, data proves differently. The National Audit Office’s findings detail that the Government’s endeavours to date have ‘lacked specificity, cross-government endorsement, clear lines of accountability and business ownership. Subsequently, former flagship programmes have slowly shut down and failed to deliver results.’
Why has the UK been slow to adopt digitalisation?
The first obstacle is: Initial cost
A revolutionary process like digitising will come at a cost. As a report detailed by the Department for Business, Energy and Industrial Strategy, SMEs and several businesses often see a financial obstacle when looking to innovate or improve certain processes. Finding the funds to comfortably look at the next steps is more often than not nearly impossible, categorising digital transformation as a distant dream. Sadly, this obstacle is not only present in SMEs but also in the UK government who state that they are ‘held back by costly and outdated technology’ and ‘does not leverage scale in technology procurement’.
From overwhelming decisions to lack of expertise
44% of UK SMEs state that there’s ‘too much confusing information’ out there about tech solutions for digitisation, which is a substantial barrier to digitisation. This overwhelming amount of choice, paired with the level of awareness (or lack of) when it comes to competition influences their receptiveness to new business integrations and procedures to keep up with the advancements of the industry- as the BEIS report suggests.
As the Government are also lacking an efficient implementation, business in the country doesn’t have the skilled leadership necessary to make digitisation a success in the public sector and within businesses.
The NAO has also put UK businesses in the spotlight for blaming tech when digitisation fails, usually accompanied by reluctance stemming from a contrast in culture and attitudes. NAO also stated that ‘when large digital business change programmes run into difficulty, there is rarely a single, isolated reason which causes [them] to fail. Many face intrinsic business challenges as well as technical challenges.’ To resolve this, businesses need to understand that digital business transformation begins with organisational change which builds a strong foundation for success. This foundation goes beyond processes and starts at mindset shifts, the way people work and general day-to-day business processes.
Sticking to tried and tested methods will not bring the success UK SMEs seek, and to begin the adaptation process, businesses will need to perceive digitisation as a necessity to successfully run a business.
Accountants insights into digitisation
Although the above barriers highlight a slow adaptation, UK businesses are aware of the benefits accountancy software brings to their operation. This is evident when organisations are approached with new tech options, and the response to accountancy software is much more positive than the responses to new CRM or HR softwares. Due to the already trusted benefit of time-saving, SMEs are more inclined to adopt automated accounting software to increase efficiency.
Despite the openness, there’s still a barrier. SMEs tend to hesitate when it comes to purchasing software they’re unable to try first. Looking for advice on which software to invest in, accountants are often under the spotlight and become the trusted in-house adviser. They have the chance to shine a light on the intimidating tech landscape, which if adopted correctly will encourage organisations to grow.
Why is digitalisation important?
From a global perspective and within the UK’s digital strategy, ‘economic future, jobs, wage levels, prosperity, national security, cost of living, productivity, ability to compete globally and geo-political standing in the world’ are all reliant on continued and growing success in digital technology. With the help of accountants, successful removal of the above barriers can happen, resulting in a revolutionary operational transformation, reaching internal processes, clients and beyond.
If you are interested in learning more about digitalisation, get in touch with Phil Chalmers at phil.chalmers@xledger.co.uk to learn more about our specialist accounting and financial management software.
