Businesses are failing to plan for digital transformation.

- Over a third of companies surveyed (36%) do not have a formal strategic plan or roadmap for digital change.
- Almost one third of respondents (32%) said that digital will have a “huge impact” on their organisations over the next 12 months, and this percentage increased to 60% when asked about the next two years and 82% over the next five years.

The main barriers to change are financial, structural and cultural.

- Pressure to hit short-term revenue and profit targets (36%), organisational structure (32%), lack of clear understanding of return on investment (30%), company culture (28%) and lack of budget (28%) were the five most frequently cited barriers to digital change.

A skills gap is opening between digitally savvy junior and graduate candidates, and more experienced but digitally naive middle managers.

- More than two thirds of companies surveyed (68%) have difficulty recruiting staff who are sufficiently skilled and knowledgeable about digital technology and communications.
- The skills gap is most pronounced in marketing-related roles, but is likely to affect other departmental functions as digital change starts to have more impact.

A report published by Econsultancy and Blue Latitude this week looks at the effect of rapidly evolving digital technology on a range of different business functions. Based on a survey of more than 100 businesses and interviews with senior executives at 15 companies across a range of business sectors, the research found that many organisations are struggling to plan for the impact of digital on their business models and processes.

Martin Brass, Managing Director at Blue Latitude, said: “The report looks beyond digital as a channel, or capability that sits only within discrete IT or Sales and Marketing functions and examines how organisations are using digital in other areas of the business to get closer to and engage more effectively with their customers, employees and other stakeholders alike.”

Marketing is the business function where there has been the biggest change over the past few years, with 86% of responding companies saying there has been a “huge impact” here. PR and communications has also changed radically, with 70% of respondents saying the impact has been major.

Other business functions where more than half of respondents say there has been a massive impact are customer service (59%), product and services development (58%), sales (57%) and market research (52%).

Linus Gregoriadis, Econsultancy’s Research Director, said: “The way that sales and marketing functions have evolved over the last few years because of the internet is well documented. What has been less well explored is how companies can embrace digital technology and communications to improve other areas of their business such as HR and product development.

“In a challenging economic environment, it is especially difficult for companies to strike the right balance between survival in the short-term and the organisational change which is needed for prosperity in the medium to long term. Some companies need to change or evolve their entire business model because of the way their products are being promoted, purchased and consumed in a different way.”

As well as carrying out an online survey of more than 100 businesses, Econsultancy and Blue Latitude interviewed senior executives, including CEOs and managing directors, at the following organisations: British Museum Company, Dell, Dyson, Dorling Kindersley, Electronic Arts, Glasses Direct, Kaplan, Ministry of Sound, 02, Penguin Books, Pentland Brands, Roche, Santander UK and Virgin Atlantic.