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Is Italy really ready to embrace digital transformation? Challenges and benefits

Digital transformation has changed everything, from how users buy, to the strategies that companies must adopt to be successful. But is Italy really ready to embrace digital transformation? The answer is yes, but on one condition: that no one is left behind. To do so there are three obstacles that the country must overcome.

The advent of the Internet has had a revolutionary effect on our society, radically changing our habits and our lifestyle. It has become normal to buy products on the internet, to use an app to personalize a pair of shoes, and even to carry out complex financial operations directly from one’s smartphone, without ever having to enter a branch.

The importance of this phenomenon is undoubtedly also linked to how widespread this transformation is, and it’s impressive, as statistics show. In just 30 years since the birth of the web, the connected population has reached 4.39 billion people, which is double the number of people online in 2012. In fact, from 2012 alone, the number of individuals registered on a digital platform has grown to 2 billion in 2019. Equally relevant is the data related to the use of digital tools. On average, a user stays connected for 6 hours and 42 minutes a day, half of that time is on a mobile device.

We could go on, but what we want to capture here is that every consumer has also become a user who utilizes the network to buy, order, and interfaces with companies. On the basis of this, users have changed their expectations.

The digital transformation of companies

As can be expected, the digital transformation has not only affected individuals but also companies and even the Public Administration, which has begun to integrate their internal processes with new digital technologies.

This is basically for one reason: because the companies that invest more in digital transformation are the most competitive on the market.

According to research from Accenture, the leading companies in digital transformation expect excellent growth results for areas such as sales (58% compared to 31% of non-leaders), new sales channels (55% vs. 30%), the development of new products or services (58% vs. 34%), and customer experience (70% vs. 53%).

After all, this is understandable if we consider all the benefits that a company can obtain from a correct and complete digital transformation.

 

First benefit: greater internal efficiency

The first benefit is that you can reorganize your business in such a way that your internal processes are more efficient and less expensive.  A striking case, in this sense, is the dematerialization of business documents. 

In the Italian context, it has been calculated that paper-based document management occupies about 3.6 hours of work per week from each worker, time that could be used in greater value-added activities. Not only that: each sheet of paper, between editing, management, and archiving, costs companies €2 a year, without ensuring the same efficiency and functionality of a digital document. 

“Analog” archiving is often expensive because it requires large physical spaces, additional resources in terms of costs and working time-related to management and despite this, is slower and can cause issues during the processes. 

By digitizing this area, companies can reduce the costs of storage by 40% and, at the same time, can reduce costs related to the management of paper in general by 80%. 

 

Second benefit: data-driven decisions 

Another advantage of digital transformation is the fact that a large amount of data is made available to companies, making it easier to access, collect, and interpret.

On the one hand, this allows us to analyze internal processes in a more precise way, identifying possible issues, and, subsequently, to be able to intervene with precise and targeted actions. On the other hand, it also allows for the collection of data concerning the opinions and consumption habits of individuals.

Through such data, each company can build its own marketing strategy aimed at satisfying, perhaps even predicting, the needs of consumers, intercepting them at the right times and in the most effective ways.

In general, whether it concerns internal processes or the adoption of certain strategies, digital transformation makes it easier to adopt data-driven decisions, i.e. decisions guided by specific insights. 

Needless to say, being able to increase the number of choices made in this way has the positive effect of increasing the return on capital invested by the company. 
 

Third benefit: a customer experience that lives up to expectations 

The third advantage of the digital transformation is to give companies the possibility (and tools) to improve the customer experience.

As we have seen above, the penetration of the Internet into everyone’s lives is increasingly important, and this has affected the needs, expectations, and desires of consumers. Every customer-user, in fact, has become more demanding, requires a continuous and direct relationship with the company, and claims to be able to perform most of the actions that interest him online, preferably from a smartphone.

Going with order: 

  • As for the immediacy of use, 53% of people will wait no longer than three seconds before closing any site accessed by mobile phone, and more than half of them expect the company to respond to requests within an hour even during the weekend;
  • Regarding the use of smartphones (and their link with an effective customer experience in terms of sales results), in 2018, a third of purchases made in the United States on Black Friday were made through a mobile device, which was also used by those who went into a physical store to find information about the object to be purchased;
  • Regarding the desire to have a direct and continuous relationship with the company, 90% of consumers expect companies to have an online portal dedicated to customer care, while 79% of millennials are more prepared to buy from a brand that has a “Customer Service” portal that is optimized for mobile. 

Finally, when it comes to customers being more demanding, consider that 76% of consumers are convinced that companies should be able to understand their needs and requirements and, as a result, 33% of them have ended their relationship with a company because they did not receive a personalized customer experience or one that met their expectations.

This last statistic is indicative of an important point: the customer experience is fundamental for keeping companies connected to their customers, who are no longer looking for the simple purchase of a product or a service, but a real experience that is memorable and immersive. The only way to guarantee this is to fully implement digital transformation, which means adopting digital technologies and embracing a new entrepreneurial mentality.

For this reason, it is not surprising that most decison-makers declare that they want to invest considerable resources in the development of innovative digital solutions in order to carry out their digital transformation.

 

Some examples from Italy 

This will is also shared by Italian companies, which unexpectedly represent a virtuous example on a global level.

According to recent research, Italian companies are much more mature in terms of digital transformation than other countries in the world. In particular, Italian are in 12th place out of the 20 largest countries, leaving behind excellent nations such as Great Britain, France, Germany, and the Netherlands.

In terms of investments, the results are decidedly positive, since medium-to-large companies in Italy intend to invest in the development and application of various digital solutions in the next three years, including Artificial Intelligence, the Internet of Things, and cybersecurity, which has become essential to protect data and business from cyber attacks.

This trend is also confirmed by the 2019 report by Assintel, the National Association of ICT Enterprises, which portrays a very positive situation. In 2018, the Italian IT market reached €30 billion in value, demonstrating growth of 0.7% compared to 2017, which should reach 1.6% by the end of this year. This means that digital transformation will not only accelerate but will also begin to involve an increasing number of areas and an increasingly wide audience of partners and external actors.

All of this is thanks to a change of cultural approach also on the part of entrepreneurs, who have basically understood two things: that the integration of digital solutions within production processes is an essential need and that it must be done according to precise and consistent investment strategies over the short term.

After all, there are no alternatives: either you adapt to the rules of a constantly evolving market, or you end up being pushed to the margins and finally disappear.

 

A two-speed transformation

Despite the positive data reported above, it should be noted that not all companies in Italy have achieved digital transformation. The highest level of digitalization, in fact, is recorded in large companies, which can count on a solid organizational structure and available resources for investment. On the contrary, small companies show more than a few uncertainties. 

This is reported in the aforementioned Assintel report, which found that “Emerging technologies are worth 18 billion with double-digit growth rates, but it is also necessary to hook small businesses and the Public Administration.”  It turns out, that as many as 30% of small Italian companies have not yet implemented or even planned a digital transformation strategy. In addition, three out of five companies are still in the early stages of digitization, despite the fact that it is essential for competing in the marketplace.

This gap is also felt at a geographical level: if the situation is positive between companies in the North East and North West, in particular in Trentino Alto-Adige, the South is still behind, where 70% of companies are at the earliest stages of this transformation.

What are the reasons for this delay?

One reason that slows down the digital transformation of some Italian companies (and consequently of Italy) is the obsolescence of some production processes.

According to a study by PWC, 42% of companies involved are well aware of the opportunities offered by digital technologies but do not know how to implement them in their internal mechanisms and therefore prefer not to change them. In addition, there is a certain residual scepticism about digital solutions, especially regarding security and privacy issues.

Directly linked to this is another obstacle, perhaps the most important: the lack of digital skills necessary to implement a real digital transformation. For this reason, in the next three years, Italian companies expect to recruit very specific and qualified professionals, such as digital marketing specialists, data analysts, and digital officers. However, while very sought after, such professionals are in short supply on the Italian labour market and this makes them very difficult to find and, consequently, very expensive to hire.

One solution might be to train staff, but this takes time and is often overlooked by companies. This is confirmed by Il Sole 24 Ore, which reports that only 41% of Italian companies carry out ad hoc training programs.

Not only the companies, but the entire country system must be able to create a digital education program that involves the entire population and not just the production area, so as to allow Italy to keep pace with other European countries.

While waiting for the labor market to adapt to the demand of companies and for training to be implemented, companies that want to fully implement their digital transformation must choose partners who can help guide them through all the phases of digitization, offering them the best possible solutions.

In this way, it will be possible to respond adequately to the challenges posed by the market, satisfying the expectations of consumers, who will have to deal with a company capable of putting them at the center of a customer experience suited to the new trends of use and consumption.

 

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