"Korean Companies Accelerate Digital Innovation... Companies Yet to Start Drop from 22% to 7%"

[Asia Economy Reporter Seulgina Jo] The pace of digital innovation among Korean companies is accelerating. The percentage of digital laggard companies that have not yet started digital innovation has decreased from 22% two years ago to 7%. However, this figure still exceeds the global average.

According to the ‘2020 Digital Transformation Index (DTI 2020)’ report by Dell Technologies, which surveyed the status of digital innovation in various countries on the 11th, the digital maturity of Korean companies has improved compared to 2018.

When classifying all respondent companies into five maturity levels, the highest group, ‘Digital Leaders,’ accounted for 6%, and the second group, ‘Digital Adopters,’ accounted for 27%, increasing by 2 percentage points and 9 percentage points respectively compared to 2018. On the other hand, the proportion of the ‘Digital Laggards’ group, which has not yet started digital innovation, sharply decreased from 22% in 2018 to 7%, but it was still high compared to the global average (3%).

As digital maturity increased, the achievement of digital transformation programs also showed positive results. When asked whether they had completed all the digital innovation programs planned for 2020, 76% answered that they had completed all or some of the tasks, which was slightly lower than the global average of 80%.

Regarding the accelerated digital innovation programs compared to before, 57% of domestic respondents cited ‘strengthening cybersecurity.’ This figure is 9 percentage points higher than the global average. Other areas included business expansion (44%), redesigning customer experience (CX) and employee experience (EX) (42%), expanding remote work environments (36%), and new ways of utilizing data (36%).

Korean companies were somewhat behind the global average in applying digital technologies to respond to the COVID-19 pandemic. Globally, 77% of companies answered that they had newly opened or were promoting digital channels for customer support, but Korean companies accounted for only 64%. Companies that shared data with government agencies and other companies for relief activities also showed a global average of 57%, while Korea was 47%.

When asked about the impact of new technologies on business and life within the next 3 to 5 years, respondents answered ▲ AI and data modeling techniques will be used to predict potential problems (83%) ▲ global connectivity will expand and the number of remote workers will increase (83%) ▲ remote classes will become widespread (82%) ▲ augmented reality (AR) will be used for machinery repair and training (80%).

Meanwhile, when asked about technology investment plans within the next 1 to 3 years, AI algorithms (47%) ranked highest, followed by cybersecurity solutions (43%), 5G infrastructure (41%), management tools to enhance and protect data value (38%), and real-time applications at the edge (34%). In 2018, the order was cybersecurity solutions, AI algorithms, and hybrid cloud. Regarding hybrid cloud, 55% answered in 2018 and 75% in 2020 that they were using it at an initial or higher stage, indicating that significant investment in cloud has already been made.

The concerns of domestic companies about barriers to digital innovation have not changed significantly compared to 2018. ‘Lack of budget and resources (37%)’ was cited as the biggest factor, followed by ‘lack of internal capabilities and expertise (34%)’ and ‘privacy and security issues (29%),’ with no change in the top three rankings. However, in this survey, 29% cited ‘lack of a consistent digital strategy,’ rising from 11th place in 2018 to 4th place in 2020, and 16% cited ‘economic recession,’ newly added to the rankings.

Kim Kyung-jin, General Manager of Dell Technologies Korea, said, “The perception of digital innovation has rapidly shifted from an option to a necessity,” and added, “Dell Technologies will provide broad support as the most trusted partner to ensure that investments in digital bring promised results effectively.”