Skills for Digital

Transformation
Research Report 2017
Patrick Hoberg | Helmut Krcmar | Bernd Welz

In Collaboration with
Acknowledgment
Thank you to all business and IT decision-makers who participated in the survey. Thanks for support in the
design and implementation of the study to Dr. Bernd Welz (executive vice president and Chief Knowledge
Officer P&I, SAP) and Yasmin Awad (head of global SAP User Groups, SAP). Finally, we want to thank the
SAP user groups for distributing the survey to their executive members.

We hope you find the insights and results of the study interesting.

Kind Regards

Prof. Dr. Helmut Krcmar Dr. Bernd Welz Dr. Patrick Hoberg

IDT-Survey 2017 1
Skills for digital transformation
 time consuming and return on investment, like in
Introduction terms of better customer service, increased pro-
cess automation, or new revenue streams
Digital transformation is one of those topics on through digitally enhanced products and ser-
management agendas that is here to stay. It is vices, cannot be guaranteed. In addition, re-
not a fad that is going to fade away but a fash- sources are limited and therefore, knowing
ion that constantly evolves in sync with new gen- where to invest is critical for organizations.
erations of digital technologies that diffuse into
the market. Almost every industry has stories to This study looks at the skills companies might
tell about organizations that, by means of digital need to be able to (1) design their digital future
technologies, have fundamentally changed the in terms of a digital vision and strategy and (2) to
way of doing business in their respective markets implement their strategy.
and organizations that were caught off guard
by changes in competition with business models
that virtually turned irrelevant overnight. Not only
About the Research
startups but also incumbents are working on
The first “Skills for Digital Transformation” study
new, exciting business models many of which still
was conducted in 2015. The goal of this study se-
need to demonstrate profitability and sustaina-
ries is to keep track of digital skill development
bility. Regardless of whether those business mod-
and to help organizations prioritize skill develop-
els turn out to be a break through or a nonstarter
ment. The primary target audience are infor-
they shift formerly accepted boundaries.
mation technology executives and human re-
The increasing digitization of our private, profes- source executives.
sional, and public life is commonly referred to as
a disruptive process that is fundamentally Industry

changing the way companies compete, inter-

act, and create value. Therefore, the capability IT services 17%
to leverage the business potential of innovative Energy suppliers and disposers 11%
digital technologies is critical for firms. This capa- Consumer goods industry 10%
bility is predominantly determined by the digital
Other manufacturing industry 10%
skills of the employees a company has access
Chemical and pharmaceutical industry 9%
to. In the context of digital transformation, many
trends and topics have been discussed – from Consulting 9%
cloud computing through big data analytics, Automotive industry 7%
sensor networks, and internet of things to aug- Electro and information technology 6%
mented reality, enabled by new user interfaces
Machine and plant construction 4%
like smart glasses. However, sometimes exagger-
ated expectations relate to those trends and Media 3%
topics. Therefore, they might not necessarily re- Banking and finance 2%
flect what organizations need for their digital Trading and Commerce 2%
transformation.
Medical engineering 1%

The dilemma organizations are confronted with, Telecommunication 1%

is that they all too often need to develop new, N/A 8%
specialized skills before they can eventually start Table 1. Industry structure
a digital transformation initiative, geared to-
wards leveraging the business potential of a cer- Executives from the SAP user groups were cho-
tain technology trend. But, skill development is sen as the population of clients to be studied.

2 IDT-Survey 2017
Skills for digital transformation
The survey was promoted via a variety of media
such as blogs, tweets, and newsletters. Included
Digital transformation
were user groups in the Americas, EMEA, and in gains traction as a ma-
Asia-Pacific.
jor topic for companies’
The survey was designed as a short online ques- business agendas
tionnaire comprising 45 questions on digital
transformation and technology skills and 6 addi- There are multiple ways digital transformation
tional background questions. It started in March may get the attention needed to become an
2017 and closed in April 2017. integral part of a company’s business agenda.
One may be the fear of being left behind by
Overall the survey was completed by 116 exec-
competitors: 45% of respondents regard digitali-
utives from 18 countries. The four countries with
zation to be a major threat to their company’s
the most respondents were: Germany (22%),
business model. Another reason may be that
United States of America (19%), India (17%), and
certain digitalization initiatives in an organization
China (10%). Industries represented include,
demonstrated the benefits of leveraging inno-
amongst others (see also Table 1): IT services
vative digital technologies. More than half (56%)
(17% of respondents), energy suppliers and dis-
of the respondents report to have better under-
posers (11% of respondents), consumer goods in-
stood their customers by means of implement-
dustry (10% of respondents), other manufactur-
ing digital technologies. In addition, about half
ing industries (10% of respondents), chemical
of the respondents (47%) claim that digital tech-
and pharmaceutical industry (9% of respond-
nologies enabled them to develop new business
ents), and consulting (9%).
models. Correspondingly, 90% of respondents
regard digital transformation as important for
25% of respondents are in the position of a CIO
their company’s overall business strategy (see
or a similar position, 5% in another C-level posi-
Figure 1).
tion (e.g. Chief Executive Officer, Chief Market-
ing Officer, Chief Financial Officer), and 22% of
respondents are in a middle management posi-
tion.

Not Important

0%
Rather Unimportant ?
Highly Important
4% Undecided “Please indicate how important
6% Digital Transformation is for
your company’s overall
business strategy.”

34% Digital Transformation is on the

56%
companies’ agendas: In 2017 90% of
respondents regard Digital Transformation
being important for their company’s
overall business strategy (2015 = 80%).
Rather Important
n = 115

Figure 1. Importance of digital transformation for the company’s overall business strategy (n =
115)

IDT-Survey 2017 3
Skills for digital transformation
 governing digital transformation projects re-
Most companies are mains a wishful dream. Therefore, a ready-made
lacking a clearly defined transformation blueprint companies can adhere

strategy for their digital to, simply does not exist.

transformation To compensate for this lack of guidance, we

concluded in our 2015 study that the ambiguity
In our 2015 survey, we concluded that compa- inherent to digital transformation projects re-
nies are just starting to prepare the soil for digital quires business and IT units to work closely to-
transformation. Likewise, in 2017 respondents re- gether to be able to design a digital transfor-
gard their companies as being in an early stage mation strategy. This is reflected also in the 2017
of digital transformation. Still, many organizations survey results. Only a fraction (17%) of the re-
are in an orientation phase. Only half (50%) of spondents regard either the IT side or the busi-
the companies have established a vision of the ness side to be exclusively responsible for setting
digital future of their company and 37% claim to up the digital transformation strategy for their
have a clearly defined transformation strategy in company. An overwhelming 83% regard this
place. Not surprisingly, only 26% of respondents strategy making as a joint effort of both sides.
have a clearly defined execution plan for imple-
menting their digital transformation strategy.

Step 1: Drafting a digital future Step 2: Developing a strategy Step 3: Defining an execution plan

Figure 2. Percentage of visionaries, strategy makers, and actual implementers among respond-
ents (n = 115)

The survey results show that many companies However, the 2017 study resembles the results
struggle with determining a way forward that from 2015. Many companies seem to be lacking
may require deviating from known paths. Alt- the cross-functional knowledge on the execu-
hough many respondents regard digital transfor- tive level needed for doing so. Cross-functional
mation as being important, only a fraction have knowledge gaps on the business as well as the IT
set up a transformation strategy. One of the dif- side are substantial. Only 41% of respondents
ficulties companies are confronted with when claim that their IT executives possess the busi-
outlining a vision and a strategy for their digital ness-related knowledge necessary to enable
future is the high social complexity, structural ri- the successful digital transformation of their
gidity, and procedural ambiguity of digital trans- company. This is even worse on the business side:
formation projects. One can find reports about Only 34% regard their business executives as pos-
successful, high-profile transformation projects of sessing the technology skills necessary.
established companies in management journals
and mass media. However, reconstructing uni-
versally valid dos and don’ts for initiating and

4 IDT-Survey 2017
Skills for digital transformation
 technology skills to be of major importance for
Lacking digital skills is the transformation of their company. Wide-
still among the top bar- spread consensus regarding the importance of

riers to digital transfor- specialized skills exists also for big data analytics
(84%), cloud computing (76%), and internet of
mation things (75%). Internet of things technologies
open opportunities to collect large amounts of
Compared to 2015, digital security remains one data in real time about the condition of a ma-
of the central issues CIOs are confronted with in chine in a production line up to how, when, and
an increasingly digitalized business world. On a where the product that has been produced is
large scale, extensive networking, sensory, and used by a customer. The ability to store, process,
computing capabilities find their way not only and ultimately make sense of that data enables
into consumer products but also into industry companies to implement radically new, data
goods and hardware. With a view to recent ran- driven business models and facilitates the trans-
somware attacks like, e.g. WannaCry that within formation towards a truly customer-centered or-
days infected thousands of computers world- ganization.
wide, it is not surprising that 88% of respondents
agree on digital security being an important skill However, technology skills alone will not enable
domain (see Figure 3). a company to successfully leverage digital tech-
nologies for business innovation. Implementing
In the 2017 study, respondents regard mobile digital technologies for business innovation
technologies, big data analytics, internet of makes changes to established routines neces-
things, cloud computing, and business networks sary and even may deeply affect the culture of
as major business enablers. There is a vast num- an organization. This has been realized by most
ber of examples in almost any industry that of the companies in our study. 84% of the re-
demonstrates how mobile technologies can be spondents regard business change manage-
used to increase the efficiency and effective- ment skills as being important or highly important
ness of business processes. In fact in some indus- for the digital transformation of their company.
tries, like the mobility services industry, mobile
technologies have become the central if not the
only means to access certain services. Corre-
spondingly, 87% of respondents agree on mobile

Digital Security 88%

Mobile Technologies 87%
?
Business Change Management 84% “How important are extensive skills
Big Data Analytics 84% in the following domains for a
Cloud Computing 76% successful Digital Transformation
Internet of Things 75% of your company?”
Business Networks 71%
Product/Service Integration 66% Compared to 2015 digital security
InMemory Databases 65% remains the central issue CIOs are
confronted with in an increasingly
Entrepreneurship 65% digitalized business world. This is
Social Media 63% followed by mobile technologies, big data
Artificial Intelligence 56% analytics, business change management,
cloud computing, and internet of things
Novel Interfaces 50%
being the most important skill domains.
Blockchain 36%
% of respondents who rated the competence
0% 20% 40% 60% 80% 100% area as being important or highly important

Figure 3. Skills needed for digital transformation

IDT-Survey 2017 5
Skills for digital transformation
 Artificial Intelligence 21%
Blockchain 24% ? “To what extent does your
Novel Interfaces 29%
Internet of Things
company have skills available with
32%
Entrepreneurship
regard to the following domains?”
34%
Big Data Analytics 34%
Substantial lack in digital talent: Even
Product/Service Integration 36% in 2017 no commodity skills have
Business Networks 42% emerged. The respondents experience a
substantial skill gap in all of the skill
InMemory Databases 43%
domains. This holds true especially for
Digital Security 45% digital mega trends like Internet of Things,
Business Change Management 46% Artificial Intelligence, and Big Data
Mobile Technologies 46%
Analytics.
Cloud Computing 49% % of respondents who answered “Highly
Skilled” or “Rather Skilled” and rated the
Social Media 57% respective competence area as important or
0% 10% 20% 30% 40% 50% 60% 70% highly important

Figure 4. Skills available in companies for digital transformation

Even in 2017, no commodity skills have emerged. enough personnel with the skills necessary for the
Despite the broad consensus regarding the im- digital transformation of our company” only 15%
portance of many of the skill domains among of the respondents rather agree or agree
the respondents in the study sample, substantial strongly. With 64%, a majority of respondents ra-
skill gaps in all the skill domains persist (see Figure ther disagree or strongly disagree with the state-
4). This holds true especially for digital mega ment. It can be concluded that the digital skill
trends like internet of things or big data analytics. gap has not closed yet (see Figure 5). Given the
Concerning digital security, only 45% of respond- short innovation cycles of digital technologies,
ents that regard digital security as an important this is not a surprise. Compared to the study sam-
skill domain rate their company’s skills in this do- ple of 2015 (53%), in the 2017 sample the skill gap
main as being high or very high. Even in the do- is even bigger (64%). Possible explanations are
main of social media, only 57% of the respond- the increasing speed of technological innova-
ents that regard it as an important skill domain tion and the increasing awareness regarding
claim to be skilled or highly skilled. digital transformation. Over time, executives
may have developed a better sense for what
The skill gap illustrated in Figure 4 is also reflected
skills their company needs and what skills are ac-
in the respondents overall assessment of their
tually available internally.
personnel’s skills. To the question: “We have

Strongly Agree

Rather Agree
Strongly Disagree
?
5% “We have enough personnel
10% with the skills necessary for the
28%
Digital Transformation of our
Undecided company.”
22%

The digital skill gap: The digital skill gap

hasn’t closed yet. Given the short
innovation cycles of digital technologies
36%
Rather Disagree this isn’t a surprise. Compared to 2015
respondents of the 2017 survey report to
suffer from an equally severe skill gap.
n = 115

Figure 5. Overall skill gap

6 IDT-Survey 2017
Skills for digital transformation
Like in 2015, respondents in this year’s study re- There is widespread consensus among respond-
port that targeted skill development is a rarity. ents regarding the digital skill sets needed. With
Only 16% of the respondents set up a dedicated a view to the gap between the skills needed and
recruitment or training program to build up the the skills available internally, access to personnel
skill base needed for shaping the digital future of with specialized digital skills is likely the main bot-
their company. tleneck for future transformation initiatives. It is
worth noting that the skill gap cannot only be

Conclusion observed on the staff-level but also on the exec-

utive level. The respondents in this survey seem
to have a clear perception of what skills they
The initiation of a digital transformation initiative
need access to to be able to shape the digital
may be driven by business opportunities inherent
future of their company. Nevertheless, only a
to advances in digital technologies or, simply, by
fraction (16%) of the companies in this study in-
the fear of being outperformed by competitors.
vests into dedicated recruitment or training pro-
A substantial part of the companies that took
grams to extend their personnel’s skill base.
part in this study have recognized that market
diffusion of innovative digital technologies has Like in the 2015 study, we conclude that many
already caused, or will cause major changes in organizations seem to be in their orientation
their competitive landscape, putting the value phase regarding digital transformation and thus
propositions of established products and ser- have not defined a digitalization strategy. A pos-
vices at stake. Those companies have under- sible explanation for the reluctant skill develop-
stood that to stay relevant, they need to trans- ment may be that the decision on what skills to
form. However, a digital transformation initiative develop is regarded as being part of the strat-
makes far-reaching changes to an organization egy. With a view to the small number of respond-
and its value network necessary, potentially af- ents (37%) claiming to have a clearly defined
fecting organizational structures, processes, re- transformation strategy in place, this would ex-
sources, and culture. However, the force of iner- plain the reluctance of many companies in our
tia in established organizations is high. Therefore, sample.
at the time changes in competition become ap-
parent it may be too late to transform.

Technical University of Munich (TUM)

TUM is one of Europe’s top universities. It is committed to excellence in research and teaching, interdisci-
plinary education and the active promotion of promising young scientists. The Chair for Information Sys-
tems at TUM applies a research approach taking social, technical and economic perspectives of infor-
mation systems into account. The Chair analyzes and evaluates information systems and their use and
shapes valuable and sustainable innovations to solve todays’ and tomorrows’ business needs.

SAP
As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and
industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device
– SAP empowers people and organizations to work together more efficiently and use business insight
more effectively to stay ahead of the competition. SAP applications and services enable more than
350,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information,
visit www.sap.com.

IDT-Survey 2017 7
Skills for digital transformation
Initiative for Digital Transformation (IDT)
IDT serves as a research platform on the fundamental issues and dynamics underlying the ability of en-
terprises to leverage their potential for digital technology-driven organizational change. The goal of the
platform is to promote innovative business development to create economic growth. The IDT accom-
plishes its mission by analyzing, understanding, and supporting the design of leadership, innovation, and
motivation in the digital transformation. The foundation of IDT emanates from a combined plan estab-
lished by SAP and TUM (Chair for Information Systems at Technische Universität München, Prof. Dr. Helmut
Krcmar) intended to intensify innovative interdisciplinary research. TUM and SAP combine excellence in
information systems development and research.

8 IDT-Survey 2017
Skills for digital transformation
IMPRINT
Technical University of Munich, Chair for Information Systems
Boltzmannstr. 3, 85748 Garching Germany

phone: +49 (89) 289 19532

fax: +49 (89) 289 19533
mail: hoberg@in.tum.de
www.winfobase.de

Title: Skills for Digital Transformation

Authors:
Dr. Patrick Hoberg |Chair for Information Systems
Prof. Dr. Helmut Krcmar |Chair for Information Systems
Dr. Bernd Welz | Executive Vice President - Chief Knowledge Officer P&I, SAP SE

June 2017

Copyright © Prof. Dr. Helmut Krcmar, Chair for Information Systems

IDT-Survey 2017 9
Skills for digital transformation