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With all the buzz around digital transformation, what can companies do to reinvent their businesses and keep up with their competitors? Part of the answer is for them to make digital investments inside their businesses. But according to Bernd Welz, EVP and Global Head of Scale, Enablement and Transformation at SAP and featured speaker on a webcast on Digital Skills - Learning the Skills for Digital Transformation, companies that prioritize upskilling their existing workforce at the beginning of their journeys will see the biggest impact.

A survey conducted by the Technische Universität München (TUM) indicates many companies are ill-equipped to compete in today’s digital economy. In fact, 83% reported their employees don’t have the skills necessary to be successful in the digital era. What’s more, 73% of executive leaders said they lack the technical knowledge to develop a successful digital strategy.

Despite broad awareness of this digital skills gap, companies aren’t necessarily putting employee development at the top of strategic growth agendas. Decision-makers know the steps required to move forward, but oftentimes do them in the wrong order. “Learning in an IT context is usually afterthought when the strategy is already done, the product decided on, and the product purchased already,” said Welz. To execute effectively, skill and strategy development have to happen first and at the same time.

That means upskilling employees in every area of the business, from the top executive to employees supporting various areas of the organization. “If you don’t know the technology, you cannot exploit the potential of the technology for the business,” Welz explained. It’s not enough to have just a few IT people trained to help with implementation or to troubleshoot issues.

Employees lacking the skills to contribute strategically to a new business model or objective could slow down the speed of innovation companies expect from digital transformation. If employees don’t know what’s possible with that technology (or even how to use it), the company could miss out on a new opportunities for their business. “The skills gap can become a hurdle in being successful in the digital transformation,” Welz said.

Consider the example of big data in retail. Research suggests leveraging it appropriately can help businesses deliver better customer experiences, but having a platform that can pump out statistics won’t be worth much if those working inside the business don’t know how to make sense of it.

Companies whose managers take the talent development step first might realize they need a data scientist to make recommendations on what the data means in light of executing strategic initiatives. At the same time, managers could carve out a career path for an employee who has some analytics experience, providing training on how to turn big-data into action. Finally, if senior management consistently makes upskilling employees a strategic priority, they’ll be able to see how the workforce should evolve to meet future needs.

Making employee development the first step in a successful digital transformation journey, companies can then fine tune their strategy framework to identify the right people, products and services to get them there before going into full-on execution mode.

The bottom line: companies that start their digital transformations with talent development will have the biggest gains from transformation.

Tune into the replay (registration required).

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