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ARLINGTON, Va., October 24, 2019

Gartner Survey Shows Digitalization Misconceptions Threaten Organizations as the Top Emerging Risk in 3Q19

Emerging Risks Monitor Report Also Notes Lagging Progress in Digitalization Efforts

Concerns about digitalization misconceptions, as well as the pace of their organizations’ digitalization efforts, topped business leaders’ concerns in Gartner, Inc.’s latest Emerging Risks Monitor Report.

Gartner surveyed 144 senior executives across industries and geographies and the results showed that “digitalization misconceptions” had risen to the top emerging risks in the 3Q19 Emerging Risks Monitor survey. “Lagging digitalization” remains in second position (see Table 1). Last quarter’s top emerging risk, “pace of change,” has now become an established risk after ranking on four previous emerging risk reports.

“While the threat of external macro risks such as the U.S.-China trade war are an increasing source of concern for executives, it’s notable that the top three risks in this quarter’s report are all centered around internal operations,” said Matt Shinkman, vice president with Gartner’s Risk and Audit Practice. “Business leaders are most concerned with their strategies around digital and having the resources in place to execute these plans.”

Table 1. Top Five Risks by Overall Risk Score: 4Q18-3Q19

Rank

4Q18

1Q19

2Q19

3Q19

1

Talent Shortage

Accelerating Privacy Regulation

Pace of Change

Digitalization Misconceptions

2

Accelerating Privacy Regulation

Pace of Change

Lagging Digitalization

Lagging Digitalization

3

Pace of Change

Talent Shortage

Talent Shortage

Strategic Assumptions

4

Lagging Digitalization

Lagging Digitalization

Digitalization Misconceptions

Data Localization

5

Digitalization Misconceptions

Digitalization Misconceptions

Data Localization

U.S.-China Trade Talks

Source: Gartner (October 2019)

Digitalization Anxiety Driven by Business Model Change
Digitalization misconceptions was cited as a top risk by 52% of respondents in the Emerging Risks Monitor Report, with lagging digitalization close behind with a 51% frequency rate. Executives from the IT and telecom sectors were clearly most concerned with digitalization misconceptions, with 75% of executives surveyed indicating this as a risk. The banking and energy industries were most concerned with lagging digitalization, with nearly seven in 10 executives indicating this area as a top risk.

Additional data collected by Gartner from corporate strategists reveals the extent of concerns with organizations’ digital strategies. Slow strategy execution and insufficient digital capabilities were tied among the top concerns of corporate strategists for 2019, with 60% of respondents indicating both areas as top concerns.

Adding to the unease is the large percentage of organizations undergoing some form of digital business change. A large majority of strategists indicated that digitalization was impacting four distinct areas of their business model: business capabilities, profit models, value propositions and customer behavior.

While these changes are underway, uncertainty persists about a clear path from current to future business models. Only 35% of strategists said they felt confident about which investments and initiatives were needed to drive their future business model, while only 20% said they had clarity on how those changes would positively impact their organizations. Just 8% of strategists felt confident that senior leadership agreed with these changes.

“Our data suggests that executives lack confidence in transformational business model changes, even as many are already underway,” said Mr. Shinkman. “To help mitigate the risks of digitalization missteps, organizations should take an incremental approach to business model transformation, with each step in the process building knowledge for future initiatives. Organizing business model transformation into discrete projects lessens the chance of major disruptions.”

Mr. Shinkman also noted that risk executives need to ensure they have a seat at the table during digitalization projects. Gartner research indicates that while two-thirds of risk executives said their organization currently has a digital transformation project underway, only 35% report that enterprise risk management teams are playing a role in the project.

More detailed analysis is available to Gartner clients in the full report and webinar recording 3Q19 Emerging Risks Report and Monitor.

Nonclients can complete free registration to read more in Emerging Risk Trends.

About Gartner Risk Leadership Council
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About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

Contacts

Justin Lavelle
Gartner
Tel +1 571 230 0816     
justin.lavelle@gartner.com