New Accenture Research Finds that Investing in a Digital Core Accelerates Reform and Innovation, Boosting Revenue Growth by Up to 60% and Profits by 40%

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“With the pace of change so rapid, continuous reinvention is now the default strategy as companies try to understand how technology will impact their business operations, especially amid new advancements such as generative AI,” said Kartik Narain, group chief executive officer, Technology, Accenture. “Deriving value from disruptive technologies with an industry-leading digital core is not just a critical success factor, but a survival factor. A strong digital core is essential to be prepared to reinvent and quickly seize any new opportunities.”

In its report, “Transforming with a Digital Core,” Accenture analyzed insights from 1,500 technology executives across 10 countries and 19 industries. Accenture's research revealed that to build the technology capabilities companies need to prepare for continuous transformation across their business, they need an advanced digital core. This requires the right combination of cloud-first infrastructure and enabling practices for agility and innovation, data and AI for differentiation, applications and platforms to accelerate growth, next-generation experiences, and optimized operations with security at every level.

Accenture's research also revealed that AI is the number one cause of technical debt – the cost and effort required to keep IT systems up to date and responsive to business needs, accumulated by choosing speed over long-term maintainability. 41% of executives cited AI as a top three cause, alongside applications/platforms. Conversely, AI, along with new ways of designing systems, can also be used to manage and reduce technical debt. While traditionally technical debt has primarily come from legacy code, outdated technology and lack of documentation, the rapid adoption of AI is creating new technical debt.

Accenture research outlines three fundamental principles for achieving a transformation-ready digital core: When these three principles are adopted together, companies can reap significant rewards, increasing revenue growth by up to 60% and increasing profits by 40%.

1. Build an advanced digital core tailored to industry-specific needs: Accenture research shows that to achieve continuous transformation, companies need to elevate their digital core capabilities to “best in class” levels. While the journey may seem complicated, Accenture research found that improving one capability, such as data, automatically improves others. For this reason, companies should first assess the current state of their digital core capabilities and then prioritize no-regret moves based on areas of need. This will drive a virtuous cycle of continuous improvement across the digital core.

2. Increase strategic innovation investments to include re-architecting systems for machine (AI) operations: Companies should monitor how much of their IT spending is increasing on innovation rather than operations as a key performance indicator. Accenture research found that at least a 6% increase year-over-year is needed to prepare for reinvention. Additional budgets can be secured as companies reduce inefficiencies with measures such as vendor assistance, optimizing cloud costs, and operationalizing automation. Companies can use the resulting discretionary funds to redesign business processes, launch new products and services, and enter new markets. Pre-integrated solutions from ecosystem marketplaces are a starting point. Ultimately, companies need a digital core designed for both humans and machines, so that they can seamlessly interact and create value through intent-driven rather than instruction-driven workflows of business processes. A more immediate focus is re-architecting systems for machine learning and AI operations.

3. Use programmatic and autonomous methods to balance technical debt with future investments: According to an Accentures analysis, about 15% of IT budgets should be allocated to fixing technical debt to keep IT capabilities current. This balance is key to balancing debt reduction with future investments. A higher or lower allocation is not optimal. Staying current with IT requires a commitment to continually update, upgrade, and manage software, hardware, and services. A programmatic version control system allows you to update infrastructure configuration settings as code changes. This approach allows for greater automation, flexibility, and integration capabilities to reduce future technical debt.

View reports on Accenture's thought leadership app, Foresight, and get a personalized feed of the latest insights, data, case studies, blogs and more. Download the app at http://www.accenture.com/foresight.

About the StudyThe 'Transforming with a Digital Core' study is based on survey responses from 1,500 C-level IT executives across 10 countries and 19 industry sectors. IT leaders were asked about the state of their technology stack, their business environment, and their financial and operational performance. The survey's quantitative findings were triangulated with qualitative research through 20 in-depth interviews and 26 case studies.

About Accenture Accenture is a leading global professional services company that helps the world's leading businesses, governments and other organizations build a digital core, optimize operations, accelerate revenue growth and enhance citizen services to create measurable value at speed and scale. We have approximately 750,000 people serving clients in more than 120 countries. Technology is at the heart of change today, and Accenture is one of the world's leading companies driving that change through strong ecosystem relationships. We combine our strength in technology and leadership in cloud, data and AI with unmatched industry experience, functional expertise and global delivery capabilities. With a broad range of services, solutions and assets across strategy and consulting, technology, operations, Industry X and Song, we are uniquely capable of delivering measurable results. These capabilities, combined with our culture of shared success and our commitment to 360-degree value creation, enable us to help our clients reimagine and build lasting relationships they trust. Our success is measured by the 360-degree value we create for our clients, our employees, our shareholders, our partners and our communities. For more information, visit www.accenture.com.

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Mylissa Tsai Accenture +1 617 488 7932 [email protected]

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