Internal resistance biggest challenge to digital adoption, says CGI survey

MONTREAL _ Global companies and governments are looking to expand their digital footprints despite facing internal resistance to change, says a new CGI Group survey released Wednesday.

The Montreal-based company’s Client Global Insights survey found that 81 per cent of executives and IT leaders surveyed said internal culture and a shortage of people with digital technology skills are the top challenges.

A large majority of respondents (85 per cent) said meeting customer expectations was primary motivation to conduct digital transformations, up from 71 per cent a year ago, said the CGI (TSX:GIB.A) report.

Growing cyber risk was the second driver and increasing regulatory demands was third. For governments, the next most important trends are cost pressures and increasing use of the cloud.

“The top takeaway was a clear and accelerating need across all industries for organizations to transform in order to meet the digital needs of consumers and citizens,” CGI Group president and CEO George Schindler said Wednesday during a conference call about its fiscal 2017 results.

Demand is increasing as 40 per cent of companies say they have company-wide digital strategies, up from just 12 per cent a year ago.

Clients forecast they will more than double budgets on new projects over the next two to three years, Schindler said.

The 2017 survey polled more than 1,300 business and IT leaders across 10 government and commercial industries in 17 countries. Canadians comprised 15 per cent of those surveyed.

He said industry consolidation is narrowing the number of companies able to deliver digital solutions, improving CGI’s position to win more outsourcing contracts.

“It is a trend that gives us confidence as we look at 2018 continuing this growth path that we’re on.”

CGI Group Inc. also said its fourth-quarter profit fell 24 per cent from a year ago as it was hit by one-time restructuring and other costs.

The consulting services firm said it earned $208.5 million or 70 cents per diluted share for the quarter, down from $274.4 million or 89 cents per share a year ago,

The most recent quarter included $65.3 million in restructuring costs and $1.9 million in acquisition-related and integration costs.

Excluding those charges, CGI earned $275.7 million or 93 cents per share for the quarter.

Revenue in the quarter totalled $2.61 billion, up from $2.58 billion.

For the full year, it earned $1 billion on $10.84 billion of revenues. Adjusted profits grew to $1.1 or $3.65 per diluted share, up from $3.46 a year earlier.

On the Toronto Stock Exchange, CGI’s shares were down four per cent at $65.35 in afternoon trading.