New research from Pegasystems Inc. (NASDAQ: PEGA), the software company empowering digital transformation (DX) at the world’s leading enterprises, reveals most business leaders overestimated the state of their digital transformation efforts – which hampered their ability to adapt to the pandemic. Nearly three quarters (74%) of business decision makers said the crisis exposed more gaps in their business operations and systems than they originally expected.

The global study, conducted by research firm Savanta in late May, found that four out of five leaders thought they were fairly deep into their DX initiatives – with 35% assessing themselves in ‘advanced stages.’ But this appears to be wishful thinking, leaving them vulnerable to a host of customer engagement failings triggered by the pandemic:

More than half (54%) conceded they should have done more to help their customers during the crisis.

Over one third (37%) communicated at least one message to customers that was badly received and damaged their brand reputation.

Over one third (36%) said they lost customers during the pandemic due to failings in their communications.

As a result, business leaders are vowing not to let their lagging technology infrastructure put them at risk for the next crisis. Seventy-one percent say the pandemic experience has forced them to accelerate their DX plans; 62% will increase the priority level of DX within their organization; and another 56% will add more DX investment. With these new DX plans in place, nine of out 10 business leaders feel confident they will be prepared to face a similar crisis if one should hit in the next two years.

Which specific DX projects have risen to the top of their wish lists? The survey found the three most popular DX projects needed to prepare for a future crisis were: cloud-based systems (48%), customer relationship management (CRM) software (41%), and AI-driven analytics and decisioning (37%).

Other findings suggest that even with all the problems it created, the pandemic could have some positive outcomes on businesses:

Change for the better – 74% of respondents say their business learned a lot during the crisis and will permanently change the way they operate for the better.

Greater empathy – 69% say the crisis taught them to be more empathetic with customers.

Getting to know you – 61% feel they learned more about their customers during the crisis than they did the previous two years combined.

Working from home actually works – 71% said remote working has been successful and will likely continue after the crisis ends.

More productive than ever – 52% reported employees are more productive now than before the pandemic. Seventeen percent saw a slight dip in productivity and only 3% reported a significant drop.

Pega surveyed more than 1,200 business decision makers around the world for their perspectives on how their organization has been impacted by the COVID-19 crisis. The results include responses from the United States, United Kingdom, France, Germany, Japan, and Australia.

“What this research makes clear is that digital transformation can no longer be a ‘nice to have’ for today’s businesses,” said Don Schuerman, CTO and vice president of product marketing, Pegasystems. “Even those that thought they were digitally advanced now realize they’ve only scratched the surface. Organizations may need to reexamine every part of their business for digital readiness or face consequences, regardless of whether another crisis of this magnitude happens again or not.”