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Headquarters of tomorrow: Structures, value-added, and processes in the digital future

21/11/2023

In this study, we depict how digitalization, driven by big data analytics, automation, the internet of things, and Artificial Intelligence (AI), will reshape HQ structures and functions in the future.

Drawing on responses from 220 managers from Austrian firms across various industries, we offer a comprehensive analysis of the shift in HQ functions due to digitalization. In particular, we explore how digitalization will affect value creation potential and cost efficiency of HQs, how digitalization will impact HQ size and structure, and how HQs will operate and make strategic decisions in the digital age. Additionally, we investigate the specific influence of AI on HQs and disentangle the differential impact of digitalization on different organizational units and industries.

Our main conclusions are as follows:

  • Value-adding functions of the HQ will gain in importance. A majority of 71% of participants prioritize value creation over cost efficiency in the context of HQ digitalization. This trend is characterized by a focus on providing more timely and better-quality information for decision-making and enhancing the transfer of best practices to subunits.

  • Less than half of the firms seem well-prepared for the impact of digitalization on the HQ. Digitalization is expected to significantly change the role and functions of HQs, but only 43% of the firms have developed a clear idea of the impact of digitalization on the HQ. This shift will notably affect decision-making processes, interactions with subunits, and the overall value-added by HQs to the firm.

  • More advanced firms see more potential for improved HQ value-creation and cost-efficiency. Advanced firms, that already have developed a clear idea of HQ digitalization, expect greater improvements in both HQ value-creation and cost efficiency. AI is expected to play a crucial role in this transformation, aiding with managerial tasks and enabling a focus on more strategic activities.

  • The HQ will potentially become more powerful due to digitalization. Digitalization is expected to augment the power of HQs, leading to a more involved HQ role in subunit operations. While this suggests a centralization of control, there is no clear consensus on the future size or physical setup of HQs. However, we might still observe a trend towards more virtual HQ setups.

  • Digitalization is expected to improve the quality and transparency of HQ decisions. About half of the participants believe that HQ managers’ strategic decision-making processes will be less biased in the future and that they will apply these processes more consistently across subunits. Additionally, about 42% of participants expect that digitalization will allow HQ managers to engage more in strategic thinking by reducing operational burdens.

Have a closer look at the results in the full report here: Link to Report

If you want to know more about how digitalization is impacting Austria as an HQ location, we invite you to take a look at our previous report as well “Austria: A Prime Location for Headquarters in the Digital Age?”.

The study was conducted by the HiA team in collaboration with eXplore!, the Austrian Business Agency (ABA), the Vienna Business Agency, and the Oesterreichische Nationalbank (OeNB).

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