People drive business, not technology. It’s easy to forget amid the swirling, emerging tech. Artificial intelligence, big data, and Internet of Things seem to capture most of the headlines. But at the heart of digital transformation are human beings who turn the wheels of disruption – the entrepreneur, the customer, the employee.

Among them, the employee might be the most important person in the room. It’s the employee who breathes life into the customer experience and makes the dreams of the entrepreneur come true.

You’d think the human resources department charged with finding, hiring and managing employees would be given carte blanche, that is, the latest technology to support the workforce. But this isn’t the case, not even close. In a KPMG study, only 27 percent of business executives said the HR function is viewed as a key business asset.

Related: Zero One: Without Bedrock Talent, Digital Transformation Craters

That’s probably why many HR departments seem to operate out of the basement. That’s not good, especially in a digital economy where good technical talent is critical for success yet hard to find. The HR department is in a race to court tech workers before competitors do.

In the KPMG study, only a few executives boasted state-of-the-art HR departments. Their companies changed HR operating models, reengineered HR processes, adopted intelligent automation for talent management and talent acquisition, helped line managers improve their people management skills, and now tap HR data and analytics for new insights.

In so doing, they’re “gaining a deeper understanding of employees’ skills, strengths, goals and purpose and creating custom-made employee experiences,” KPMG says.

Before anyone asks, no, they didn’t merely adopt cloud HR tech to free up HR staffers. Going to the cloud may be smart, but it’s not transformative.

“Simply plugging into cloud systems will not deliver data-based insights, smarter decision-making, real value for the bottom line or anything resembling cloud computing’s vast capabilities to redefine HR and engage more effectively with employees,” the KPMG study says.

Related: Zero One: Digital Transformation Leaders vs. Laggards

More than moving to the cloud, these companies are truly transforming HR. A new workforce powered by the millennial has emerged, and HR must meet its demands by becoming faster and more flexible. No longer can HR take weeks to make a hiring decision or force employees into a fixed org chart.

But these companies are front-runners in digital HR transformation; what about everyone else? Sadly, too many are stuck in the old ways. The KPMG study cites six of the biggest challenges fronting HR departments in their quest for digitally transformation:

Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at [email protected].