A recent survey of 2,000 business and technology executives by PwC finds that that there is a direct link between digital investment and corporate performance.
Specifically, the report finds that digital leaders are twice as likely to achieve more rapid revenue and profit growth as the “laggards” in the study. These digital leaders are “more deliberate” in their digital strategy, the report finds, and also show a greater CEO commitment, a strategic clarity and a broad view when it comes to applying technology and identifying new sources of innovation.
It’s not that other companies don’t have a commitment to digital: 86% of CEOs are pushing digital technologies compared with 57% in 2013. In addition, 31% report their companies are investing more than 15% of revenue into technology investments that include all areas of the business, not just IT.
But the digital leaders are better at not only linking digital to real gains, but also are more adept at consistently measuring the value of their digital investments, the report says.
Based on its research, PwC identifies the 10 characteristics that will spur digital growth:
- The CEO champion. “The CEO is the natural leader as the focus on technology has shifted from operational efficiency to growth, and the stakeholders and conversations have changed,” the report says.
- Digital leaders set strategy. As CIOs and CDOs become more involved in setting the strategy, some organizations may have to change the way the organization is structured. For example, a global healthcare company uses a digital council that brings together CIOs and CMOs, who work together on both digital strategy and execution.
- The C-suite is on board. While the CIO and CMO may collaborate, research shows it’s often a weak relationship – only 54% rate it as strong compared to the CIO/CEO relationship that is rated at 70%. But getting all the C-suite players on the same page “means there’s greater likelihood to maximize investments,” the report says.
- Strategy is shared. Today, 69% of companies say that business and digital strategies are shared throughout the organization, compared to 50% two years ago. Organizations rely on videos, social media and smartphones to communicate the strategy with workers.
- Taking an outside-in approach. While top-performing organizations get insight from vendors and customers who help them discover new ideas for using technology, they still make decisions based on the technology – not just on the influence of what others say.
- Pushing toward competitive advantage. “The emerging technologies that land on each company’s short-list will vary widely, but those that executives see as being most strategically important in three to five years are cybersecurity, data mining and analysis, data visualization, digital delivery, and private cloud,” the research shows.
- Using business data effectively. Executives say it’s a challenge to get real value out of data by using it to guide strategic decisions because it can be difficult to understand which data to use and how it benefits their role. Top performing companies, however, say they see the most promise in third-party data, cloud application data, social media data and location-aware data.
- Being proactive about cybersecurity. Top-performing companies say they’re more prepared to handle risks and one way they do that is by routinely including risk managers and security leaders in conversations about new product and service development.
- Designing a digital roadmap. The percentage of companies having a comprehensive roadmap that include business capabilities and processes, along with digital and IT components, has dropped to 53% from 63% four years ago. “We’ve seen progress bottom out as digital has become more pervasive in the enterprise while at the same time also more fragmented,” the report finds.
- Taking consistent measures. The top companies use traditional metrics like ROI to track against growth goals, but also turn to new ones that help measure disruptive investments.
Finally, PwC recommends organizations that want to raise their digital IQ must use a systemic approach, assessing their abilities with the business and IT teams, targeting areas for improvement and developing a disruptive strategy instead of just relying on existing business improvements.