business-increase-profits

Digitally Mature Companies Are More Profitable, Report Shows

Original post by Ben Rooney via WSJ

Companies that embrace digital technology are more profitable, generate more revenue and achieve higher market valuations than their competitors, according to research published Monday.

Didier Bonnet, vice president at Capgemini Consulting and the leader of the study into the use of digital technologies, said the difference was considerable. The most digitally mature companies are 26% more profitable, generate 9% more revenue and achieve 12% higher market valuations, the study showed.

Mr. Bonnet said digital maturity meant two things: “Digital intensity is about how much technology are you putting in to your organization. How much are you investing in customer engagement or internal operations.”

But he said that’s not enough. “When we looked at the people doing well, we found that they had a transformation management intensity,” he said. “This is the soft side the vision, the governance, the leadership, the engagement of the people.”

Mr. Bonnet said there was a consistency across industry sectors even if not all sectors were moving at the same velocity. Some sectors such as manufacturing, pharmaceuticals and consumer packaged goods had yet to make the sort of transformations that banking, retail and inevitably the high-tech industry, had undergone, he said.

“In every sector we looked at there were leaders who were outperforming the average of the industry. It means that someone somewhere is using digital transformation as a differentiator in what they offer, in whatever sector you are in. Our view is that every single sector should worry about this,” he said.

The report, which gauged the use of  technologies such as social media, mobile, analytics and embedded devices to improve business performance or reach, also examined successful companies to establish how they achieved success. It came down, perhaps not surprisingly, to the quality of management, not the technology.

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