CHICAGO – Digitally mature businesses have higher revenue growth and net profits—regardless of a company’s industry. In particular, four digital characteristics – a clear vision and dedicated leadership, engaged employees who are intrinsically motivated, an ability to leverage data for insights, and digital interactions that are convenient and effortless – showed a high correlation with stellar financial performance, defined in the survey as annual growth rates above 10 percent.These are among the key findings in a new report, “Digital Leaders: Learn from Digitally Mature Companies to Grow Revenue and Profits,” released today by West Monroe Partners, a business and technology consultancy that aids organizations through their digital transformation journeys.
“To keep up with the most digitally mature organizations, companies need to start thinking of digital as more than a buzzword that only applies to certain segments of their organizations or as the latest technology update,” said Kyle Hutchins, senior director and leader of the firm’s Digital team. “The challenge is often knowing the right digital elements to focus on and if efforts will actually drive revenue. With this research, we are able to conduct conversations with organizations about what specifically they can do to see direct impact on their revenue and profits.”
West Monroe conducted the online survey with 407 executives based in the United States to understand perspectives on digital maturity and the impact of employing digital initiatives across four industries: healthcare, financial services, energy and utilities, and manufacturing (specifically consumer and industrial products). Respondents were divided among C-level executives and senior managers with decision-making influence for digital investment. Survey respondents self-assessed their organizations on 16 components of digital maturity. Supplementary qualitative interviews were conducted with 10 senior executives in support of the quantitative research.
The survey found digital maturity levels are fairly evenly divided across the spectrum from “not digitally mature” to “very digitally mature,” with the largest percentage of companies – 21.5 percent – characterizing themselves as average. Some industries are farther along in the digital journey: Almost half (47 percent) of financial services organizations consider themselves to be digitally mature or very mature, as opposed to only 31 percent of healthcare organizations.
Across all industries, half of companies are investing to digitize their operating model. The most digitally mature companies spend 35 percent of overall budget on digital initiatives.
“When thinking about investment, consider that three of the four elements that most correlated with financial performance explicitly cite customers,” said Greg Layok, managing director and leader of West Monroe’s Technology practice. “Time and time again, we see a customer-focused mindset ensure that digital transformation isn’t simply about ‘technology for technology’s sake.’ Instead, it makes digital tangible, actionable, and most importantly, profitable.”
Other key findings of the report, which illustrates practical, real-world examples of digital in action, include:
Most companies have work to do to establish a clear digital vision. Only 24 percent of respondents strongly agreed that their “organization’s digital vision is clear and comprehensive, widely understood, and used to guide strategic decisions.”
Strong leadership has a particularly high correlation with financial performance. More than one-third – 36 percent – of organizations with annual growth rates above 10 percent strongly agree that they have a definitive leader charged with executing on digital efforts. (That rises to 51 percent for those with annual growth rates above 40 percent.)
A full copy of the report is available here.
About West Monroe Partners
West Monroe is a national business and technology consulting firm that partners with dynamic organizations to reimagine, build, and operate their businesses at peak performance. Our team of more than 1,000 professionals is comprised of an uncommon blend of business consultants and deep technologists. This unique combination of expertise enables us to design, develop, implement, and run strategic business and technology solutions that yield a dramatic commercial impact on our clients’ profitability and performance. For more information, visit www.wmp.com.