Deloitte Survey Uncovers How Key Elements of Digital Transformation Help Drive Financial Performance
NEW YORK, May 27, 2020 -- Digital transformation has new applications beyond known efficiencies and benefits, helping organizations address the changing role of business today.
Key takeaways
- Companies surveyed with higher digital maturity are two to three times more likely to achieve benefits that support superior financial performance such as efficiency, revenue growth, product/service quality, customer satisfaction and employee engagement.
- These companies are also more likely to exhibit a more innovation - and growth -oriented mindset and use digital technologies for nonstandard objectives such as advancing sustainability goals.
- Respondents are planning to increase digital transformation investment for 2020 by 15%, slightly less bullish than last year’s 25% planned increase.
Why this matters
To understand why digital transformation leads to improved financial performance, Deloitte conducted a survey in November 2019, which asked 1,200 U.S.-based executives to assess their organization’s approach to and benefits from digital transformation. Organizations surveyed have a global headcount of 500 or more and have earned at least U.S.$250 million in annual revenue. The respondents included in the analysis were self-reportedly “very” or “highly” knowledgeable about their organization’s digital transformation efforts. An equal number (200) of respondents were surveyed from each industry represented in the study. For more information, please go to https://www2.deloitte.com/us/en/insights/topics/digital-transformation/digital-transformation-survey.html.
Greater digital maturity is associated with better financial results and strengthens focus on growth and innovation
In last year’s survey, Deloitte determined that digital maturity was correlated with financial performance. Consistent with last year’s survey results, this year, higher-maturity companies surveyed are nearly three times more likely than lower-maturity companies to report net profit margins and annual revenue growth significantly above the averages in their industries. Deloitte also found higher-maturity organizations are two to three times more likely than lower-maturity companies to report that their digital transformation efforts delivered significant impact in terms of increased efficiency, revenue growth, product and service quality, customer satisfaction and employee engagement. These positive effects may allow organizations to thrive in a changing marketplace and focus on growth and innovation.
- Forty-five percent of higher-maturity companies reported net revenue growth significantly above industry average, while only 15% of lower-maturity companies said the same.
- Fifty-eight percent of higher-maturity organizations reported that they offer digitally connected products, compared to only 33% medium maturity and 17% lower maturity organizations.
"Digital transformation is about more than better, faster and cheaper — it’s also about doing what wasn’t possible before," says Ragu Gurumurthy, global chief innovation and chief digital officer, Deloitte LLP. This can mean smarter products and richer experiences, more responsive supply chains and distribution systems and new business models. Our study reaffirms what we see with clients every day: digital transformation helps to deliver a range of critical business benefits and is a vital investment in the future. Organizations can use their digital transformation efforts to drive financial performance and boost growth and innovation.
Changing investments in digital transformation
As higher digital maturity continues to be a factor in improved financial performance, organizations surveyed are planning to significantly boost their investments in pursuing digital maturity in 2020, though somewhat more conservatively than last year. Respondents plan to increase investments in digital transformation for 2020 by 15%. In contrast, last year’s survey found a 25% increase in planned investments for 2019. Overall, respondents this year tended to be more moderate in their projections of 2020 investment, likely taking a more pragmatic and experience-based view about what their companies are doing when it comes to information technology investment and digital transformation more broadly.
Digital transformation for the greater good
Digital transformation can also help companies keep pace with society’s changing expectations of business, such as issues of workforce diversity and environmental sustainability.
- Sixty-five percent of higher-maturity organizations noted they use digitally enhanced talent recruiting and management methods to support diversity.
- Sixty-seven percent of higher-maturity companies use digital technologies to lower consumption of natural resources and 69% use them to reduce carbon emissions.
The growing focus on these areas illustrates how investment in digital transformation enables companies to better tackle issues of emerging importance to a broader cohort of stakeholders, while also offering direct financial benefits.
About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthy society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Now celebrating 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 312,000 people worldwide make an impact that matters at www.deloitte.com.
Source: Deloitte
