Survey says: Digital maturity can help boost financial performance
The benefits of digital transformation are real, extensive, and tangible, according to a recent Deloitte survey of 1,200 senior executives.
Surveyed companies with higher digital maturity —or those that had made greater progress in generating results from their digital transformations—enjoyed a range of benefits that include, but go well beyond, improved financial performance.
The benefits of digital maturity
Our analysis found that companies with higher digital maturity were three times more likely than lower maturity ones to significantly outperform their industry average on key financial metrics. This pattern held true across industries, and was remarkably consistent with findings from a similar survey Deloitte published last year on this topic.
This year we dug deeper into this connection between digital maturity and better financial performance. We found that higher maturity companies were more likely to attribute the following benefits to their digital investments:
We examined the survey responses through the lens of seven “digital pivots” that collectively enable digital transformation. Surveyed Higher maturity organizations were actually two to three times more likely than lower maturity ones to attribute each of the five business benefits listed above to every single one of the digital pivots, which are:
Focusing on growth and innovation through digital transformation
Another key difference between higher and lower maturity companies surveyed is that the higher maturity companies displayed a greater focus on growth and innovation in the pursuit of digital transformation. Lower maturity organizations surveyed, on the other hand, tended to focus more on benefits linked to cost-cutting and efficiency. For example, when describing the single greatest benefit to their sales and marketing functions, higher maturity companies were more likely to cite increasing customer lifetime value. Lower maturity organizations, meanwhile, were more likely to point to decreasing customer acquisition costs. Higher maturity organizations were also more likely to report that they were leveraging digital business models, such as offering digitally connected products.
In other words, the higher maturity companies recognized that digital transformation is about both doing old things better, faster, and cheaper, and doing new things that weren’t possible before. Efficiency gains and lower costs are some of the low-hanging fruit of digital transformation. Ambitious companies aim higher.
Boosting environmental sustainability and workforce diversity
Our findings also suggest that the benefits of digital maturity extend beyond traditional business objectives. At a time when companies increasingly view social responsibility as part of their mission, digital transformation is helping them meet challenges like improving environmental sustainability and workforce diversity.
Higher maturity respondents in our survey were more likely to use digital technologies to lower their consumption of natural resources and reduce carbon emissions, as well as enhance their talent recruitment and management to support diversity. In some cases, even the majority of lower maturity companies were leveraging digital technologies to meet these goals.
However, prior research conducted by Deloitte and MIT suggest that organizations with higher digital maturity are more likely to have the advantage of more modernized governance and ethics frameworks. This can help safeguard them from potential missteps by, for instance, having a process in place to screen and eliminate potential biases in AI models used for recruiting talent.
Uncertainty highlights the need for digital transformation
Our survey also revealed that some companies plan to significantly increase their digital transformation budgets. On average, respondents said they planned to grow investments by 15 percent over the next year. Still, this is a lower growth rate than we found in last year’s survey, when respondents reported that they planned to grow digital transformation investments by 25 percent.
This slower growth rate is in line with media and analyst reports that suggest macroeconomic concerns are impacting enterprise IT spend. However, market uncertainty only underscores the need for digital transformation. When faced with constantly shifting market conditions and the need to meet new customer and stakeholder demands, digital maturity’s benefits outlined in this report only grow more critical to the success of the enterprise.
Check out the latest edition of Deloitte’s annual digital maturity survey to learn more about the latest trends in digital transformation and explore our offering to learn more about digital maturity.
David Schatsky, managing director, Deloitte LLP, tracks and analyzes emerging technology and business trends, including the growing impact of cognitive technologies, for the firm’s leaders and its clients.