In just a few years digital technology has connected an ever-growing number of people, sensors, and devices.
It’s created new business and social networks, resulted in new ecosystems, and transformed our economy.
Of course, not all organizations have responded to it in the same way. While some have invested significantly in technology, operational, and cultural changes, others are lagging behind.
Our research shows that digital transformation is paying off for those who embrace it: Digitally transformed organizations (“digital leaders”) performed much better than organizations that lagged behind (“digital laggards”), effectively creating a “digital divide” across companies.
Our research focused on 344 enterprises* listed on U.S. exchanges with a median company revenue of $3.4 billion, including most major firms in the manufacturing, consumer packaged goods, financial services, and retail industries. The table includes all participants in our study and shows how organizations that scored in the top quartile of our digital transformation index obtained much better gross margins, earnings, and net income than organizations in the bottom digital quartile. Other financial and operating indicators showed similar disparities.
Our research also shows that a digital advantage is not simply a function of spending money. The best-performing companies stated they have technology budgets on par with digital laggards; the average IT spend as a percentage of revenue was 3.5% for leaders and 3.2% for laggards. Clearly, digital transformation involves some significant capability building.
What Digital Leaders Do Differently?