On a worldwide basis, there are still relatively few companies that have integrated digital technologies into their processes. But the excellent results of those that have should set a pattern for others to follow.

Companies That Have Taken the Digital Path Outperform Their Peers on All Counts

In the interview that Patrick Ferraris, Global Leader of the Technology Transformation practice at Capgemini Consulting, gave to L'Atelier on the sidelines of the Electronic Business Group (EBG) Mobile, Social & Big Data event in Paris, on 14-15 November, he went into the results of a study* published by Capgemini Consulting, together with the MIT Center for Digital Business. He points out that the number of companies that have embarked on a process of digital transformation is still somewhat low. This is a pity, since companies that have launched themselves into the digital sphere are already reaping real benefits in terms of competitiveness
and profitability. This holds true whatever sector the company is in. The digital recipe seems to work for all sectors, from high-tech industry to the most traditional business. The authors of the report studied over four hundred firms. Four categories emerged, each showing different combinations of two parameters: ‘digital intensity’ and ‘transformation management intensity’. The companies dubbed ‘Digirati’ are those that have taken digital integration furthest. They are followed by the ‘Fashionistas’, the ‘Beginners’ and finally the ‘Conservatives’, which show virtually a zero adoption rate. The researchers found that 38% of high-tech sector companies
could be classed as Digirati, compared with 35% in the banking industry. These two sectors were followed by insurance, travel & hospitality and telecoms, all with 30%+ Digirati. The next sectors in percentages of Digirati were retail, consumer packaged goods, utilities, manufacturing and pharmaceuticals.

More competitive, more profitable

The analysts found that overall, the turnover of Digirati and Fashionistas is respectively 9% and 6% higher than that of the other categories. However the companies in the Digirati bracket are on average 26% more profitable than their non-Digirati peers, and enjoy a market value which is around 12% higher. Another advantage of companies in this category is their flexibility and adaptability. The report found that 62% of all Digirati have succeeded in making changes – whether partial or major – to their business models and this has enabled them to transform the way the company works. Only 30% of the Fashionistas have managed to do this, though surprisingly, around the same number of Conservatives have too. The study indicates that it is digital maturity that pays off, rather than any special start-up talent or a company culture that has always focused on innovation. Digital maturity takes a number of years to acquire, and the essential ingredient is… management. Senior management in these companies has in general understood the opportunities offered by digital transformation and seized them with both hands.

Sharing a vision

Senior managers have done this by sharing a vision, rather than pushing technology. They have then built relationships between technology and decision-making departments and have chosen which areas to shift to digital, thus closely targeting their investment. And finally they have succeeded in implementing appropriate solutions. The report shows that basically Digirati companies have managed to spot the areas where they needed to innovate. This might well consist of using social networks or mobile devices, but could also be a matter of simply identifying processes that needed to ‘go digital’, such as creating proper customer databases,
whether for the B2B, or B2C segment. The study indicates that Fashionista companies have also made considerable investments in digitisation but the analysts see a clear difference from the investment made by the really pioneering firms. Thus the Fashionistas may well introduce a range of innovations, but these more often serve to boost the company’s appeal by making it appear more up to date than actually create value for the company, the Capgemini/MIT study concludes.

* The Digital Advantage: How digital leaders outperform their peers in every industry