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Kathleen Martin

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Four Steps to Increase Returns on Your Digital Investments
A major utility was preparing to capitalize on emerging trends in smart home technology, electric mobility, and sustainability—with the goal of increasing customer satisfaction through personalization and user-friendly interfaces. This transformation included developing new business models and product offerings. EY worked with the utility to develop a digital strategy, capabilities, and a multiyear transformation roadmap—all while communicating across the organization to ensure digital adoption and new ways of working. The result: the company is receiving top rankings for customer and employee satisfaction and is on track to improve efficiency by 5% to 15% while also increasing earnings per share.
Clearly, organizations that get their digital transformation efforts right are reaping significant rewards. Companies worldwide are expected to invest $6.8 trillion in digital transformation between 2020 and 2023.https://hbr.org/sponsored/2021/08/four-steps-to-increase-returns-on-your-digital-investments#_edn1 However, despite significant investments, many executives are not seeing their investments pay off—and the pressure to show results is mounting. So why are so many companies failing to produce much-promised results?
What Digital Performance Leaders Are Doing Right
A recent EY Digital Investment Index study of more than a thousand respondents identified 9% as digital leaders—companies that achieved both roughly six percentage points more return on digital investments than others surveyed and stronger revenue growth.
Leaders clearly see mergers and acquisitions (M&A) as well as partnerships and alliances with tech natives as a critical lever for a successful digital investment strategy. Nearly three-quarters of executives say they are shifting to M&A and partnerships to accelerate digital initiatives.
The survey results also show that leaders:
  • Have a clearly defined strategy and accountability for digital
  • Prioritize digital initiatives with high cash returns while systematically and quickly discontinuing unnecessary initiatives
  • Dedicate funds to accelerate new digital products, services, and business models
  • Invest in emerging technologies and capabilities to execute on that strategy
In addition, the technology mix leaders use is likely to include investments in the internet of things (IoT), cloud computing, artificial intelligence (AI), and advanced cyber defense.
The chart below illustrates that higher investment levels in startup deals and organic development of digital solutions such as patents tend to produce higher share returns. Startup M&As are highly beneficial if the acquiring company has the proper digital foundation and capabilities. Pure inorganic investments without the internal digital foundation seem to decrease value.
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Continue reading: https://hbr.org/sponsored/2021/08/four-steps-to-increase-returns-on-your-digital-investments
 

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