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MIT: Digital leaders enjoy significantly higher profits

Research with Capgemini highlights adanvatges of 'Digirati'

Research shows that companies that have fully adopted digital marketing and analytics are enjoying a much better bottom line.

Capgemini Consulting and the MIT Centre for Digital Business are in the second year of a three year global research project into "digital advantages" among companies, covering social media, mobile, analytics and embedded devices.

The second year study, "The Digital Advantage: How digital leaders outperform their peers in every industry", shows that companies which have succeeded in delivering a fundamental transformation of their business through technology benefit from a "significantly better financial performance than their peers".

Around 470 senior executives at 390 major firms globally were surveyed for the research. Capgemini and MIT found that the "digirati" among the sample generate, on average, 9 percent more revenues through their existing assets; and outperform their peers by 26 percent in terms of profitability. They also achieve significantly higher (12 percent) market valuations.

The study found the highest percentage of "digirati" in the high-technology (38 percent), banking (35 percent), travel and hospitality (31 percent), insurance (33 percent) and telecoms (30 percent) sectors.

Less advanced digirati sectors included packaged goods (24 percent), utilities (20 percent), retail (26 percent), manufacturing (12 percent) and pharmaceuticals (7 percent).

The research identified common patterns for how the leading companies build their digital advantage. First, the digirati significantly invest in the "how" of digital transformation.

They build and share a digital vision and engage the workforce in understanding the vision, and implement proper digital governance structures to ensure ownership and accountability of the transformation. They also build strong relationships between the business and IT/technology functions.

Secondly, they make clear choices on what to transform, concentrating investment based on their own strengths and the dynamics of their competitors.

For instance, some excel in process digitisation with a strong emphasis on analytics and internal collaboration, while others select customer experience excellence through channel integration.

George Westerman, the research scientist who led the research for MIT, said, "Achieving a digital advantage requires more than sheer digital investment. It requires building the leadership frameworks to envision and drive transformation. Digital transformation is as much about leadership and organisational change as it is about implementing new technologies."

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