Digital maturity of firms linked to higher revenue growth and profitability

17 October 2018 Consulting.us

A new report from West Monroe Partners has found that higher self-rated digital maturity correlates strongly with higher revenue growth rates.

Organizations are feeling great pressure to transform into digital companies, turning themselves into companies that do business like the Amazons and Googles and Apples. Transforming can often mean playing catch-up: streamlining operations, getting to market faster, and better anticipating customer shifts.

But digital transformations aren’t some consulting industry-created buzz garbage to sell products and services to companies and industries that don’t need them. According to management and tech consultancy West Monroe Partners, more digitally mature companies actually see higher revenue growth.

Based on a survey of 407 US executives across healthcare, financial services, energy and utilities, and consumer and industrial products, West Monroe found that there was a strong correlation between firms’ self-rating of digital maturity – from overall vision to utilization of digital within sales, marketing, customer service – and revenue growth. The study also found a relationship to net profit margin, though the correlation was less pronounced than with revenue growth.Digital maturity = higher revenue growth"To keep up with the most digitally mature organizations, companies need to start thinking of digital as more than a buzzword that only applies to certain segments of their organizations or as the latest technology update,” said Kyle Hutchins, senior director and leader of the firm’s Digital team. “The challenge is often knowing the right digital elements to focus on and if efforts will actually drive revenue.”

The report found that four digital characteristics in particular showed a high correlation with strong financial performance (growth rates above 10%). These four characteristics were a clear vision/dedicated leadership, engaged and motivated employees, ability to leverage data, and convenient digital interactions.

According to the report, crafting a strong digital vision is a taxing process that requires both infrastructural and cultural transformations. “A digital vision should encompass not only technology, but how it will affect people and culture and change day-to-day business processes,” the report notes. As such, only 24% said their firm’s digital vision was clear and comprehensive, and used to guide strategic decisions.

The difficulty of the process means that companies need strong leadership to execute their digital vision. According to West Monroe, these digital leaders should be able to create agile and adaptive work environments, should be experts in change management, and should be able to bring in and align technologists across the enterprise.Growth rate’s relation to digital vision and leadershipOrganizations that agreed that they were highly adept at leveraging data for insights tended to have higher growth rates. Data can be used to drive smarter decision-making, providing insights to improve products while fueling new innovations and predicting the future needs of customers. Data analytics can also optimize certain areas of a business, like supply chain management and risk management.

Higher growth was also linked to customer service divisions ensuring that customers’ digital interactions were convenient and enjoyable. Customers now want and expect convenient interactions, through technology-assisted avenues like apps and echat. Net provider scores – how likely customers are to recommend a firm to their friends and family – are 65 points higher for low-effort (i.e. easy to interact with) companies.

Finally, companies with employees who were engaged and motivated due to their commitment to customer needs also had higher growth rates. In digitally mature firms, employees put customers first, incorporate feedback, and quickly access customer insights to better solve problems. This sort of agile environment means that employees can make decisions quickly, effectively, and independently.

Focus on customer experience and data

The survey found that some industries were more advanced than others: 47% of financial services companies said they were digitally mature (or very much so), in contrast to 31% of healthcare companies. However, each of the four sectors included in the survey had their own areas of strength in digital transformation.

Energy and utilities firms scored highest on cybersecurity defenses, which makes sense since they face real and critically important cyber risks from state and non-state actors looking to take down power grids and energy producers. Energy and utilities companies also spent the highest overall proportion of their budgets on digital, at 31%.

Healthcare organizations, meanwhile, spent more than their peers on launching new digital products and services, with 48% saying they had done so in the past three years. Meanwhile, financial services’ digital maturity was linked to their strong digital vision, another area where they led. Consumer & Industrial Products firms scored the highest in customer experience, with 72% saying that they strongly agreed that their customer service division made digital interactions ‘convenient, effortless, and enjoyable.’

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Publicis Sapient named a leader in digital transformation

21 March 2019 Consulting.us

A recent analysis and ranking from Forrester on digital transformation firms has placed Publicis Sapient in the leader category, alongside other top performers including McKinsey and Accenture.

Paris-based advertising and PR giant Publicis purchased digital marketing firm Razorfish from Microsoft for more than $500 million in 2009. In 2015, it put down $4 billion to buy Boston-based digital transformation firm Sapient. In 2016, Publicis fused Sapient’s advertising and marketing arm SapientNitro with Razorfish to create SapientRazorfish. Earlier this year, Publicis merged the latter entity with Sapient Consulting to create Publicis Sapient, an end-to-end digital transformer that combines strategy, consulting, and customer experience to drive successful digital change.

The unified brand has now been recognized as a leader in market research firm Forrester’s Q1 analysis of digital transformation accelerators. The other firms recognized as leaders were Accenture, EY, McKinsey & Company, PwC, and IBM.

Forrester’s report helps executives select the right consultancy for their needs. According to the market researcher, many digital transformations stall when they target short-term gains in customer experience and operational efficiency without tying the effort to true market understanding and a broader business strategy. The digital leaders on Forrester’s list are more likely to deliver the full package needed for success.

Publicis Sapient named a leader in digital transformation

The top firms are also more likely to provide the “speed of design and execution” vital to digital success. According to the Forrester analysis, the leaders “blend strategy and execution chops and couple them with the soft skills for inspiring leadership and training teams. CIOs and digital executives should look for providers that: have the capabilities to design business for change [and] can seamlessly integrate emerging technologies to design new experiences.”

Publicis Sapient was lauded for its effective customer research in support of digital transformations, its world-class digital experience design capabilities, and its performance-driving outcome-based contracts. The analysis did, however, find room for improvement in the company’s ability to advise on strategy at the CEO level.

With the creative and marketing roots of SapientNitro and Razorfish – and the resources of Publicis – the firm is a top consultancy on the customer experience front. “Publicis Sapient is an especially strong partner where the transformation emphasis is on creating world-class digital customer and employee experiences,” the report states.

"We are honored to be recognized as a Leader in this space and believe that it is a proof point of the success of our unique approach to helping clients on their constantly evolving digital transformation journeys," Nigel Vaz, Public Sapient CEO, said.The integration of our capabilities across strategy and consulting, experience and engineering, along with creative problem-solving, provides us with a unique view of both the company and the customer to enable end-to-end transformation."

Among those placed in the “Strong Performers” category were Deloitte, KPMG, Capgemini, Cognizant, Wipro, and Atos. TCS, Infosys, and DXC Technology ranked in the “Contenders” category.