MIT, Capgemini Prove Power Of Digital Technologies In New Business Study

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Companies that invest in digital technologies like mobile apps and social media -- and have a clear leadership strategy tied to those technologies -- are more profitable than their competitors, according to a new study from Capgemini Consulting, No. 6 on CRN's 2013 SP500 list,
and the Massachusetts Institute of Technology.

The study was conducted over the course of three years within the MIT Center for Digital Business and was designed to gauge the impact digital technologies have on a business' financial and overall performance.

The study was also conducted to determine where most organizations fall within today's "digital transformation," or, as MIT and Capgemini describe it, the use of new technologies like social media, mobile, analytics or embedded devices to improve customer experience, streamline operations and ultimately be more profitable.

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The results of the study -- which will be published in full in an upcoming book from MIT and Capgemini called "The New Digital Masters" -- are based on 160 in-depth interviews inside 50 companies, along with survey results from more than 2,500 companies around the globe.

The findings of the study broke companies down into different categories based on their maturity level using digital technologies. These segments ranged from beginners with little to no experience to what MIT and Capgemini referred to as "digital masters," or those organizations that rely heavily on digital technologies to drive efficiencies in their business.

In addition to their use of the technology itself, digital masters were distinguished by their "strong overarching digital vision," meaning they communicated, from the top-down, the big-picture strategy driving the use of these technologies.

At a press event Tuesday announcing these results, Didier Bonnet, ‎senior vice president and global practice leader, Digital Transformation at Capgemini, said his biggest takeaway from the study, in terms of how to help clients grappling with their own digital transformations, is the importance of laying a strategic foundation before just diving into the technical details.

"For me, the key to it is that people don't spend enough time upfront planning for this. If you don't have a layer of governance and management behind it, what you find is you have ... 20 mobile applications dong roughly the same thing and not communicating with each other," Bonnet said. "So you aren't really leveraging a lot of the potential of the technology investment."

MIT and Capgemini found that digital masters are, on average, more than 26 percent more profitable than their peers in the same industry and have a market valuation that's roughly 12 percent greater.

The high-tech industry -- perhaps unsurprisingly -- is leading the charge on digital maturity, with roughly 38 percent of the companies surveyed falling under the digital master designation. The banking, insurance, hospitality and telecom industries rounded out the top five.

Regardless of the industry they are targeting, solution providers, Bonnet advised, should "eat their own pudding," in terms of implementing and carefully planning their own digital transformations.

"To address this market, from a consulting side, we have pretty much reoriented all of our practices around digital. Even the most traditional practices like supply chain, for instance, are looking at the impacts of digital," Bonnet said. "We have launched an internal social platform many years back. ... We try to do to ourselves what we [tell our clients.]"


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