Digital Transformation Initiative Maximizing the Return on Digital Investments

Digital technologies offer new ways for companies to grow
and be more productive. However, it is not completely clear
how investments in new technologies impact productivity.
This White Paper addresses that issue by analysing the
business value impact of new technology investments
and providing recommendations for maximizing that value.
It includes an econometric analysis of the productivity
impact of new technologies using data from a sample of
over 16,000 companies from 14 industries and an analysis,
through interviews and workshops with industry leaders, of
key enablers and execution principles to maximize the return
on digital investments.
The analysis of productivity and new technology
investment data led to the following observations:
– Companies in the sample realized revenue and
productivity growth over the past decade.
– However, these gains were not evenly distributed. The
growth was driven by a small group of industry leaders
(the top 20% of companies by productivity within each
industry)1
.
– Companies are investing in new technologies to
accelerate growth and productivity. From 2016
to 2020, total new technology spend is expected to
increase by 13% compound annual growth rate to $2.4
trillion per year, led by the internet of things (IoT) (42% of
total spend in 2020)2
.
– These investments are made to drive new efficiencies,
enhanced customer experiences and new business
models, with new efficiencies being the most prominent
driver to date.
– While there are concerns about technologies, such
as artificial intelligence (AI) and robotics process
automation, causing worker displacement, overall
employment levels have remained stable over the past
decade.

The quantitative analysis of companies’ return on digital
investments resulted in four key findings:
1. The return on investment in new technologies is
positive overall. The productivity increase is three times
higher when technologies are deployed in combination.
2. The return on digital investments varies by industry,
and industry leaders achieve a greater productivity
increase from investments in new technology than
followers (70% vs 30%). The leaders in a majority of
industries tend to be larger companies by revenue.
3. Asset-heavy industries realize more value from
robotics; asset-light industries realize greater value from
mobile/social media, primarily led by efficiency-driven
opportunities.
4. While industry leaders realize higher overall return
from robotics and mobile/social investments, followers
have gained more from IoT and cognitive technologies
(artificial intelligence and big data analytics).
Five key enablers to maximize the return on digital
investments emerged from the discussions with
industry leaders:
1. Agile and digital-savvy leadership: Maintaining a
strategic vision, purpose, skills, intent and alignment
across management levels to ensure a nimble decisionmaking
process on innovation
2. Forward-looking skills agenda: Infusing a digital
mindset in the workforce by making innovation the
focus of training and hiring programmes
3. Ecosystem thinking: Collaborating within the value
chain (e.g. with suppliers, distributors, customers) and
outside (e.g. start-ups, academia)
4. Data access and management: Driving
competitiveness through strong data infrastructure and
warehouse capability combined with the right analytics
and communication tools
5. Technology infrastructure readiness: Building the
required technology infrastructure to ensure strong
capabilities on cloud, cybersecurity and interoperability
In addition, industry leaders also emphasized that the
successful execution of these enablers would require
companies to establish clear ownership of the digital
transformation, invest in specific use cases (vs individual
technologies) and follow an outcome-based approach that
is agile and flexible to allow failure at minimal costs.

Fuente: WEF

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