Our extensive data on the digital initiatives at more than 800 major companies around the world provided numerous insights on their strategies, impacts, investments and future plans. The findings below are those that we believe are most important.
Companies in 13 global industries across four regions of the world see their digital initiatives as crucial to business success this decade, and, as a result, they are making major investments. Some 70% say their digital initiatives are either the most important factor in their firm’s success or of ‘major’ importance. Overall, companies will invest an average $113 million this year in digital initiatives that give them an online connection to customers and the products they sell to them. All companies, on average, plan to maintain their spending through 2017 (with projected average spending of $111 million). A select group of companies (4%) will spend at least $1 billion each this year on digital initiatives, and the same percentage plan to spend as much in 2017. (See Section II)
The vast majority of companies (95%) see digital technologies as a critical way to connect to their customers, and are already doing so through mobile apps, monitoring social media comments, providing downloadable digital products, and other means. This is the case for both B2C and B2B companies.
The three industries making the biggest digital investments (media, telecom, and high tech) in 2014 are more likely to reinvent their business models and bring digital products to market than the other sectors. But more than a third of companies in retail, insurance, banking, and utilities believe they too will need to ‘digitally reimagine’ their businesses by the end of the decade. (See Section III)
Big Data is central to digital initiatives. Over the next three years, companies worldwide will spend more of their digital budgets on Big Data and analytics technology to understand their customers’ digital habits. The greatest percentage of spending on the digital five forces will go to Big Data and analytics, which will command 28% of the digital technology budget, followed by mobile devices (20%), social media (20%), cloud computing (19%) and artificial intelligence and robotics (13%). The fact that Big Data and analytics investments are larger than those for the other digital forces shows just how critical Big Data has become to corporate success. (See Section II)
The majority of companies have already brought a digital product or service to market. Some 59% have brought digital products or services to the market, and expect to generate an average $234 million in revenue this year (0.9% of total revenue). (See Section II)
Playing the digital game requires immense investments – or (if investments are limited) revamping and simplifying a company’s existing technology infrastructure. (See Section IV)
The companies whose digital initiatives have generated the most revenue (a group we call ‘digital leaders’3) are more likely to have gained critical business capabilities. These include better demand forecasting, and the ability to determine customer needs for product enhancements and whole new products and services. To develop these capabilities, these companies leverage the digital five forces in different ways. (See Section IV)
Digital leaders are ahead because they have a singular long term strategy that puts customer value at the center, leverage more technologies, centralize digital initiatives, integrate digital technologies with existing systems, and make them more reliable. Companies with the greatest success from their digital initiatives put customer centricity at the core of their digital strategy. (See Section IV)
To avoid going the way of many once powerful companies, firms must begin reimagining their core business models, products and services, business processes (especially customer segmentation approaches), and their workplaces. In fact, nearly a third of the companies we surveyed said they need do so by the end of this decade, even though only 8% said that was their digital strategy today. (See Section IV) In the pages that follow, we explore these and other findings in more detail.