Cloud computing and artificial intelligence (AI) may now be table stakes in today’s business investment landscape, but scaling these digital initiatives — and maximizing their return — remains a challenge for business leaders, according to the Ernst & Young LLP (EY US) Digital Investment Index, conducted by EY-Parthenon, the strategy consulting teams of the EY organization.
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The survey polled 1,001 global C-level and executive decision-makers at companies with $1b+ in annual revenue between September and November 2020 to reveal how they develop their own digital strategy and how they can enhance their RODI. Among its key findings: CEOs, chief digital officers and other senior executives are not yet aligned on investment strategies and struggle to measure RODI.
“Budget constraints in the pandemic economy and transformation fatigue across organizations threaten to turn digital promises into mere buzzwords — unless organizations can prove the value of their investments to the bottom line,” said Peter Ulrich, EY-Parthenon Principal, Digital Strategy and Transactions, Ernst & Young LLP. “EY data shows that executives have still more work ahead to bolster their digital investments and to realize results. A strategy which coherently outlines both growth and savings across an organization is necessary to carving a winning path forward.”
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Digital leaders focused on boosting resilience and future-proofing the enterprise
Very few business leaders have been able to successfully steer their digital investment strategy toward differentiating upside — just 9% of respondents claimed to do so. Among these digital leaders, though, there were a handful of common themes that helped them achieve stronger returns; in fact, leaders reported roughly 40% more revenue growth than non-leaders.
Digital leaders are accelerating new digital products, services and business models, and have a clearly defined strategy to do so (48% vs. 36% of others). Their strategies commonly included a shift in focus from in-house development to mergers and acquisitions (M&A) and partnership (64% vs. 39% of others) and a reprioritization of digital initiatives to those with immediate cash returns, while discontinuing unnecessary initiatives (58% vs. 37% of others). That technology mix is more likely than others to include investments in the internet of things (IoT), cloud computing and advanced cyber defense — showing that leaders are creating a strong foundation (through cloud and cybersecurity) to rapidly accelerate emerging technology solutions, such as AI and IoT.
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