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A major cruise ship company was missing out on significant revenue because its guests didn’t know about critical aspects of their vacation: ship amenities and adventure options. The company also needed to meet the demands from a new generation of customers who were digitally more adept — as nearly half of cruise passengers were under the age of 34.
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Read moreThe company personalized and digitized on-board experiences and tracked preferences from the moment customers boarded the ship — for example, vacation planning apps, virtual reality videos of shore excursions and augmented reality features. It also hired digital-savvy leaders and worked with EY-Parthenon to build an ecosystem of strategic partners to manage the transformation. These efforts positioned the cruise liner to capture significant passenger growth.
From travel to industrial to life sciences companies, organizations that get their digital transformation efforts “right” are reaping significant rewards. However, many companies that have invested heavily in digital transformation are not seeing their investments pay off – and the pressure to show results is mounting.
EY-Parthenon identified 9% of a 1,000+-respondent sample as “digital leaders” in the EY-Parthenon Digital Investment Index study. These leaders achieved roughly six percentage points more return on digital investments compared to non-leaders and reported stronger revenue growth.
Leaders clearly see M&A and partnerships with tech natives as a critical lever for a successful digital investment strategy with nearly three-quarters of executives noting that they are shifting to M&A and partnerships to accelerate digital initiatives. The survey results also show leaders:
The technology mix used by leaders is more likely than others to include investments in internet of things (IoT), cloud computing, artificial intelligence (AI) and advanced cyber defense.
Digital solutions in action: A $3b mid-tier mining company in Australia invested in AI and machine learning capabilities to build digital twins for its milling operations. EY-Parthenon helped the company develop the “twin” to run in parallel to the legacy system to predict optimal operational setpoints, identify ways to increase throughput, improve uptime and increase yield quality – all leading to a $50m+ business value improvement.
Digital solutions in action: A leading US-based retail pharmacy player was facing questions on operational performance and its retail business model. EY-Parthenon advised the company to acquire technology capabilities critical to drive both operational gains, offer platform-based technology solutions to regional retail pharmacies and build new business models to compete in the emerging e-commerce pharmacy segment. Result: The company’s $100m+ investments in various companies during the last three years are reaping double-digit returns.
Digital solutions in action: One government needed scalable rapid identification, containment and treatment of the COVID-19 virus. With the help of EY-Parthenon, one country’s government rapidly deployed a digital care platform and care accelerator embedded with intelligence and analytics to eliminate barriers to patient outreach, monitor risk groups, understand citizen behavior and manage demand spikes. EY-Parthenon worked with another country on a similar scaled roll-out that resulted in a 28% reduction in emergency visits in the initial stage of the virus outbreak.
Digital solutions in action: A local government tried to increase connectivity among citizens and public services by adapting new digital technologies. EY-Parthenon diagnosis revealed that implementation failed because of unclear digital governance, breakdown in coordination across departments and failure to monitor critical priorities. EY-Parthenon designed an implementation strategy in which a central figurehead was accountable for communication and performance. A new KPI framework also monitored performance, implementation pace and coordination. Result: The governance framework enabled the city to regain the control of the digital agenda.
As companies incubate new opportunities to drive growth and digitize their core businesses, they should continuously assess talent requirements, operating models, investment strategy and funding constraints. Inadequate operating models and a lack of governance and KPIs are often the cause of stalled transformations.
M&A and other inorganic investing options often produce outsized results compared to other digital investment choices.
This EY-Parthenon article is part of a sponsored content series as seen on hbr.org.
Digital transformation remains top priority for companies in all sectors of the economy. But despite heavy investment in digital transformation, many are not seeing results. A recent EY-Parthenon study shows companies that are experiencing success are using M&A and partnerships to increase returns on their investments. They are also taking four key steps to achieve better results including: managing digital spending, aligning on investment strategy, removing barriers to ensure scalability and establishing strong governance.
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