How can your digital investment strategy reach higher returns?

The Digital Investment Index reveals companies are doubling down on tech investments but struggle to clearly define their digital strategy.

In brief
  • Companies continue to invest money into digital transformation efforts, with many planning to up spending again this year, according to a new EY-Parthenon survey.
  • After years of heavy digital investment, companies are feeling the heat to transform operations, move digital efforts forward and show results.
  • While inorganic vehicles are chosen most often, success hinges on getting it right with respect to the proper mix of organic and inorganic vehicles.

Companies are making record-breaking investments in digital transformation this year, up 65% from 2020, according to the EY-Parthenon 2022 Digital Investment Index (DII).

Speed and success are critical, as nearly three-quarters of executives (72%) say they must radically transform their operations during the next two years to compete effectively in their industry — up from 62% in the EY-Parthenon 2020 report. Across all sectors, companies will need to focus on scaling technology solutions and realizing benefits as they step up their investments in high-priority projects.

Report highlights

The 2022 DII report, which is based upon a study of 1,500 global C-level executives with digital transformation and technology decision-making responsibility across industries worldwide, was conducted from January to March 2022. It encompasses three main areas:

  1. Trends in digital spending and returns
  2. How companies’ digital transformation efforts are maturing
  3. Lessons learned from digital leaders1

More companies are measuring digital returns today, but progress is slow, with many saying they do not know how much they spent on digital last year or what value it yielded.

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Chapter 1

Trends in digital spending and returns

To accelerate digital transformation, companies are increasing spend and using inorganic investments; but measuring returns is a challenge.

Companies are accelerating their digital spending in 2022. This is in response to mounting pressure to quickly bring technology-enabled products and services to market and achieve efficiencies.

Executives plan to allocate 5.8% of their revenues to digital as compared with 3.5% in the 2020 survey. To understand the significance of this increase, consider that for a company with $10b in revenues, 5.8% spending on digital would mean a bounce from $350m to $580m — an increase in spending of 65%.

Companies increasingly measure returns on digital investments

More executives are also measuring digital returns. In the 2020 survey, only 23% of respondents measured RODI. Today, 41% are measuring returns.

And many are being rewarded for their efforts. Companies that measure RODI expect a 7.6% average return on digital investment in 2022, which, if achieved, would be significantly higher than the 4.4% RODI they reported achieving in 2021.

Conversely, many still struggle to measure and achieve results from digital investments. The concept of measuring return on investment for digital projects, programs and use cases is still not applied systematically. Three out of five companies don’t know how much they spent in digital operating or capital expenditures last year or what value it yielded in incremental revenues, reduced cost and working capital.

Measuring returns on digital investments


of companies are measuring returns, up from 23% in 2020.

For companies seeking to accelerate digital transformation efforts, it is critical to be transparent on digital use cases. To do this, companies can:

  • Develop a systematic approach to their digital capital allocation with the right governance in place
  • Focus on high-value use cases where companies have successfully validated how a digital business case has positively impacted a key aspect of the business
  • Set clear guiding principles to drive the digital capital allocation strategy, while simultaneously considering corporate strategy goals, the company’s tech portfolio, return on investment and potential impact to the business
  • Company spotlight: ABB uses acquisition strategy to move beyond EV-charging hardware to energy management software and services

    ABB, a global technology leader, works closely with utility, industry, transportation and infrastructure customers to help write the future of industrial digitization and realize value. During the past five years, ABB has made eight investments in developing battery or electric charging technology.

    In 2021, ABB announced plans to spin off its e-mobility business into a separate entity, hoping to raise $750m in capital by spinning off the business to support additional acquisitions and investments. As a key pillar of its innovation strategy, ABB has focused on investments that frequently lead to partnerships in developing battery or electric charging technology, including those with In-Charge Energy, AFC Energy and Spear Power Systems. ABB’s long-term goal is to move beyond charging hardware to software and services (e.g., energy management) to expand its total addressable market.

    As a partner, ABB also works with more than 100 universities to advance academic research in fields such as robotics to access new opportunities and augment internal capabilities. In doing so, ABB is positioning itself to help meet the needs of manufacturers, warehousers and distributors that are increasingly creating efficiencies with machines and automating workflows. In 2021, revenue and orders for ABB’s Robotics and Discrete Automation business grew 9% and 29%, respectively, year over year.

    Source: CB Insights

How companies can use inorganic investments to accelerate innovation and increase value

Most survey respondents (55%) are choosing inorganic investments, such as corporate venture capital (CVC), M&A and partnerships, over building capabilities in-house to accelerate their digital journey.

Inorganic investments are attractive due to easier access to capital, increased quantity and improved quality of technology targets. They also provide an accelerated pathway to access new technologies and fill key capabilities and skills gaps. Today there are more tech partners and targets than ever: in Q4 2021, the number of new global unicorns reached a record high of 959, representing a 68% increase from Q4 2020.3

Accelerating the digital journey


of companies are choosing inorganic investments over building capabilities in-house.

When deciding on inorganic investment vehicles, companies say they prefer partnerships to gain financial returns with lower capital investment (34%). They also prefer M&A to gain faster access to new technology and products (32%) and favor CVC (45%) to support new market expansion and have early access to forward-looking technology or assets.

Companies say they are using the entire suite of investment vehicles to drive their innovation strategy. This is critical, as different types of investments offer different risk and return profiles. While most executives (87%) indicate that their most recent inorganic investments met or exceeded expectations, many are unsure of how to optimize their inorganic mix of investment vehicles.

Driving the innovation strategy


say their most recent inorganic investments met or exceeded expectations.

To achieve an optimal mix, it is important for companies to break down silos and become more purposeful in synchronizing these investment types with each other. Build, buy and partner decisions should not be made in isolation; rather, they should align with overarching corporate and business unit-specific objectives.

Leading practices for inorganic investments

Companies can lose value by choosing the wrong investment vehicle and not fully weighing the benefits and drawbacks of each option. Likewise, setting up the right incubation structure and building an operating model that links each investment vehicle will improve transparency, efficiency and effectiveness of investments across various stages of maturity.

These considerations can guide decisions:


This investment vehicle is used to support new market expansion, strengthen customer relationships, close capability gaps and leverage startup solutions.


Partnerships typically represent less financial burden compared to other inorganic vehicles.

  • Companies should consider partnership constructs that require commitment from both parties, such as equity joint partnerships.
  • It is important to choose the right partnership vehicle (e.g., equity partnership or joint venture, commercial agreement) based on a company’s unique situation and goals.
  • In some cases, certain partnership options (e.g., licensing, research and development) may yield greater returns in a shorter time frame.
Potential risks

While partnerships can help drive value by leveraging the other companies’ capabilities, drawbacks may include the sharing of business decisions, culture mismatch, misaligned commercial or go-to-market aspirations, splitting profits, and losing full rights to intellectual property.


Companies often structure corporate venture funds as a separate entity or “branded CVC” fund to operate with autonomy and keep off-balance sheet investments to capitalize swiftly on venture opportunities.


Companies can use CVCs to learn from startups, identify future M&A opportunities and build an ecosystem of incubators.

  • Define governance and operating models that link to the parent company with a dotted line to the chief executive officer (CEO) or chief financial officer (CFO) to empower future-think investment decisions
  • Determine investment strategy in terms of fields of play, technology gaps and strategic goals that tie into larger outcomes.
  • Build off-balance sheet investment structure to avoid impacting financial reporting
  • Develop an attractive compensation package to secure high-quality venture capital and startup talent and maintain a differentiated incentive plan to foster innovation
  • Build strong industry relationships to be able to tap into the startup ecosystem
  • Company spotlight: Qualcomm creates its own reality with shift from XR investor to acquiror

    Wireless technology innovator Qualcomm has been a steady investor in the extended reality (XR) space since 2007. The year 2021 marked a shift in Qualcomm’s XR investment strategy, moving it from investor to acquiror.

    The company purchased three companies — Wikitude, TwentyBN and Clay AIR — to augment its existing XR capabilities and platforms designed to connect physical and digital spaces. Qualcomm Ventures also continues to invest through targeted investment funds for specific technologies, including its $200m 5G Ecosystem Fund directed toward 5G applications and networking solutions.

    These investment accelerators are helping the company find new opportunities to be an early leader in emerging areas like the industrial internet of things (IIoT) and connected vehicles.

    Source: CB Insights


M&A is often pursued when speed is needed to acquire technology or new products.


Successful companies recognize the differences between startup acquisitions and traditional M&A transactions and consider:

  • Whether to integrate the target company or keep it as a stand-alone entity
  • Value sources and startup valuations and conduct a thorough product due diligence
  • The right integration model (consider timing and level of integration to improve value and retain talent)
  • Operating models and address cultural differences and ways of working
  • A plan to scale the acquired capabilities and share during early round of negotiations
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Chapter 2

Key findings: how digital transformation efforts are maturing

Many companies are progressing in their digital journeys while others are still lacking a defined strategy with clear implementation plans.

In a sign of digital transformation maturity, the DII reveals that more companies are moving from the initial stage of “building” digital capabilities to “running” or scaling technology solutions and are beginning to see benefits. In 2022, 31% of digital spending is being dedicated to “building” capabilities, while 69% of spending has shifted to “running,” in comparison to 36% and 64%, respectively, in 2020. This suggests that companies are pivoting from core internal operational efficiencies to new digital products and services that enable them to get closer to their customers and generate revenue.

Another indication of companies’ digital journey progression can be seen in the scaling of existing technology investments. For example, many companies have been building data platforms through investments in cloud and IoT. The number of companies reporting that they are now realizing full benefits of their investments in cloud, IoT and AI increased 54% in 2022 compared to 2020. This means they have moved from a proof-of-concept and build phase for key digital technologies to a launch phase.

Overall, companies are setting the foundational elements of digital transformation while moving toward full benefit realization.

Strategy is critical to securing funding for digital projects

A clear strategy, business case and proven agile capabilities are prerequisites to secure the right level of funding. The survey indicates that more companies are connecting their digital strategies with successful implementation, e.g., culture, agility, clear accountabilities, measurement and execution pathways. But many companies still show room for improvement when it comes to defining an actual digital strategy with clear implementation plans and executive accountabilities.

Only 16% of respondents strongly agree that they have a clearly defined strategy for digital — an essential factor in the success of digital investments. However, the numbers do suggest progress compared to the last survey (see Figure 2).

Although companies say they expect to have easier access to capital during the next two years, more than half of executives still face budget and funding issues for their digital programs. For example, a life sciences company had a portfolio of 89 digital product and market-facing applications. Less than 25% of these projects resulted in additional revenues. It was important for the company to focus on the most valuable digital products and services, then to establish a clear business case based on technology platform, capability requirements and addressable market. Based on this new scope with a clearly defined path to implementation, the chief financial officer was able to establish a funding plan over the next three years.

Companies continue to focus on customer experience in 2022

Customers remain at the heart of most companies’ digital priorities, with respondents noting that improving customers experience is a leading goal. Specifically, 42% of executives say customer acquisition, retention and experience will be one of the top priorities during the next two years.

Customer experience (CX) also ranked highest in positive outcomes from important digital investments. More than half (55%) of executives indicate “improved CX” as an area where they have seen a positive impact from their digital investments. But to accelerate improvements and move to more predictive models and personalization in this area, companies will need to harness essential customer data.

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Chapter 3

Lessons from digital leaders

Leaders are progressing their investments in more sophisticated technologies and considering company culture when mapping digital strategies.

A select group of executives — called digital performance leaders — is building momentum and separating itself from the pack in terms of digital investment success.

This group (126 companies, representing 8% of the survey sample) is defined as those companies that (1) estimate their RODI to be more than 8% in 2022 and (2) strongly agree that their organization leads others in the success of their digital initiatives. Leaders are equally distributed across major regions including Asia-Pacific; Europe, Middle East, and Africa (EMEA); and the Americas. Industries represented range from telecommunications, media and technology (TMT) to infrastructure and health care.

What a digital performance leader looks like

Our survey suggests that leaders are more likely to track performance on digital investments, generate greater financial impact than others and mature their digital investments faster:

  • Leaders report an average RODI of 10.8% as compared to all others who reported an average RODI of 5%.
  • And almost one in five expect their digital investments to contribute to revenue growth during the next two years, as compared to 11% of all other survey respondents (Figure 4).

How digital leaders differentiate themselves

Leaders are achieving nonlinear or outsized value creation by investing heavily in foundational capabilities and building their teams, technology and data platforms. Leaders are now moving on to the next stage of their digital transformation journey, with the vast majority (87%) taking a centralized governance and oversight approach to benefits and associated cost outlays. Finally, 79% of them have a formal program to identify, measure and report digital investment outcomes.

Taking a centralized governance approach


of digital leaders have a formal program to identify, measure and report digital investment outcomes.

Leaders do not radically differ from the total survey population when it comes to their industry, share of revenue devoted to digital investments or investment-vehicle mix. Where they do distinguish themselves is in their company culture. Forty-six percent consider necessary culture changes when mapping digital strategies.

Digital leaders note that they:

  • Develop strategies that can be adjusted in the event of unforeseen disruptions, and 40% say they maintain a fail-fast culture that encourages employees to be unafraid of experimentation and allows for increased agility and speed. Leaders are also much less likely than others to cite talent and skills gaps and lack of alignment among organizational units as obstacles to achieving a high RODI.
  • Empower team leads or change agents to socialize and champion digital projects requiring more scrutiny. A vast majority of leaders have also taken to heart lessons of the pandemic: ensuring flexibility in their workplace, developing new strategies to attract talent and formalizing approaches to measure digital investment outcomes.
  • Decouple their innovation operating models, incentive structure and measures of success from the mother ship to encourage “futureproofing.”
  • Focus their digital investments on innovation and new products and services, succeeding by being judicious about investing and scaling the foundational technologies so they can quickly focus on advanced initiatives aimed at bringing greater integration and agility to the operating model. They are successful at bringing together corporate, business units and functions to collectively focus on specific customer needs. More than half of leaders (55%) say they have seen a positive impact from their 2021 digital investments in terms of improved customer experiences and successfully launching new digital products and services (58%). Going forward, 48% say launching new products and services is a top goal for their investments.
  • Take a lean portfolio approach, carefully prioritizing use cases and establishing a formal funding process with milestones tied to the investment and corporate objectives. Leaders create an outcome management office-style governance program with an agile operating model to provide rigor, speed and meaning to investment decisions. This office can also track user and customer feedback using formalized, real-time dashboards to provide direct input into current and future strategies. 
  • Company spotlight: Sony makes mobility and AI ecosystems a priority

    Sony is an electronics and media giant that has quickly expanded its footprint in the mobility space through investments and partnerships.

    In 2022, Sony created a new operating company, Sony Mobility, with the initial task of launching the company's Vision-S electric vehicle. To this end, Sony entered a strategic alliance with Honda in March 2022 to develop and sell electric vehicles and mobility services.

    A notable precursor to Sony Mobility was a 2018 taxi-hailing joint venture, Minnano Taxi. This venture and other mobility investments like what3words, along with existing automotive sensor and infotainment capabilities, provided initial exposure to a rapidly evolving mobility space. 

    At the same time, Sony has remained an aggressive investor in AI, with 25 total investments and partnerships since 2017. In 2020, it launched Sony AI, a wholly owned subsidiary devoted to the research and development of AI solutions. Through a mix of acquisitions, partnerships and investments in startups, Sony has been able to turn AI ecosystem efforts into product advancements in the gaming and electronics space. Furthermore, Sony AI, Sony Mobility and Sony Interactive Entertainment have joined to explore the full capabilities of the entertainment and sensing business.

    Source: CB Insights

The next frontier for digital leaders

While others choose inorganic investment vehicles in search of market expansion or for near-term financial gains, leaders use inorganic investments to learn and experiment, strengthen existing relationships, and support cultural transformation.

Leaders are also distinguished by the progress of their investments in more sophisticated technologies. Leaders are specifically reporting full benefit realization of physical robotics and automation (72% vs. 36% of non-leaders) and AI (39% compared to 19% of non-leaders). While most companies plan to focus their investments on cloud and IoT as they continue to build foundational data and analytics capabilities, leaders are more likely than others to invest in even further advanced technologies such as blockchain (30% vs. 20% of non-leaders) during the next two years. This suggests that while many companies are progressing in their digital journeys, leaders remain a step ahead.

Key takeaways

Analysis of the 2022 DII survey indicates these key takeaways:

  • Companies continue to make heavy investment bets on digital transformation, with most seeing it as a top business imperative and crucial to survival.
  • Success may hinge on getting the “right mix” of organic and inorganic investment vehicles.
  • Many executives are optimistic that spending increases will nearly double their return on digital investments (RODI)2 this year compared to last year.
  • More companies are measuring digital returns today, but progress is slow, with many saying they do not know how much they spent on digital last year or what value it yielded.
  • A select group of executives — called digital performance leaders — is building momentum and separating itself from the pack in terms of digital investment success.


Companies undergoing digital transformation should consider the following actions to accelerate their journey, including:

  • Establish clear rules to drive capital allocation strategies, while simultaneously considering corporate strategy goals, the company’s tech portfolio, return on investment and potential impact to the business
  • Weigh the use of all investment vehicle types from a risk-and-rewards standpoint
  • Put customers at the heart of digital strategies by harnessing essential customer data to improve predictive models and personalization
  • Establish governance, key metrics, and realistic timelines and goals to achieve positive investment results


With record levels of digital investments on the horizon, driven by a need for speed, CEOs and other C-level executives are under more pressure than ever to select the right mix of investment vehicles and demonstrate measurable returns on digital investment. Making wise investment decisions and generating a high RODI remain challenging since the last iteration of the Digital Investment Index. Capital allocation has become even more critical to success, as well as having flexible strategies and a company culture to integrate digital investments with greater agility.

Strengthen your digital investment strategy with these five steps:

  1. Capitalize on your digital spend: Set up clear guiding principles to drive your digital capital allocation strategy, considering your corporate strategy goals, tech portfolio, ROI and potential impact on the business.
  2. Develop an integrated inorganic growth strategy: Deciding whether to build internal capabilities or use inorganic investments (e.g., buying or partnering) to meet innovation goals will determine how quickly a company can bring new products and services to market and deliver RODI.
  3. Establish a strong digital foundation first: Invest in foundational technologies first, putting the right building blocks in place before looking into more advanced digital initiatives.
  4. Create a playbook to scale your digital initiatives: Establish a formal process for prioritizing, developing and scaling your digital initiatives.
  5. Establish a strong governance model to measure your success: Set metrics, review key performance indicators, assess impact on portfolio value realization and adjust accordingly.

EY-Parthenon contributors to this article include Isaac Branaum, Shai Eilat, Ankur Sharma, Daniel Weil, Andy Youn and Richard Yang.

  • CB Insights methodology

    Companies with spotlights in this report had the top 5% investment and acquisition activity within their sector. CB Insights analyzed their acquisitions and investments in emerging technology areas (artificial intelligence, robotics, blockchain, etc.).

  • Show article references#Hide article references

    1. Leaders are defined as companies that achieved 8%+ RODI in 2021 and answered “Strongly agree” to the survey statement “My organization leads others in my industry when it comes to the success of digital initiatives.”
    2. “Digital” is defined as business solutions and use cases that are enabled by emerging technologies such as AI, blockchain, apps, robotics, automation, IoT and cloud with the goal to drive internal efficiencies and incremental revenues by launching new products and services.
    3. Research Report: Venture Trends 2021, CB Insights.


The EY-Parthenon Digital Investment Index is a survey of C-level executives from large companies around the world, conducted by Oxford Economics between January and March 2022. Results are based on interviews with 1,500 global corporate executives about their digital strategies and investment results. Respondents include companies from more than 30 countries, across eight industries.