How Digital Drives Financial Performance

How Digital Drives Financial Performance

There is a case being made that the coronavirus (COVID-19) pandemic has accelerated by five to 10 years the transformation of the American economy by forcing businesses to push ahead with digital solutions and strategies in a stay-at-home world. So, whether it’s a company finding ways to conduct business virtually, or a meatpacker or warehouse quickening its adoption of AI-enabled machines, digital transformation may be a crucial indicator of a company’s ability to enhance financial performance over the next decade.

An article by Deloitte, “Uncovering the Connection Between Digital Maturity and Financial Performance,” identified seven digital pivots that, when applied by companies, tend to lead to better financial results.1

The seven digital pivots that surfaced in Deloitte’s digital transformation survey were:

  1. Flexible, secure infrastructure that balances security and privacy, while offering the flexibility to respond to fluid business needs.
  2. Data mastery that enables the aggregation and monetization of underutilized data by embedding it into products, services, and operations to enhance efficiency, revenue growth, and customer engagement.
  3. Training programs that focus on digital competencies to upgrade staff capabilities and create a company-wide open network for all businesses to access.
  4. Ecosystem cooperation with external business partners to broaden access to technology and knowledge to increase the organization’s capacity to improve, innovate, and grow.
  5. Intelligent and continuously-improved workflows that maximize human and technological capabilities.
  6. Unified customer experience that integrates human and digital interactions for a more enjoyable and useful customer experience.
  7. Business model adaptability that facilitates an array of business models and revenue streams to accommodate changing market conditions and augment profitability.

Greater Digital Maturity, Better Financial Results

Deloitte analyzed respondent companies’ digital maturity and their financial results and found that 45 percent of higher maturity companies had net revenue growth greater than the industry average, while only 15 percent of lower maturity companies managed above-average growth. These results were mirrored when measuring the net profit margin.

They also found that data mastery and intelligent workflows had the strongest impact on business results.

The benefits of digital transformation are not limited to financial measures, though. It can also help companies meet society’s expectations of social responsibility and stakeholder consideration. For instance, digital technologies can be used to address many of the priorities set by the United Nations Sustainable Development Goals or be employed to improve workplace diversity.

As advisors evaluate new investment opportunities, they may want to consider how their leading investment candidates employ these pivots across the organization.



Please reference disclosures: 

About The Author


    Subscribe to receive a monthly recap of our three most popular posts.

    Recent Videos