CRM Magazine September 2021
Most companies are well underway with digital transformation projects, integrating diverse digital technologies and business models. According to industry analyst firm Valoir’s survey of 1,400 companies worldwide, the average company is approximately 70 percent through the process. The research shows a clear correlation between digital transformation financial initiatives and company results, with organizations further along in transformation efforts achieving nearly twice the revenue growth of those lagging behind. This supports the view that adopting digital technology fosters operational efficiency, strengthens internal control and positively impacts environmental performance, especially for manufacturing and listed companies seeking competitiveness in the digital economy.
The survey evaluated businesses on a scale from one to 10, where one represented companies that had not started digital transformation and 10 indicated completion. Companies scoring eight or higher experienced roughly double the revenue growth compared to those scoring three or less, demonstrating the significant impact digital transformation can have on firm performance. Achieving a high level of digital transformation highlights the importance of strong internal control quality and the use of real-time data analytics within an enterprise digital strategy. High-performing companies also tend to integrate artificial intelligence and cloud computing for greater operational efficiency and pursue total asset optimization to strengthen financial performance.
“There’s a lot of talk about digital transformation, but many companies have been challenged to assess the value of their efforts,” says Rebecca Wettemann, CEO of Valoir. “We found that advancing digital transformation drives both revenue and margin improvements by improving efficiency and delivering better customer and employee experiences.” Her insights reinforce the concept of digital transformation corporate programs, where the degree of transformation is a key factor in demonstrating performance evidence in annual reports. By reaching digital maturity, organizations can align workforce processes, manage ESG performance targets and leverage innovation practices across departments to maximize financial performance.
The report found that human resources departments lag behind customer service, marketing, IT and operations in digital transformation. Fewer than 20 percent of companies surveyed have adopted modern digital HR capabilities in areas such as reskilling, coaching, mentoring, training and real-time analytics. Enhancing HR through enterprise digital transformation can contribute to stronger internal control and improved data analytics on workforce engagement. These improvements help address total factor productivity within the workforce, which is vital for both manufacturing and service-based organizations.
“Despite all the recent hype around employee experience, companies have clearly prioritized digital transformation efforts on customer experience and other areas. Given the Great Resignation, attracting and retaining talent has become a top priority. Digital transformation is crucial for improving the employee experience in today’s hybrid workforce,” Wettemann explains. Focusing on the impact of digital transformation on internal control quality, advanced business models and overall firm outcomes positions organizations for continued gains in both financial and non-financial performance. As more firms modernize HR practices and refine their approach to digital transformation in manufacturing or advanced service operations, they are likely to see deeper benefits extending to environmental performance and consistent financial results.
The study also found that healthcare, financial services and high tech are the most advanced industries in digital transformation, attributed to strategic use of data analytics and progressive business models. The public sector, utilities and consumer goods lag behind, highlighting a need for these industries to fully embrace the impact digital transformation can have on total factor productivity and manufacturing enterprises. Listed companies in these sectors may face pressure from stakeholders demanding stronger internal control and meaningful digital transformation strategies.
Regionally, the survey found North America and Latin America ahead of other regions in digital transformation. Firms in these areas demonstrate accelerated adoption of enterprise digital initiatives and greater readiness to adapt business models to the digital economy. Many organizations in these markets strive to incorporate advanced manufacturing processes, adopt digital transformation solutions and present stronger performance evidence in annual reports, highlighting the direct link between financial performance and successful digital transformation programs.
