Dive Brief:
- Businesses across sectors on average are only about 40% digitized as of 2016, according to a McKinsey report. While the media and entertainment sector is reaching the digital mainstream, consumer packaged goods, automotive and assembly and financial services companies are lagging, with only minor digital changes.
- While it will take time for companies to become "fully digitized," many sectors have passed the halfway point in their transformations, including retail, high tech and healthcare systems and services.
- Companies with only average or bottom-performing digital upgrades are expected to see a 6.4% decrease in revenue annually, according to McKinsey data. Top performing companies, however, are expected to see a 0.8% annual increase in revenue if the current levels of digitization hold.
Dive Insight:
Promoting the benefits of a digital future is nothing new. Thought leaders and experts are quick to illustrate what could happen to companies that ignore transformation efforts in favor of maintaining the status quo.
Gartner analysts have assured disruption for those companies and IT decision makers who do not create a bimodal strategy, which allows companies to maintain system integrity while planning for the future. To put it more simply, organizations are confronted with two choices: modernize technology or face irrelavance.
Certainly, the dire warning is not an inevitability quite yet. But as more advanced technology enters the enterprise stack, businesses with legacy systems are going to have to figure out how to remain competitive against far more agile competitors.
For most organizations, a digital shift takes time but is not impossible. For example, the airline industry is partnering with vendors to create digital solutions tailored to their needs, rather than developing them in-house. Organizations also take advantage of planned moves to upgrade underlying technology stacks, as was the case with the National Science Foundation.
