The case for digital reinvention across all industries and sectors has been clear for some years: companies that embrace digital will outpace their peers financially and benefit from greater profitability and higher revenue growth. The pace of change, however, is slow. Research published by McKinsey in showed that, despite the apparent ubiquity of digital technologies in day-to-day life, industries were less than 40 percent digitized on average.
Even with relatively deep penetration of technology in media, retail, and high tech, traditional industries contributed to the lag and continue to do so today Exhibit 1. The global findings pointed to pressures on revenue and profit growth as a result of the reduced economic friction and the competition that digitization enables Exhibit 2.
In , digitization had already taken out, on average, up to six points of global annual revenue and 4. The impact on revenues and profits will persist with further digitization, widening the gap between the bottom quartile of companies and those at the top that are capturing disproportionate gains through their digitization efforts.
Most companies, it seems, are not sufficiently bold in the magnitude and scope of their digital investments. Two pathways exist depending on where businesses find themselves on their digitization journey. Fast-forward two years: McKinsey finds that companies, on average, have made little progress in their efforts to digitize their business models. Those that have made strong gains from digitization have followed either the disruptor or the fast-follower model.
From the mining and chemical industries to retail, many traditional businesses are only just beginning to implement digital strategies. One of the biggest differentiating factors between the top economic performers and others is how quick and adaptable they are in setting, executing, and adjusting their digital strategies. There is much discussion across all industries about the various ways to speed up digital delivery and drive closer alignment between business and IT in South Africa.
