Top-Performing Companies Tie Tech Spend to Strategic Priorities

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Jan 25, 2024, 09:15 ET

They Plan and Spend Differently, and Address Tech in the Boardroom, According to L.E.K. Consulting Study

BOSTON, Jan. 25, 2024 /PRNewswire/ -- Companies are spending heavily on digital technologies but the top performers are doing it differently – they are spending on their most critical business priorities and building technology solutions, such as AI-driven decision-making, advanced cybersecurity, supply chain management and customer experience systems, that stretch across the whole organization and support its biggest strategic goals. They are making digital a top boardroom priority.

Their approach may give them a lasting competitive advantage over businesses that are still taking a traditional approach – investing in technology for discrete, tactical solutions for siloed functions like manufacturing or human resources.

Those are among the key findings of the 2023 Enterprise Digital Impact Study by global strategy consulting firm L.E.K. Consulting. The study, based on execution of hundreds of projects, interviews, and a survey of 1,000 U.S. executives across multiple industry sectors, shows that businesses that perform best according to their self-determined measurements set different and fundamentally more strategic priorities when they plan and execute digital investments.

"What sets top performers apart is that they are moving beyond digitizing the work they already do and instead are harnessing digital solutions as a powerful vehicle for future growth," said Darren Perry, Managing Director and Partner in L.E.K. Consulting's Digital practice. "They are rethinking how they go to market, they are building AI-driven products, and they are using digital technology to create entirely new markets."

"When digital leaders think about technology, they are thinking about how to interconnect solutions across functions to support business investments. They are coordinating their technology investments at the highest level of the organization," said Chuck Reynolds, Managing Director and Partner in the firm's Digital practice.

Among the study's key findings:

Top performers focus digital strategy on growth and impact. Executives from top-performing organizations were more likely than others to report they have adopted digital strategies designed to drive growth and increase organization-wide impact and effectiveness. Among the areas of focus: improving organizational efficiency (44% for leaders vs. 34% for others), improving supply chain management (43% vs. 28%), optimizing sales reach and effectiveness (41% vs. 28%) and launching improved products and service offerings (37% vs. 29%).
Top performers make it a priority to invest in solutions that drive core business objectives. Asked which investments were most important on a scale from 1 (least important) to 5 (extremely important), executives from top-performing organizations gave highest marks to foundational technologies that drive advancements across the business, including cybersecurity (averaging 4.5 vs. 3.5), enterprise-wide data and productivity applications (4.5 vs. 3.5), advanced analytics (4.5 vs 3.0) and agile ways of working (4.0 vs. 3.0). They also gave highest marks to "digital enablers" that give a business more advanced capabilities or make it more competitive – these include AI in general (4.5 vs. 3.5) and generative AI (4.0 vs. 3.0), customer data solutions (5.0 vs. 4.0), the Internet of Things (4.5 vs. 3.5), robotics (4.0 vs. 3.0), blockchain (4.0 vs. 3.0) and digital simulations (4.0 vs. 2.5).
Their programs are paying off. Top performers were dramatically more likely than others to report their digital investments were successful or highly successful – rating a 6 or 7 on a scale of 1-7 – at launching or improving products or services (95% vs 54%), improving supply chain management (94% vs. 62%), optimizing sales reach and effectiveness (94% vs. 58%), increasing business resilience and efficiency (91% vs 57%), improving operational efficiency (81% vs. 63%) and improving customer experience (79% vs. 62%).
They are making digital technology a boardroom priority. While a large number of executives from all companies (77%) reported that digital strategy had high or critical importance in the boardroom, the figure for top-performing organizations was notably higher (99%).

"Digital is not a level playing field," Jenny Lieb, Director, Digital Strategy at L.E.K.

"The gap between high-performing companies and others is likely to widen in the future as leaders continue to invest and to grow even more ambitious about their digital strategies and investments."

About L.E.K. Consulting
We're L.E.K. Consulting, a global strategy consultancy working with business leaders to seize competitive advantage and amplify growth. Our insights are catalysts that reshape the trajectory of our clients' businesses, uncovering opportunities and empowering them to master their moments of truth. Since 1983, our worldwide practice — spanning the Americas, Asia-Pacific and Europe — has guided leaders across all industries, from global corporations to emerging entrepreneurial businesses and private equity investors. Looking for more? Visit www.lek.com.

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SOURCE L.E.K. Consulting