Paved with intention: A path to getting financial value out of digital transformation

Introduction

If your organization’s digital transformation effort is falling short of expectations in terms of delivering value, maybe there’s a better approach.

Yes, there may be a better way to successfully implement a digital transformation, at least from a value-creation perspective. In a recent Deloitte Global study, Unleashing value from digital transformation: Paths and pitfalls¹—detailed in Tim Bottke’s book, Digital Transformation Payday (Wiley, 2022)²—significant digital transformation factors that correlate with increased market cap were isolated. The good news: the research found that the right combination of digital transformation actions could unlock up to $1.25 trillion in additional market cap for Fortune 500 firms. On the other hand, this analysis found that the opportunity cost for those firms when a transformation goes astray could be as much as $1.5 trillion.

Value creation can represent a growing challenge for CFOs, as outlined in this year’s CFO Agenda.³ A challenging part of any budding digital transformation can be choosing which technologies to invest in. At a time when purse strings may be tightening and some boards may be demanding greater detail about spending, CFOs can benefit by knowing which actions may be correlated with higher returns. Keeping those in mind, they can map out an end-to-end strategy that leverages investments to help de-risk the undertaking, boosting the odds of realizing the full benefits of complex, multidimensional transformations.

In this edition of CFO Insights, we will examine what the Deloitte Global analysis of 10 years’ worth of financial disclosures—from more than 4,000 global organizations—revealed as to which combinations of technology investments and capabilities yield the most enterprise value. Further, the analysis looked at those actions that can erode value when taken in isolation. The results also shed light on why some companies—despite their stated commitment to implementing leading-edge technology, embracing agility, and fostering a dynamic culture—may still struggle to get financial value out of their digital transformation efforts.

Endnotes

¹ “Unleashing value from digital transformation: Paths and pitfalls,” Deloitte Global, 2023.

² Digital Transformation Payday (Wiley, 2022), by Tim Bottke, inspired the study’s methods and data sets.

³ “The CFO Agenda 2023,” CFO Insights, April 20, 2023.

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