Digital Transformation How to Become Digital Leader

Transcription

1 Digital Transformation How to Become Digital Leader Study 0 - Results Arthur D. Little

2 Table of Contents Executive Summary Deep Dive Appendix (DTI per industry)

3 Executive Summary Study Overview Arthur D. Little conducted the Digital Transformation Study globally and cross-industry. The key findings are summarized in this document. 0 hrs Expert interviews with management representatives +7 Sections have been assessed 00+ Global players have participated 7 Major industry clusters have been covered Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport ) EPC = Engineering, Procurement & Construction

4 Executive Summary Randomly Selected Participants The Arthur D. Little Digital Transformation study covers leading companies across all industry segments +

5 Executive Summary Study Overview Turning Digital has become a well understood imperative. Whilst Digital has commonly found its way into corporate strategies, the path to transform adequately remains unspecified 80% of surveyed companies are digital adaptive only 7% of companies have comprehensive digital transformation strategies in place Progress in Digital Transformation is measured via the Digital Transformation Index (DTI).9 DTI have dedicated central units for Digital % strategy development and implementation 0% perceive lack of digital knowledge across the value chain as their major challenge to overcome Logic: The higher, the better. Measured on a scale from 0 to 0

6 Executive Summary Why Digital Transformation? Digital Transformation is everywhere and impacts everything and everyone Our biggest challenge is to understand the customer and his new behaviors. Products and services need to undergo a digital transformation: we cannot just take physical products and put them online. The market is changing: partners are becoming competitors. Clients are pushing us towards digital transformation: If we don't transform they will move to our competitors. New entrants and fast-moving competitors increasingly capture digital opportunities, indicating the potential of digital in the market. Productivity related to new technologies such as cobots, predictive analytics and additive manufacturing will increase by a factor of 00 over the next 8 years, while costs will be reduced by a factor of 00. Our world has been changed by the expectations of our customers, while our basic service continues to be the same: We need to transform in order to maintain customer satisfaction.

7 Executive Summary Study Overview Some of the below key findings we anticipated beforehand, whereas others have been surprising and astonishing. Digitization will change the competitive environment of all industries significantly. Most industries are already affected by digital disruption or realize that they will be soon. Few companies yet follow a consistent digitization approach for their whole business model. Companies underestimate opportunities in Operations and in Business Model Redesign. There is a huge demand and backlog for the majority to deal with Digital properly. No industry can claim to be a digital front-runner; however, each industry has its outperformers 7. Most companies are either not aware of or ignore potential threats from digital disruptors 8. Companies are too slow in transformation, though facing rapidly evolving digital competition 9. Third-party integration is often underrated as companies still try to solve problems on their own 0. The usage of smart data, and thus also personalized offerings, lag behind Also too little imagination for a renewal resp. overhaul of their business model in a future digital world 7

8 Executive Summary Trends Some major digital trends change yesterday s realities these game changers facilitate great opportunities and will inevitably generate some highly digitized champions Yesterday s Realities Digital Disruption Digital Trends Automotive Telecom & Media Physical product Product-as-a-service Consumption Active creation Energy & Utilities Consumer & Life Science Points of usage Service everywhere Mass production Ownership Personalization Shared across community EPC & Manufacturing 00+ Study Participants Travel & Transport Disconnected No updates Embedded into ecosystem Continuous improvement Financial Institutions Vertical integration Value chain disintegration EPC = Engineering, Procurement & Construction 8

9 Executive Summary Trends Impact on Industries Prominent examples of digitalization can be found in every industry. By nature, each trend s impact varies and so does the industry-specific progress on digital transformation Industries Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport 8 Digital Trends Product-as-a-service Cloud Services Active creation D- Printer Service everywhere Personalization Running Shoes Individ. Hybrid Advisory Model Shared across community Car Sharing Embedded into ecosystem Continuous improvement Value chain disintegration Wifi SW- Upgrade for Car EPC = Engineering, Procurement & Construction Google Car Smart Home Appl. PP Money Transfer Sourcing via Alibaba 9

10 Executive Summary Overview Digital Transformation Framework The survey followed a holistic approach to analyze the relevant sections for digitalization; the questions raised have been mapped to these sections Opportunities and challenges Changes in the firm Changes in competitive environment Maturity of digital strategy KPIs on Digital approach Roles and responsibilities for concept and implementation Product and service portfolio adaption Share of digital sales Changes in development process B Drivers & Challenges Products & Services F A Strategy & Governance C Customer Management Information Technology D Operations & Supply Chain Corporate Services & Control E Digital client share Share of digital sales and interaction Digital marketing share, customer data analytics Flexibility of IT landscape to provide digital capabilities Role of IT function in digitalization Budget dedicated to digital Impact of digital on transparency Maturity of digital support processes Maturity of digital operations Target picture and transformation roadmap Degree of dynamic adaption G Workplace & Culture Business Model Maturity of communication and collaboration Mobility Agile working methods 0

11 Executive Summary Cross-Industry DTI The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric Digital Transformation Index (DTI) Digital centric [score above 7.] Digital oriented [score between and 7.] Digital adaptive [score between. and.0] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company-Specific Deviation to Ø DTI calculated as average of scores for each section

12 Executive Summary Cross-Industry DTI per Sections Average DTI is most advanced in the section Strategy & Governance as well as Information Technology, with a score of however, it still lags behind the virtual star performance Digital Transformation Index (DTI) per Section Strategy & Governance Workplace & Culture Products & Services Information Technologies Corporate Services & Control = Cross-Industry Virtual Star = Cross-Industry Average Operations & Supply Chain Customer Management

13 Executive Summary Case Examples We collected many best practices for each section to share with you A Strategy & Governance B Products & Services C Customer Management Nike x-functional Digital Sports Division Coca Cola Co-Founders Network Cyber-Physical Product Service with Peer-to-Peer Component SBB GoodBox Rail-Transport Smartization Burberry Integrated Customer Experience Real-Time Dynamic Pricing for Profit Maximization Quicksilver Personal Pricing & Rewards D Operations & Supply Chain E Corporate Services & Control F Information Technology G Workplace & Culture adidas Speedfactory In-Store Production Vision Picking using Augmented Reality Cold Chain Quality Management Coca Cola Brand Dashboard Digital Business Launch Factory Cloud-Based Project Staffing European Telco Layered IT Architecture for Quick Process Implementation ICT to Support Industry.0 Gamification in Project-based/ Knowledge Environment

14 Executive Summary DTI Views per Industry The different progresses of industries in Digital Transformation can be investigated when looking at the radar charts, reflecting the 7 sections of the model Cross-industry Automotive Industry Telecom & Media Industry Energy & Utilities Industry Ø.9 Ø.0 Ø.0 Ø. Financial Institutions Consumer & Life Science EPC & Manufacturing Travel & Transport Ø.8 Ø.7 Ø. Ø. ) EPC = Engineering, Procurement & Construction = (Cross-) Industry Virtual Star = Cross-industry average = Industry average

15 Executive Summary Average DTI per Industry On average, all industries are digital adaptive only; however, each industry contains digital-oriented companies, whereas two industries contain one digital-centric company Average Industry-Specific DTI Automotive min Telecom & Media min Energy & Utilities min Overall average min Financial institutions min Consumer & Life science min EPC & Manufacturing min Travel & Transport min max max max max max max max max.0. Insight σ = σ =.8 σ = σ = σ = σ = σ = σ =. σ = Standard Deviation; Ø = Average On average most companies (~0%) are in the Digitaladaptive area All industries are impacted by Digital Transformation and show ability to play in the higher leagues of the DTI Most industries show an extreme spread: Participants score among the weakest and best at the same time Ø.9

16 Table of Contents Executive Summary Deep Dive Appendix (DTI per industry)

17 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry) 7

18 Deep Dive Drivers & Challenges Drivers & Challenges Overview Drivers & Challenges Strategy & Governance Products & Services Information Technology Operations & Supply Chain Customer Management Corporate Services & Control Key Learnings Most critical challenges for Digital Transformation are. lack of knowledge,. lacking sense of urgency and. excessive complexity Consideration of the continuous increase of digital customer needs and expectations will be key to succeeding in the future competitive landscape The primary impact of the Digital Transformation is reflected in changes in distribution channels and adaptations to existing products and services A prevailing number of the surveyed companies see the acquisition of new customers as a major opportunity brought by digitalization Workplace & Culture Business Model 8

19 Deep Dive Drivers & Challenges Most critical challenges for Digital Transformation are. lack of knowledge,. lacking sense of urgency and. excessive complexity Major Challenges for Digital Transformation Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport Share of participants Lack of knowledge 0% Sense of urgency % Excessive complexity 0% 7 Goal definition 9% 7 7 Lacking control system % 7 8 Legal requirements Lacking financial resources Lacking mgmt. Support % % 7% Numbers indicate frequency of answers among companies in given industries Highest 9

20 Deep Dive Drivers & Challenges Consideration of the continuous increase of digital customer needs and expectations will be key to succeeding in the future competitive landscape Changes in the Competitive Landscape due to Digitalization All Industries Existing customers with new needs resp. behaviors Automotive Telecom & Media Energy & Utilities New competitors New ecosystems Existing competitors with new products/business models New partners within value chain New customer groups and markets 8 Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport x = # of quotes 0

21 Deep Dive Drivers & Challenges The primary impact of the Digital Transformation is reflected in changes in distribution channels and adaptations to existing products and services Changes of Your Company s Business Model due to Digitalization All Industries Automotive Telecom & Media Energy & Utilities Distribution channels and CI Existing products & services Business model overhaul Internal processes 7 New business segments Production and logistics Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport 8 0 x = # of quotes Arthur D. Little perspective: Companies are underestimating potential in new business segments and operations / processes CI = Customer Interaction

22 Deep Dive Drivers & Challenges A prevailing number of the surveyed companies see the acquisition of new customers as a major opportunity brought by digitalization Major Opportunities in the Digital Transformation Journey Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport Average ranking Acquisition of new customers Differentiation from competition New sources of revenue Increase of customer loyalty Increase of agility and flexibility Cost savings Arthur D. Little perspective: Companies are underestimating potential for cost improvements, agility and flexibility increase Numbers indicate frequency of answers among companies in given industries Highest

23 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry)

24 Deep Dive A. Strategy & Governance Strategy & Governance Overview Drivers & Challenges A Strategy & Governance Products & Services Information Technology Operations & Supply Chain Customer Management Corporate Services & Control Key Learnings In most cases, CxOs govern both strategy development and implementation for the Digital Transformation the topic has definitely arrived at the top of their agenda A cross-functional digital governance unit on corporate level can ensure cross-functional digitalization of the End-to- End value chain Across all industries, the levers hiring digital talent and training and further education dominate when it comes to capability building effort in all industries Going beyond corporate borders allows for matching experienced entrepreneurs with corporate resources, e.g. on dedicated venturing platforms Workplace & Culture Business Model

25 Deep Dive A. Strategy & Governance In most cases, CxOs govern both strategy development and implementation for the Digital Transformation the topic has definitely arrived at the top of their agenda Digital Strategy Development & Implementation Top management Dedicated central unit Several departments No specific unit Top management Central Unit Dep # Dep # Dep # Dep No dedicated responsibilities is/are responsible for developing the Digital Strategy No specific unit % steer(s) the implementation of the Digital Strategy No specific unit % Several departments 7% 9% Dedicated central unit 9% Top management Several departments % % % Top management Dedicated central unit

26 Deep Dive A. Strategy & Governance Across all industries, the levers training and further education and hiring digital talents dominate when it comes to capability building effort in all industries Measures Applied to Catalyze the Digital Transformation Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport Share of participants Training and further education % Hiring Digital talents % Strategic alliances w/ digital co. % Own corp. incubator/ accelarator % Acquisition of digital co. % VC arm/ capital provision for incub. % Numbers indicate frequency of answers among companies in given industries Highest

27 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry) 7

28 Deep Dive B. Products & Services Products & Services Overview B Drivers & Challenges Strategy & Governance Products & Services Information Technology Operations & Supply Chain Customer Management Corporate Services & Control Workplace & Culture Key Learnings Most companies have neither agilized nor digitized their product and service portfolios The majority of companies only involve their customers in the product development process occasionally industry leaders typically involve their customers It is worthwhile to experiment with the smartization of classic Brick & Mortar business in order to protect core business and increase attraction For digitized products, the user experience can be enhanced through remote SW-upgrades and data collection to automatically inform on repair and service requirements Introduction of products and services with peer-to-peer components can increase competitiveness and growth of customer base Business Model 8

29 Deep Dive B. Products & Services Most companies have neither agilized nor digitized their product and service portfolios Agilization in P&S Development vs. P&S Digitization + Full adaptation Automotive Telecom & Media Digitization Major Simple No adaptation Need for changes in product development process More effort required In full movement Need for adaptation of products & service portfolio Energy & Utilities Financial Institutions Consumer & Life Science EPC & Manufacturing Travel & Transport No changes planned Selective process acceleration Agilization of development Full agilization of development Agilization + = Bubble size reflects no of companies 9

30 Deep Dive B. Products & Services The majority of companies only involve their customers in the product development process occasionally industry leaders typically involve their customers Customer Involvement in Product Development Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport Share of participants Occasional involvement 8% 0% 77% 0% 7% 0% 7% % No involvement of customers % 0% 9% 0% % % 0% % Frequent involvement % 0% % % 7% % 8% 8% Strong involvement % 0 9% 7% 0% 0% 0% 0% Numbers indicate frequency of answers among companies in given industries Highest 0

31 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry)

32 Deep Dive C. Customer Management Overview Customer Management Drivers & Challenges Strategy & Governance Products & Services Information Technology Operations & Supply Chain C Customer Management Corporate Services & Control Workplace & Culture Business Model Key Learnings Despite a diverse understanding of the nature of the digital customer, companies expect a significant increase in the share of digital customers within the next years The share of customer interactions through digital customer service is constantly growing great opportunities lie ahead Digital technology can be leveraged to transform from wholesale to a retail-led growth strategy based on an integrated customer experience across all channels Current low share of digital marketing expenditure correlates with a low share of digital channel sales both are mostly still below %, but predicted to grow There is still huge potential for many companies to capture client information from digital interactions and increase the benefit for better business decisions Real-time dynamic pricing can be used to optimize revenues by driving in an average profit boost of ca. % Integrated solutions with sophisticated analytics are meanwhile available across the customer journey and history

33 Deep Dive C. Customer Management Despite a diverse understanding of the nature of the digital customer, companies expect a significant increase in the share of digital customers within the next years Companies Consider Customers Digital if Share of Digital Customers they use self-service and paperless communication they are steered and served through digital channels they are attracted and treated online they use the internet to consume content 00% 90% 80% 70% 0% 0% Below 0% 0 to 0% Below 0% 0 to 0% 0 to 0% they use digital hardware and media the customer s lifecycle happens in a digital environment they manage key processes digitally 0% 0% 0% 0% 0% 0 to 0% 0 to 0% Above 0% 0 to 0% Above 0% Today In years Related to a company s total customer base; sums may not add up as some participants have voted for n/a

34 Deep Dive C. Customer Management The share of customer interactions through digital customer service is constantly growing great opportunities lie ahead Digitalization of Customer Service Interaction Current situation in respective industries All industries 00% Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport 90% Below 0% 80% Below 0% 0% 0% % % 8% 70% 0% 70% 0% 0% Below 0% Up to % 0% 9% % 7% % 9% 0% 0% 0% Up to % Up to 0% 0% % 0% 9% 7% 0% % 0% 0% 0% Up to % Up to 0% Above 0% Up to 0% Above 0% Above 0% 0% % % 9% % 0% 9% years ago Today In years % Percentage share of companies by given answer in respective industries

35 Deep Dive C. Customer Management Current low share of digital marketing expenditure correlates with a low share of digital channel sales both are mostly still below %, but predicted to grow Impact of Digital Marketing Expenditure on Digital Channel Sales + Share of marketing expenses for digital channels >0% 0% 0 % <0% Utilization > Collection 0 9 High effort, still low impact To be improved area Future Equilibrium Low effort, high impact Automotive Energy & Utilities Financial Institutions Telecom & Media Consumer & Life Science EPC & Manufacturing Travel & Transport <0% 0 % 0% >0% + Share of sales through digital channels = Bubble size reflects no. of companies

36 Deep Dive C. Customer Management There is still huge potential for many companies to capture client information from digital interactions and increase the benefit for better business decisions Obtaining Customer Information and Using it + Data usage with Business Analytics Significant (i.e. Predict) Advanced (i.e. Optimize) Simple (i.e. Facilitate) No usage Utilization > Collection Collection > Utilization Automotive Energy & Utilities Financial Institutions Travel & Transport Telecom & Media Consumer & Life Science EPC & Manufacturing No collection Limited (i.e. Transactional) + Advanced (i.e. Informational) Total (i.e. Client needs) Data collection from digital interaction = Bubble size reflects no of companies

37 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry) 7

38 Deep Dive D. Operations & Supply Chain Overview Operations & Supply Chain Drivers & Challenges Strategy & Governance Products & Services Information Technology D Operations & Supply Chain Customer Management Corporate Services & Control Workplace & Culture Business Model Key Learnings 70% of the participants have no clear view and perspectives on trends and the impact of new digital technologies on their Operations & Supply Chain Most companies underestimate radical innovation capabilities and full digitalization of technological components in Operations & Supply Chain Leading Companies have a clear understanding of how digital and new technologies will impact Operations & Supply Chain and have set up a process for rapid deployment Prototypes already allow for de-central in-store and just-intime productions, i.e. customized products with individual colors, sizes, etc. with a few minutes delivery time Tests of Augmented Reality in warehousing resulted in significant efficiency increases and reductions in errors Cloud-based Machine-to-Machine (MM) solution and RFIDbased asset tracking solution can help ensure product quality 8

39 Deep Dive D. Operations & Supply Chain 70% of the participants have no clear view and perspectives on trends and the impact of new digital technologies on their Operations & Supply Chains Target Picture & Transformation Roadmap Leverage of Technologies & Digital Methods Share of participants Share of participants Continuous and incremental optimization % Focus on well established technologies and processes % Current work on Digital agenda and roadmap % Increase of digitalization is planned % Clear view on trends and industry impacts (-0 yrs) % Performance already high and on peer-level % Target picture and roadmap for EE operations (-0 yrs) % Competitive advantage through state-of-the art % 9

40 Deep Dive D. Operations & Supply Chain Leading Companies have a clear understanding of how digital and new technologies will impact Operations & Supply Chain and have set up a process for rapid deployment Best Practice Strategic plan for Innovating Operations Description A manufacturing company has developed a 0-year vision about technology usage in operations & supply chain A self-financing project pipeline for deployment is set up and will be frequently updated to extend coverage and to leverage new technology opportunities Partner-Networks have been set up for mission-critical technologies and applications to create competitive advantages Implications & Benefits Cost improvement potential above 0% in relation to value add Higher customer and staff satisfaction, Company Information 0

41 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry)

42 Deep Dive E. Corporate Services & Control Overview Corporate Services & Control Drivers & Challenges Strategy & Governance Products & Services Information Technology Operations & Supply Chain Customer Management Corporate Services & Control E Key Learnings Participants expect their companies to heavily invest in advanced digital solutions to create transparency and comprehensive controlling Companies plan to utilize complex digital solutions to support and automate their processes Brand dashboards can integrate Web Analytics, CRM and share of voice at a single glance Highly standardized and thus professionalized launch factory approach can be seen as starting point for mastering execution A cloud-based HR model can foster high employee performance and efficient global staffing Workplace & Culture Business Model

43 Deep Dive E. Corporate Services & Control Participants expect their companies to heavily invest in advanced digital solutions to create transparency and comprehensive controlling Use of Digital Solutions to Achieve Transparency and Control Current Situation in Respective Industries All industries 00% 90% 80% Marginal use Marginal use Simple use Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport 0% % % 9% 8% % % 70% 0% 0% Simple use Advanced use 0% % 7% 0% % % % 0% 0% 0% % 7% % % 0% % 0% 0% Advanced use Complex use 0% % % 8% 8% 9% 0% 0% Complex use Today In years % Percentage share of companies by given answer in respective industries

44 Deep Dive E. Corporate Services & Control Companies plan to utilize complex digital solutions to support and automate their processes Use of Digital Solutions to Automate Management Processes Current Situation in Respective Industries All industries 00% 90% 80% Marginal use Marginal use Simple use Automotive Telecom & Media Energy & Utilities Consumer & Life Science Financial Institutions EPC & Manufacturing Travel & Transport 0% 7% 8% 7% 8% % 8% 70% 0% 0% Simple use Advanced use 0% 0% % 0% % 9% % 0% 0% 80% 8% % % 0% % % 0% 0% Advanced use Complex use 0% % % 8% 8% 0% 0% 0% Complex use Today In years % Percentage share of companies by given answer in respective industries

45 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry)

46 Deep Dive F. Information Technology Overview Information Technology Drivers & Challenges Products & Services F Strategy & Governance Information Technology Operations & Supply Chain Customer Management Corporate Services & Control Key Learnings The role of IT departments is still passive The majority enables Digital Transformation only. The leaders also have a budget share of 0% dedicated for Digital IT departments need to balance their technical capabilities and redefine their operating models in order to become coleaders in the digitalization process Layered IT architectures enable even large companies to realize an omnichannel solution in less than months, with a massive impact on footfall and revenues IT infrastructure-enabled Industry.0 solutions can help to increase productivity and profits for contractors Workplace & Culture Business Model

47 Deep Dive F. Information Technology The role of IT departments is still passive The majority enables Digital Transformation only. The leaders also have a budget share of 0% dedicated for Digital The Role of IT in the Context of Digitalization IT Budget Dedicated to Digital Share of participants Share of participants Leader 7% More than half % Driver % Up to half % Enabler % Up to % % Reactive % Up to 0% 9% N/a % None % 7

48 Deep Dive F. Information Technology IT departments need to balance their technical capabilities and redefine their operating models in order to become co-leaders in the digitalization process Flexibility of the IT Landscape Maturity of the IT Operating Model Share of participants Share of participants Flexible % Very high 8% Balanced % High 8% Complex 8% Medium 0% Rigid % Low % 8

49 Table of Contents Executive Summary Deep Dive Drivers & Challenges A. Strategy & Governance B. Products & Services C. Customer Management D. Operations & Supply Chain E. Corporate Services & Control F. Information Technology G. Workplace & Culture Appendix (DTI per industry) 9

50 Deep Dive G. Workplace & Culture Overview Workplace & Culture Drivers & Challenges Strategy & Governance Products & Services Customer Management Information Technology Key Learnings Today simple concepts for communication and collaboration, as well as for agile methods, seem to prevail This is unfortunately not yet the adequate playground for catalyzing the digitalization of business Internal innovation capability generally lags behind due to little usage of agile methods A gamification-based workplace culture can attract talent from all over the world Operations & Supply Chain Corporate Services & Control G Workplace & Culture Business Model 0

51 Deep Dive G. Workplace & Culture Today simple concepts for communication and collaboration, as well as for agile methods, seem to prevail Concepts for Communication and Collaboration Agile Methods Integration All industries All industries Classic 9% Innovative % No % Comprehensive % % Advanced % Advanced Simple % 9% Simple

52 Table of Contents Executive Summary Deep Dive Appendix (DTI per industry)

53 Appendix Automotive Industry The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric DTI for Automotive Industry:,0 Digital centric [score above 7.] Digital oriented [score between and 7.] Digital adaptive [score between. and.0] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company-Specific Deviation to Ø Note: DTI calculated as average of scores for each section

54 Appendix Automotive Industry Automotive belongs to the most developed industries in terms of digitalization. The field of Operations & Supply Chain is perceived as the weakest point DTI for Automotive Industry per Section Strategy & Governance Workplace & Culture Products & Services Information Technologies Corp. Services & Control = Automotive Virtual Star = Automotive average Operations & Supply Chain Customer Management

55 Appendix Telecom & Media Industry The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric DTI for Telecom & Media Industry:,0 Digital centric [score above 7.] Digital oriented [score between and 7.] Digital adaptive [score between. and.0] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company-Specific Deviation to Ø Note: DTI calculated as average of scores for each section

56 Appendix Telecom & Media Industry Although the Telecom & Media Industry is strong in digital strategy there is no clear industry pattern, but significant room for improvement in some sections for each company DTI for Telecom & Media Industry per Section Strategy & Governance Workplace & Culture Products & Services Information Technologies Corp. Services & Control = Telecom & Media Virtual Star = Telecom & Media average Operations & Supply Chain Customer Management

57 Appendix Energy & Utilities Industry The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric DTI for Energy & Utilities Industry:, Digital adaptive [score between. and.0] Digital centric [score above 7.] Digital oriented [score between and 7.] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company-Specific Deviation to Ø Note: DTI calculated as average of scores for each section 7

58 Appendix Energy & Utilities Industry There are rather strong differences between respective enterprises in Energy & Utilities, but the industry generally lags behind in terms of products and operations DTI for Energy & Utilities Industry per Section Strategy & Governance Workplace & Culture Products & Services Information Technologies Corp. Services & Control = Energy & Utilities Virtual Star = Energy & Utilities average Operations & Supply Chain Customer Management 8

59 Appendix Financial Institutions Industry The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric DTI for Financial Institutions Industry:,8 Digital centric [score above 7.] Digital oriented [score between and 7.] Digital adaptive [score between. and.0] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company Specific Deviation to Ø Note: DTI calculated as average of scores for each section 9

60 Appendix Financial Institutions Industry Financial Institutions focus on digital strategy, governance and IT while only few actually have adapted products and operations DTI for Financial Institutions Industry per Section: Strategy & Governance Workplace & Culture Products & Services Information Technologies Corp. Services & Control = Financial Institutions Virtual Star = Financial Institutions average Operations & Supply Chain Customer Management 0

61 Appendix Consumer & Life Science Industry The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric DTI for Consumer & Life Science Industry:,7 Digital centric [score above 7.] Digital oriented [score between and 7.] Digital adaptive [score between. and.0] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company-Specific Deviation to Ø Note: DTI calculated as average of scores for each section

62 Appendix Consumer & Life Science Industry The Consumer & Life Science industry has large potential to digitize customer management, operations and corporate services DTI for Consumer & Life Science Industry per Section Strategy & Governance Workplace & Culture Products & Services Information Technologies Corp. Services & Control = Consumer & Life Science Virtual Star = Consumer & Life Science average Operations & Supply Chain Customer Management

63 Appendix EPC & Manufacturing Industry The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric DTI for EPC & Manufacturing Industry:, Digital centric [score above 7.] Digital oriented [score between and 7.] Digital adaptive [score between. and.0] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company-Specific Deviation to Ø Note: DTI calculated as average of scores for each section ) EPC = Engineering, Procurement & Construction

64 Appendix EPC & Manufacturing Industry Few EPC & Manufacturing companies have set a digital strategy, while no company in our sample has significantly transformed its products or operating model DTI for EPC & Manufacturing Industry per Section Strategy & Governance Workplace & Culture Products & Services Information Technologies Corp. Services & Control = EPC & Manufacturing Virtual Star = EPC & Manufacturing average Operations & Supply Chain Customer Management ) EPC = Engineering, Procurement & Construction

65 Appendix Travel & Transport Industry The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered digital oriented or digital centric DTI for Travel & Transport Industry:, Digital centric [score above 7.] Digital oriented [score between and 7.] Digital adaptive [score between. and.0] Each # represents a specific company Average 0 Digital aware [score below.] X-Axis = Indexed at Cross-Industry Ø.9 Y-Axis = Company-Specific Deviation to Ø Note: DTI calculated as average of scores for each section

66 Appendix Travel & Transport Industry Travel & Transport is lagging behind in Digital Transformation products and services as well as operations have especially not seen relevant changes DTI for Travel & Transport Industry per Section Strategy & Governance Workplace & Culture Products & Services Information Technologies = Travel & Transport Virtual Star = Travel & Transport average Corp. Services & Control Operations & Supply Chain Customer Management

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