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Digital business: industries that lead, industries that lag

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Some industries embracing the digital business model -- such as travel and banking -- are doing so because they have been dealing with its disruptive nature for a number of years now. Other industries which have been immune from the digital wave -- such as utilities -- need to sit up and take notice.

That's one of the key takeaways from a new study conducted by Capgemini, which concludes that companies with mature digital strategies are 26% more profitable than their less-digital-savvy peers.

What does Capgemini mean by "digital" business"? In a digital business, technology is baked into business processes and channels -- such as an online travel site. Some companies have lots of IT assets and huge data centers, but aren't necessarily digital businesses.

As the report explains it, going "digital" means more than implementing new IT systems and servers. It means investment in "technology-enabled initiatives to change how a company operates -- its customer engagements, internal operations, and even business model." It's the use of tools such as social media, mobile, analytics and embedded devices to transform the way they do business. A vision and inspired leadership also is part of the digital equation.

What industries are ahead, and which are lagging?  The study took a close look:

Way Out in Front (the "Digerati"):

  • Banking: "Digital is revolutionizing the relationships between customers and retail banks, who have responded with strong capabilities in customer service, analytics and social media."
  • Retail: "A decade-long history with digital disruption has seasoned retailers," the report observes.
  • High-Tech: No surprise here -- a tech company would be remiss not be adopting technology to advance its business.

Lagging:

  • Pharmaceuticals: "Many are building capabilities in analytics and worker enablement, but most firms are just beginning their digital journeys."
  • Consumer packaged goods: "Less-mature CPG firms can improve through stronger visions, greater digital investments, and more robust transformation management."
  • Manufacturing: "Efforts in digital remain focused on operational efficiencies and worker enablement, but the B2B nature of many companies may limit their attention to digital customer engagement."
  • Insurance: "The combination of strong digital governance capabilities, regulatory worries, and a risk-averse culture could be an innovation-stifler."
  • Utilities: "Constant pressure to reduce costs and the advent of smart metering create digital opportunities in customer experience, worker enablement, analytics, and process improvement."

And a special breed apart CapGemini calls "Digital Fashionistas":

  • Telecom: "Facing ever-increasing levels of connectivity and data consumption, telecom firms have been quick to respoond.
  • Travel and Hospitality: Since the advent of the Web, digital has turned the industry upside down.

(Photo: Joe McKendrick.)

— By on December 4, 2012, 5:37 AM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure