CEOs expect profit growth from digital transformation

Gartner survey shows CEOs expect profit margins to increase through digitisation efforts

Tags: Customer serviceDigital transformationDigitisationGartner Inc. (www.gartner.com/technology/home.jsp)
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CEOs expect profit growth from digital transformation CEOs expect to see major digital transformation ahead.
By  Mark Sutton Published  April 21, 2016

Half of CEOs worldwide expect their industries to be substantially transformed by digitisation, according to a survey by Gartner.

The Gartner 2016 CEO survey, which surveyed 400 senior business leaders, found that around half believe their sectors will be changed substantially or beyond recognition over the next five years, while 84% expect that digital change will bring higher profit margins.

The survey showed the most CEOs (54%) are still focused on growth as the main business priority for this year, while customers (31%) and workforce (27%) are the second and third priorities. While business conditions are challenging, CEOs remain confident enough to sanction strategic investments, particularly when it comes to digital business transformation.

Mark Raskino, vice president and Gartner Fellow commented: "One explanation for CEOs' optimistic attitude toward digital change may be because they can see how it helps with the product innovations that matter to customers. We asked CEOs what proportion of the customer perceived value of products and services they think is digital. Thinking about the product features that customers are choosing and believe they are buying, CEOs believe the value percentage is already 30% on average and will rise to 46% by 2019.

"The big rise of explicit mentions of the word ‘customer' was very noticeable in the results of this year's survey," he added. "CEOs seem to be concerned about improving customer service, relationship and satisfaction levels. At the same time, CEOs have become much more concerned about employee issues than a couple of years ago. The emphasis is as much on benefits, retention and training of mainstream staff. It is not constrained only to senior grade 'talent' issues."

In a bid to stick to their digital business transformation plans, more and more CEOs are choosing to head up digital change in the business. This year's survey finds that CEOs now understand that digital business is substantial enough to warrant them leading it personally. If they delegate primary responsibility, then the next most likely leader is the CIO.

The rise in the number of CEOs heading up digital change is unsurprising given that half of the CEOs surveyed expect to see substantial digital transformation in their industries, or for their industries to be almost unrecognizable within five years. Examples of digital changes in industries include self-driving cars, the rise of blockchain in banking, the e-cigarette revolution in tobacco and the potential impact of Internet of Things (IoT)-fuelled data science in insurance.

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