However, transformations do not always yield the expected results, which is why it is essential to identify the key factors for maximizing the impact of technology on a company's profitability. In this regard, it is worth reviewing seven lessons drawn from a study by the consulting firm McKinsey.
The first lesson indicates that technology investments are indeed creating significant business value: more than three-quarters of the initiatives undertaken by surveyed companies resulted in substantial cost reductions or a combination of cost reductions and improvements in the employee experience. Over two-thirds of respondents reported that these change efforts increased revenues from existing streams, and more than half reported the emergence of new revenue streams.
The second lesson suggests that people-centric moves—changes in workforce and talent strategies—generate the most value. Companies that transformed their practices to attract, retain, and upskill talent with digital and engineering skills reported the highest impact.
The third lesson points out that transformations centered on business strategy related to talent not only stand out for their value-creation potential, but are also far more common among top-performing companies. For businesses that recently pursued transformations, the primary challenges continue to revolve around talent and culture: namely, skill gaps and cultural differences, the difficulty of shifting culture and ways of working, and the challenge of finding talent to fill new roles.
Business Strategy
The fourth lesson drawn from the research highlights that the talent challenge has clear implications for sourcing. Because companies found talent-related changes difficult to execute, they turned to new or alternative technology sourcing approaches to fill the gaps. Specifically, reliance on third-party providers to support both core IT and digital activities increased. Most respondents noted that their companies engaged partners across a variety of sourcing models—from traditional time-and-materials setups to managed services and joint ventures.
Furthermore, the fifth lesson demonstrates that there are no silver bullets in this realm: top-performing organizations executed more transformation moves than their peers. In fact, building capabilities in one area often demands developing others simultaneously, as these capabilities reinforce each other.
Emerging Technologies
The sixth lesson suggests that a broader deployment of advanced technologies yields a greater impact across the value chain. For example, in the study, 44% of respondents who reported using the Internet of Things (IoT) or edge computing technologies in recent transformations achieved significant cost reductions. Additionally, respondents who realized higher value creation tended to leverage a somewhat broader tech stack—such as advanced analytics, process automation, and data processing at scale in the cloud, to name just a few.
Finally, the seventh lesson indicates that bridging the divide between technology and the business is essential for achieving superior performance. Beyond their focus on talent, technology deployment, and a broad transformation agenda, top-performing companies also consistently follow practices that foster a stronger partnership between tech and business units. In these organizations, IT and business teams are far more likely to collaborate on both strategy development and technology delivery.
In addition to these seven lessons, the authors concluded that top-performing companies are significantly more focused on measurement than others, even for non-technology-specific metrics.
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