Measurable digital value transformation outcomes: PwC

US & Mexico Strategy& Leader, New York, NY, PwC US

Mohib Yousufani

Principal, Strategy&, Chicago, PwC US

Everyone talks about digital transformation, but measurable business outcomes — beyond isolated results in individual divisions — are often difficult to capture and explain to stakeholders. In our August 2023 PwC Pulse Survey, 88% of executives told us they struggle to capture value from their technology investments, and 85% said it’s a challenge to update operating models to support a new vision. Unrealized value represents a missed opportunity at a time when scrutiny of tech investments has grown and business leaders can rarely afford missteps.

In this landscape, digital value transformation (DVT) can be a path to long-term success. DVT is an end-to-end delivery model that can help unlock value by reconstructing business models and using next-generation technology to reimagine value chains. DVT differs from traditional digitization efforts through its focus on accelerated value delivery, a thorough approach from strategy to execution and a relentless focus on value creation. By embracing DVT, your organization can more quickly achieve tangible outcomes — including increased revenue, decreased costs, and improved customer and employee experience — all while driving significant business growth.

Common pitfalls that keep tech investments from creating value

Here are some top challenges we’ve seen with technology implementation, particularly when it’s hidden within the cloak of business transformation.

One significant misstep is failure to align technology with your core objectives. When one global company invested heavily in an advanced customer relationship management (CRM) system brimming with features, leaders recognized after six months that only a few features truly aligned with their sales process, rendering most capabilities redundant or irrelevant.

Neglecting the end-user experience when deploying new solutions is a common error. A leading manufacturer rolled out innovative inventory management software, but its intricate interface led many employees to revert to old spreadsheet methods, resulting in wasted resources.

This can result in misdirection. One e-commerce startup heavily invested in new AI solutions for customer service. Yet without a strategic vision, customers often received impersonal, off-target responses. 

Many companies often miss the importance of tracking and managing the return on investment. Counting on a digital wave, one airline introduced a new online booking system expecting a surge in reservations. But its failure to track vital metrics rendered it incapable of gauging success or refining the strategy.

Disregarding how a solution aligns with your ingrained culture can spell disaster. A traditionally conservative financial institution that introduced an open-source collaborative platform soon confronted a clash between the platform and the firm’s deep-rooted culture. That disconnect led to resistance and limited engagement.

Ambitious endeavors that don’t account for inherent complexities can easily spiral into chaos. One retail chain that wanted to modernize attempted a simultaneous overhaul of all systems – only to face delays, ballooning costs and patchy implementation.

Ignoring the human side can lead to resistance and inefficiencies. A pharmaceutical giant swiftly transitioned to a new digital record-keeping system without providing adequate training, leaving employees feeling unprepared and vulnerable and limiting adoption of the new system. 

How companies are solving challenges through digital value transformation

Digital value transformation offers a new approach and framework for driving transformation, and one key to success is learning from companies that have successfully undergone DVT and seen measurable results. In this approach, value can be achieved through vertical problem solving, alignment within the ecosystem, leveraging targeted solutions, unique user experiences and evolutionary mindsets.

Vertical problem solving

What it involves: Isolating and addressing problem statements that are specific to individual segments or processes.

What you can achieve: Greater attention to detail and precision. Sometimes referred to as right-to-left thinking, this helps create clarity on a problem and focuses on the solution.

How one global consumer products company transformed:

The company’s procurement function had a multibillion-dollar annual spend, but the overall process was highly manual and difficult to scale. It was riddled with bottlenecks resulting from the use of outdated automation tools, limited use of analytics for vendor recommendations, limited self-service support and manual processing of orders and compliance checks.
The company redesigned procurement end-to-end by assessing the current state, defining the future state, designing the technology architecture and implementing digital tools. This included 24/7 conversational AI help desk support, automated quality checks, digital catalog card creation and processing, tactical buy support tools, consistent global reporting on procurement spend and other new features.
The outcome: Savings of more than 30% in labor costs by removing multiple third-party vendors and inconsistent processes, eliminating duplicate functions that were performed in various regions, centralizing and standardizing help desk support, digitization and establishing multi-country local language (digital) coverage for core activities.

Alignment within the ecosystem

What it involves: Critically thinking through how a new product can function in harmony with the ecosystem, considering inputs, outputs and interactions.

What you can achieve: Holistically integrated and beneficial solutions. This also improves the odds that each tech initiative complements and supports the broader business strategy and incorporates the critical context within which to operate.

How one oil and gas company transformed:

The company wanted to overhaul its core functions to improve operational performance and generate incremental EBITDA. However, the company historically operated in silos, and several executive team members had recently joined the company and weren’t always aligned at the strategic level.
The company started with a clear vision for fuels blending and wanted to improve functions that were lacking and coordinate value-add activities between various functional teams. By establishing collaborative ways of working, the company introduced structured processes for coordinated and accelerated decision-making and project funding.
The outcome: A path to realizing a $200 million increase in EBITDA as well as several other initiatives that are being designed and implemented after this new model. Through these efforts, the company could see a $10 billion to $15 billion increase in enterprise value on the back of this new operating model.

Leveraging targeted solutions

What it involves: Envisioning how to reimagine the value chain and harness the potential of technologies such as AI, among others.

What you can achieve: Increased business growth and efficiency. This is about strategically deploying these technologies to help solve business challenges — not just automating existing processes but thinking more about new value chains and the associated end-to-end process and customer journey that can create the most leverage for moving a business objective. In this way, tech can be a force multiplier.

How one food and beverage company transformed:

A large team across geographies built planograms for stores, but the process was manual, time-consuming and lacking real-time insights. Despite investing in multiple automation efforts, improvements had been insignificant and turnaround times were significantly higher than the industry average.
The company took multiple actions to improve sales and decrease inventory. These included integrating analytics and insights to automate shelf planning, designing workflow-enabled data collection for dynamic reporting, and designing intelligent automation to generate rapid iterations and real-time recommendations on shelf space optimization.
The outcome: A 15% inventory reduction, a 50% increase in efficiency and a 1% to 3% uplift in sales.

Unique user experiences

What it involves: Designing and implementing exceptional experiences for end users.

What you can achieve: More help for users with their jobs and higher engagement and satisfaction. This is pivotal in determining the success of any digital transformation. Crafting unique, intuitive user experiences allows technology to not only serve its functional purpose but also resonate strongly with users.

How one fast-food restaurant chain transformed:

The company wanted to improve the customer experience and operational efficiency of its drive-through order system, which suffered from a high turnaround time.
The company developed the capability to conversationally process orders, including corrections, and used predictive analytics to identify upselling opportunities. In addition, a new conversational AI platform was able to recognize loyal customers.
The outcome: A 10% to 15% increase in order value and a 70% to 80% order containment rate.

Evolutionary mindsets

What it involves: Embracing digital transformation as a continuous journey, with an emphasis on short, impactful sprints of 12 to 16 weeks.

What you can achieve: Greater adaptability and faster value delivery. The short time frame helps businesses remain nimble, adapt to feedback rapidly and continuously iterate on solutions. While the designer has to decide how big a bite of the transformation apple to take, this approach can better deliver quick wins and foster an ongoing commitment to evolution and improvement.

How one large food processing company transformed:

The company wanted to transform its tax provision process, but the tax team lacked the skills to maximize automation and technology benefits. More digital training was needed to improve core competencies related to low code solutions and reduce reliance on IT for ongoing maintenance and updates.
Company executives shifted their overall mindset to rethink and assess how tasks were done and started simplifying tax provision processes to better suit proposed automation solutions. The company then deployed automation solutions to improve efficiency related to fixed-asset calculations, journal entry accounting and tax provision review through dashboarding and analytics.
The outcome: Increased speed to complete automated processes, more accurate calculations and reduced recalculations, faster review of data and identification of anomalies and variances, and more flexibility to change processes with less IT involvement.

Thanks to Jenna Pica, Director, PwC US, for contributing to this blog.