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Are You Following the Right Digital Recipe?

May 17, 2018 • INNOVATION, Delivering Innovation - Accenture Research

By Tracey Countryman, David Abood, Aidan Quilligan, Raghav Narsalay, and Aarohi Sen

To produce a successful dish of digital reinvention, start by combining six ingredient technologies. Here’s how to get cooking.

 

Digital technologies have been feeding executives’ appetite for growth, cost savings, and innovation for years. Each one promises nourishment and sometimes brings delight. But how many business leaders are considering the value of combining technologies to create one gourmet meal?

So far, not many. And to be fair, technologies such as augmented reality are still very much emerging. Yet some companies have already discovered the power of combination and are reaping the rewards.

We studied the performance of 800 companies in 12 manufacturing and resources-based industries and 21 countries. According to our research, the five percent of organisations that combined six ingredient technologies – mobile computing, big-data analytics, machine learning, augmented and virtual reality, autonomous robots and autonomous vehicles – lowered their overall costs by 14% between 2013 and 2016. And we found trailblazing “combiners” in every industry and country. Cost savings for those not combining the six? They saw a negligible cost reduction – less than one percent. (We used a broad mix of research methods – See “About the Research” below)

About the Research
In 2017, we surveyed 931 senior executives from manufacturing and resources businesses across 12 industries in 21 countries (companies with annual revenues of more than US$500 million). The survey attempted to understand: (1) the digital technologies that were being deployed by companies to drive new-to-market efficiencies and hyper-personalised experiences; (2) the challenges of deploying digital technologies; and the (3) investments being made in digital technologies and capabilities to deliver new efficiencies and new growth. In our survey, we asked executives about the digital technologies (out of a list of 10) that were critical for driving higher operational efficiency and hyper-personalised experiences.

We designated these two outcomes as performance dimensions to map the impact of digital technology combinations on the bottom-line and top-line of corporations, respectively.

We then applied principal component analysis (PCA) to the data set to identify how the technologies correlated with one another to drive these two performance dimensions. The PCA analysis returned 5 different technology combinations.

Our model translated each into an index, assigning scores to each company based on their responses. We chose the combination with the maximum financial impact to rearrange the company list in decreasing order of index scores.

We then compared the top 10% from that rearranged list with the bottom 90%. The top 10% percent reduced overall costs by 14%. The bottom 90 by only 0.6%.

That raised even more questions for us: Can this technological combination really work for every company? What makes this combination so special? Which companies have mastered the art and science of combination, and what can we learn from their experiences?

To answer these questions, we examined cases of organisations that are combining multiple technologies. After poring over the results, we believe these six make for a formidable combination, and every executive should understand how each strengthens the other for the benefit of growth, efficiency and future innovation. Recipes are meant to be tweaked and improved, to be sure. But skilled chefs understand the value of a broad range of ingredients and why they work better in combination.



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About the Authors

(left to right)

Tracey Countryman is global managing director in resources with Accenture. David Abood is senior managing director in resources. Aidan Quilligan is the global lead for Accenture’s Industry X.0 practice. Raghav Narsalay is a managing director and Aarohi Sen is a manager with Accenture Research.

 

References

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20. Author calculations based on Intel’s financial statements

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