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Harvard study links profits to digitization


28 Sep, 2016 10:02 am

Digitization is directly linked to higher returns for companies that embrace it, and lower profits for "digital laggards" who fail to invest in technology, a Harvard Business School study has found.


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"Digital leaders" in the study posted a three-year average gross margin of 55 percent, compared to just 37 percent of the companies at the bottom end of the scale, measured by their investments in technology. 

The report's leading companies' three-year average earnings were 16 percent to 11 percent higher, and their three-year average net income was 11 percent to seven percent higher than companies that had failed to invest. 

The Harvard study described the low-ranking companies as "digital laggards." 

"It's a pretty substantial gap and it correlates with performance in significant ways," the study's author Marco Iansiti said.
TAKEAWAY TREND
The Harvard study offers quantitative evidence reflecting how enterprises that invest in digitization have higher profits and earnings than those businesses that do not.
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