On average across the sectors we examined, we found that digital transformation can boost the bottom

The potential impact of digital technology varies widely by industry, but most enterprise leaders car rental in new zealand share an important car rental in new zealand challenge: how to get beyond the small share of the prize they are capturing today by looking for impact across the whole value chain.
While online sales , social networking, and mobile applications have received most of the buzz when it comes to digital, our recent research finds that the greatest bottom-line impact may come where most companies aren t looking car rental in new zealand from cost savings and changes beyond the interface with customers. Our yearlong study shows that, across the industries we examined, the average bottom-line impact that can be realized from digital sales over the next five years is 20 percent: a significant opportunity to be sure, but much less than the bottom-line impact from cost reductions, which average 36 percent.
Digital transformation can make a big difference. To calculate just how big, we examined ten industries: retail banking, mobile telecommunications, airlines, consumer-electronics retailing, apparel, property-and-casualty insurance, hotels, supermarkets, pay-TV broadcasting, and newspaper publishing. To get at costs, we recut the expense categories of these sectors on an apples-to-apples basis and computed the difference that fuller use of digital channels, greater automation, better analytics, and innovative virtual models such as remote freelance call-center workers might yield, using metrics such as reduced head count and improved productivity. On automation, for instance, we assessed the typical distribution of human resources across processes in a service-operations function and identified which labor-intensive car rental in new zealand activities could be done by technology. For sales, we compared the sales outperformance of selected digital car rental in new zealand leaders in each sector against the industry average, forecasting the likely digital advantage such companies could build up over the next five years. Combining this analysis with online-penetration growth rates in each industry and average margins, we were able to estimate bottom-line impact.
On average across the sectors we examined, car rental in new zealand we found that digital transformation car rental in new zealand can boost the bottom line by more than 50 percent over the next five years for companies that pull all levers. This ranged from 20 percent in pay-TV broadcasting to more than 200 percent in music retailing, with most sectors clustered in the 30 to 60 percent range. These headline figures are underpinned by a few critical insights: most sectors are expected car rental in new zealand to double their share of sales coming from digital channels over the next five years. Additionally, digital leaders are on average growing their digital sales at 2.5 times that of their sector peers, with as high as a 9 times multiple seen in newspapers, for instance. Furthermore, we found that companies can, on average, cut the total cost base by 9 percent, resulting in average bottom-line impact of 36 percent, car rental in new zealand through shifting customer interactions to digital channels and automating paper-heavy processes. This ranged from 3 percent of total costs in grocery retailing to 20 percent in retail banking substantial impact, car rental in new zealand which passes directly to the bottom line and reshapes car rental in new zealand the economics of competition car rental in new zealand across these sectors.
A too-narrow focus on distribution channels means organizations are getting only a small share of the full value that digital transformation can provide. That narrow focus may also be leaving organizations vulnerable to new entrants car rental in new zealand and agile incumbents that can translate car rental in new zealand operational car rental in new zealand improvements across the full value chain, combined with innovative operating models, into better, cheaper, more customized products, faster service, and an improved customer experience. For organizations that can step back and apply their digital investments in such a holistic way, the prize is significant.
Of course, not all industries face the same opportunities or the same threats. Hotels and airlines, for instance, car rental in new zealand are greatly car rental in new zealand exposed to the disruptive potential of digital, with our research showing that over the next five years their share of sales via digital channels will rise to 50 percent in mature markets. This will clearly disadvantage digital laggards. Large grocery chains, on the other hand, could be less affected. Their share of sales via digital channels is expected to rise to just 10 percent. With an expense base dominated by the cost of goods sold, the potential for digital to radically transform their economics is somewhat constrained. To capture the value available, organizations will need to assess the value at stake, invest proportionally to that value, and align their business and operating models accordingly.
Technology drives car rental in new zealand value in businesses in four ways: enhanced connectivity, automation of manual tasks, improved decision making, and product or service innovation (exhibit). Tools such as big-data analytics, apps, workflow systems, and cloud platforms all of which enable this value are too often applied selectively by businesses in narrow pockets car rental in new zealand of their organization, particularly in sales and marketing.
This creates missed opportunities to gain maximum car rental in new zealand advantage from digital investments. Big-data insights, for example, can be used to enhance customer targeting and adjust pricing in real time, but they can also be used for better forecasting of operational-capacity needs to boost asset and resource utilization. Likewise, app technology that is typically focused on improving customer interactions can also be applied to a broad range of internal interactions, such as HR and procurement requests.
car rental in new zealand Smarter and more complete application of digital investments not only delivers concrete improvements within a given function but can also unlock trapped value by improving information flows and reducing waste across the organization. For example, one bank found that upgrading the digital channel drove a significant improvement in customer-data richness and quality, which increased marketing effectiveness and drove better lending decisions by reducing risk and enabling the automation of previously labor-intensive fulfillment car rental in new zealand processes. When used well, digital expands the improvements delivered in one part of an organization across the whole value chain.
car rental in new zealand Digital will be highly disruptive to some industries, affecting car rental in new zealand not only revenue and cost structures but also shaking up the core business and operating models. The music-retailing industry has already been down this path. Others are nosing into the eye of the storm. Some sectors may see less dramatic but still important shifts. We see three clusters of industries that will face varying levels of change.
For these industries, there is unlikely to be a wholesale shift to a fully digital model in the medium term. Examples include grocery retailing and apparel. Despite innovations, such as new digitally enabled store formats, in-store digital kios, and highly functional e-commerce offerings, car rental in new zealand digital-sales volumes will likely remain relatively low. We project that 10 percent of grocery car rental in new zealand and 24 percent of apparel sales are likely to be online car rental in new zealand by 2018. (The average for sectors in this cluster is 20 percent.) One reason for their modest online-sales growth is that grocery retail and apparel both have persistent consumer behaviors and habits. In many categories, shopping is a highly social experience, and social-media networking to share purchases is not a sufficient substitute for in-person interaction.
Digital capabilities in the near term can only go so far in simulating the experience of trying on clothes or choosing fruit and vegetables. In addition, these sectors have cost structures that are less amenable to digitally driven transformation. For example, most of the costs of a large grocery retailer are the goods it sells. However, car rental in new zealand this is only half the story; we see a large opportunity for savvy competitors to drive digitally influenced sales within their physical car rental in new zealand footprint by leveraging highly targeted promotions, mobile apps with prebuilt shopping lists, and other conveniences that combine seamlessly with their traditional offerings to transform the customer experience. Given the typically tight margins in these industries, digital leaders can significantly boost profitability and command a clear performance advantage.
These industries are likely to see a more transformative effect from digital. Retail banking, property-and-casualty insurance, and mobile telecommunications offer virtual rather than physical products and, as such, have a cost base largely focused on processing car rental in new zealand and servicing, making them highly susceptible to digital transformation. We project digital-channel car rental in new zealand use in these sectors to average 35 percent and total cost-base potential reductions to average 20 percent. Companies in these sectors have their work cut out for them as they absorb the business-model changes taking car rental in new zealand place while fending off new digital car rental in new zealand entrants. The onus will be on the companies to act decisively and quickly, streamlining and repurposing car rental in new zealand their physical distribution car rental in new zealand and redirecting the freed-up capital to build out their digital-channel capabilities. There will also need to be a concerted focus on automating core activities to boost self-service and straight through car rental in new zealand transaction processing. Such change may come with a stiff price tag, but these industries may have little choice but to step up in a sustained way since the trajectory car rental in new zealand suggests they are headed toward greater car rental in new zealand disruption from digital.
These are the industries that are visibly going through or have completed several rounds of digital disruption. Sectors like music retailing, consumer-electronics retailing, airlines, and hotels have seen their business and operating models permanently changed. They have experienced the double car rental in new zealand whammy of digital enabling very different sales trajectories and altering cost structures. For instance, digital sales for music retailing and consumer-electronics retailing is expected to exceed two-thirds o