Digitalization in the Age of Economic Downturn
The year 2020 marks a watershed to businesses worldwide. Outspread of coronavirus and global economic downturn bring prolonged and tremendous negative impacts to companies. No matter how difficult the business environment is going to be, the truth is that some companies can always fare their competitors even during the worst of times.
According to a report by McKinsey , 10% of the publicly traded companies materially outperformed their weaker counterparts during the last economic downturn. It is their fast cost reduction that responded to the economic recession. In particular, companies that used digital analytics tools were able to reduce costs by 7%, while companies that employed conventional cost reduced that by 2% only.
McKinsey’s research found that when companies reinvent technological development in supply chains and processes, it could lead them to EBIT growth of 3.2% and 1.0% respectively.
Digitalization is connected to several benefits. Digitised companies connect better with customers through online interaction with clients and exclusive personalised offerings that foster customers’ loyalty towards a brand. Digitalisation improves efficiency, productivity and competitive advantages by creating automation and frictionless processes for various departments to work together seamlessly.
All in all, EBIT growth is the ultimate result that every business decision aims to attain. It is reported that when companies respond assertively to digitalization, their EBIT and revenue both grow. McKinsey ’s research found that when companies reinvent technological development in supply chains and processes, it could lead them to EBIT growth of 3.2% and 1.0% respectively.
Many companies are struggling to reinvent their digital performances and in the light of unpredictable challenges during an economic crisis, the need for a digital transformation to increase revenues and profits became more obvious in need and priority. There will never be the perfect timing for businesses to undergo digitalisation because it is always the right timing to make a digitalisation move.
Business leaders should look beyond the horizon and lead their organisation on the decision to embrace digitalization, or risk falling behind. To read more about digitalization, stay tuned to our coming blog posts.
Written by Clare Wong, Digital Marketing Specialist
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