I have been conducting research for a forthcoming report on trends in the technology sector and potential implications for corporate real estate.
During the course of this research I have discovered a term which is new to me and I really like – ‘digerati’. This word is generally used to refer to the elite of the computer industry. But I have found it being used in a recent study from Capgemini to describe a class of companies who have invested significantly in digital technology and who are now starting to outperform their peers as a result. To cut a long study short… the key finding is that high-performing companies – the ‘digirati’ – outperform their industry competitors on multiple financial metrics, generating, on average, 9% more revenues through their existing assets; outperforming their peers by 26% in terms of profitability; and achieving significantly higher (12%) market valuations.
With the on-going growth and spread of new digital technologies such as social media, mobile apps, big data analytics and the increasingly proven link to competitive advantage, companies (regardless of sector) would be foolish to ignore the potentially huge transformative implications of strategic technology investment and digital expansion.
Companies in many sectors have already begun or are planning on digital transformation investment strategies. One of the obvious ‘digerati’ I can think of is Burberry (a case I highlighted in our recent Retail sector digest).
In recent years Burberry has turned its fortunes around, having launched a significant technology transformation program (following appointment of a new CEO in 2006) covering multiple business areas, from customer experience to operational excellence, driven in no small measure by digital technologies. This was a closely managed change program which has proved very successful. Burberry has been widely recognised for its digital innovation, and its sales and profits have been on a significant upward trajectory ever since.
Many large corporates are starting to catch on and are applying digital technology across a wide range of business functions to drive competitiveness and productivity. One such example is the specialised but increasingly important function of corporate real estate. Our recent Global Corporate Real Estate Survey indicates positive sentiment towards technology investment to aid corporate real estate decision making. Big data analytics is rapidly emerging with 34% of survey respondents indicating further investment in lease administration systems or the like. It seems highly likely that this sentiment would extend across other business functions. With this in mind I believe that new technologies are going to expand faster than many have predicted – with rapid growth in the years ahead not just amongst technology companies, which has dominated the demand story of most real estate analysts, but also in a large number of corporates drawn from multiple sectors who will want to develop and enhance the digital aspects to their businesses – in order to join the exclusive ranks of the rising ‘digirati’.