How Much Measurable Benefit from "Digitalization?"

Digitization or digital strategy are terms one hears tossed about often. Perhaps too often, some would argue, as it is not always clear what is meant by such terms. In the early 1980s, such terms likely referred to use of desktop personal computers, client-server computing and productivity suites. 

After the turn of the century, such terms often referred to use of the internet. 

A decade ago, digital strategy might most often have referred to harvesting and analytics of big data sets. Just as often, digital strategy might have referred to adoption of cloud computing. 

These days, the terms are more often used to describe applied machine learning, artificial intelligence, Internet of Things and advanced robotics. 

“Digital technologies have the potential to spur a global productivity boom, especially as productivity growth in many countries is at all-time lows,” say researchers at Moody’s.  “Digitization, which entails the adoption of advanced technologies such as big data, machine learning, AI, cloud computing, "internet of things," and advanced robotics, is aimed at enhancing information processing and the quality of decision making while further automating routine tasks.”

"Digital technologies can lead to 'winner-take-all' economics, with small differences in quality potentially leading to substantial differences in earnings," says Associate Managing Director Elena Duggar. 

“Gains from company investments in information technology (IT) tend to have a five-to-seven year lag as they require significant organizational innovation and workforce retraining,” Moody’s says. Some of us would say it will take even longer than that to produce measurable gains. 

Some industries will show results sooner. And shockingly, in some cases we will probably not be able to measure any improvement in productivity. That will likely be the case when artificial intelligence is applied to business processes as well. 

Though we might note productivity improvements after information technology advances, we have seen relatively restrained impact since the advent of the internet, as disruptive as that has been. 

source: Goldman Sachs