Insight

What’s the value of digital transformation for private equity?

Mar 20, 2017

At the turn of the century, digital was associated with technology and online. Investments largely focused on technology companies, or companies who did business online.

But now? Digital is everywhere. It's pervasive across all sales channels and industries – from the way companies engage with customers, to how they run their operations, and link with their partners and suppliers. It's a core part of their business models. Moreover, the pace and pervasiveness of digitisation has accelerated to the point where it's a key way to create value within the investment horizons of most private equity investors.

So what do private equity firms need to do?

  • Assess and evaluate companies that have a better view on value enhancement levers associated with digital – from operational prerequisites to competitive differentiation.

  • Invest in developing digital capability and differentiation within the investment horizons.

'But how?' I hear your ask. There are a number of ways.

  • Leverage digital so you go from providing products and services to providing solutions.

  • Update your go-to-market strategy to transition from traditional channels to online. This can be done as a gradual shift or as a complete transformation of your business model. We recently helped John Lewis and Worldpay to implement their digital strategies to drive sales.

  • Improve customer engagement by using digital to develop better customer journeys and experiences.

  • Identify where efficiency can be enhanced by digitising operations in areas such as procurement, supplier management, network optimisation, plant operations, delivery and customer service.

  • Transform business models by moving from transactional, often physical asset heavy models, to yield management or annuity models. This will allow you to customise and personalise on a larger scale.

  • Proactively address the cyber threats you face to build digital trust with customers. We've worked with many organisations to help them improve their cyber resilience strategy and give them the confidence to know they're protecting customers and their competitive advantage.

Successfully identifying the opportunities to implement digital transformation will be a critical component of the future growth strategy for all businesses. We're seeing clients use digital to significantly increase their ability to create better products and services, win, and delight more customers – and who doesn't want that?

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