The pace of digitization is picking up rapidly but the speed at which digitization is taking place varies a great deal from industry to industry. To gain a better understanding of the relative degree to which digitization is transforming different industries, we have created the Industry Digitization Index. Whether they are currently digitization leaders or laggards, all industries can benefit by investing in the input, processing, and output capabilities needed to extend their digital footprints throughout their business ecosystems.

1. Research Roman Friedrich
Matthew Le Merle
Florian Gröne
Alex Koster
Measuring Industry
Digitization
Leaders and Laggards
in the Digital Economy

2. Use your smartphone to scan the QR code on the cover of this Perspective, and you will be taken to the CMT Foresight
home page on Booz.com.
Contact Information
Beirut London/Düsseldorf Shanghai
Bahjat El-Darwiche Dr. Michael Peterson Andrew Cainey
Partner Partner Partner
+961-1-985-655 +44-20-7393-3310 +86-21-2327-9800
bahjat.eldarwiche@booz.com michael.peterson@booz.com andrew.cainey@booz.com
Berlin New York Sydney
Dr. Florian Gröne Philip Minasian Vanessa Wallace
Principal Principal Partner
+49-30-88705-844 +1-212-551-6098 +61-2-9321-1906
florian.groene@booz.com philip.minasian@booz.com vanessa.wallace@booz.com
Delhi Paris Zurich
Ashish Sharma Pierre Péladeau Alex Koster
Principal Partner Principal
+91-124-4998705 +33-1-44-34-3074 +41-43-268-2133
ashish.sharma2@booz.com pierre.peladeau@booz.com alex.koster@booz.com
Dubai San Francisco
Karim Sabbagh Matthew Le Merle
Senior Partner Partner
+971-4-390-0260 +1-415-994-4320
karim.sabbagh@booz.com matthew.lemerle@booz.com
Düsseldorf/Stockholm São Paulo
Dr. Roman Friedrich Ivan de Souza
Partner Senior Partner
+49-211-3890-165 +55-11-5501-6368
roman.friedrich@booz.com ivan.desouza@booz.com
Birger Maekelburger and Florian Stürmer also contributed to this Research.
Booz & Company

3. EXECUTIVE The pace of digitization is picking up rapidly, as consumers,
companies, and entire industries become increasingly con-
SUMMARY
nected at home, in the office, and on the go. It is already obvi-
ous, however, that the speed at which digitization is taking
place varies a great deal from industry to industry. And these
differences can already be felt in how quickly certain indus-
tries are capturing value as digitization grows in importance.
To gain a better understanding of the relative degree to which
digitization is transforming different industries, we have cre-
ated the Industry Digitization Index, consisting of the four
factors involved in the digitization effort: input, processing,
output, and underlying infrastructure. At the top of the list is
the financial services and insurance sector, which should come
as no surprise, given its purely informational products and
services, and its long-standing effort to automate both back-
office and customer-facing transactions. At the bottom are
such industries as hospitality and real estate, both of which
have made great strides in digitizing their contacts with cus-
tomers but still struggle to automate supplier and construction
management in a highly fragmented environment.
The race to capture value in the age of digitization is not yet
over, however. All industries can benefit by investing in the
input, processing, and output capabilities needed to extend
their digital footprints throughout their business ecosystems.
Booz & Company 1

4. THE WORLD Broadband connectivity, wireless
mobility, cloud computing,
Governments, too, can gather and
disseminate information quickly—for
IS DIGITIZING e-commerce, social media, sensors— purposes both good and bad—making
they’re all coming together to their operations, in the best cases,
transform the world as we know it: more transparent and their dealings
how we work, play, consume, interact, with their populations more efficient.
stay in touch. We call this process
“digitization”: the pervasive adoption The process of digitization is taking
of a wide variety of digital, real- place on a global scale, and the
time, and networked technologies, benefits for companies on the leading
products, and services that will enable edge of the trend—greater customer
people, companies, governments, insight and reach, higher productivity,
and even machines to stay connected and the creation of new business
and communicate with one another, models—are already being realized.
gathering, analyzing, and exchanging However, those benefits are not yet
massive amounts of information on all evenly distributed among different
kinds of activities—and the economic nations, markets, or industries. In
and societal impacts those activities previous studies we have investigated
will have. the causes behind this transformation
and the benefits to be reaped (see
People at home, in the office, and on “Resources,” page 13). In this
the go can now find a vast wealth of study, we analyze which industries
information on just about everything, are leading the pack in digitizing
and exchange, rate, and review that themselves, along with the supply,
information for all to see. In turn, demand, and industry-level aspects of
companies are collecting detailed digitization that are driving industry
information on consumers and leadership and differentiation. To
their behavior—not just their Web- that end, we have created what we
browsing preferences but also their call the Industry Digitization Index,
location—and even their friends a core component of a body of
and their behavior, and using that global research we are conducting
information to target marketing to understand the digitization trend
efforts more effectively and to and its effect on national economies,
design better products and services. industry sectors, and society at large.
The benefits for companies on the
leading edge of the digitization trend
are already being realized.
2 Booz & Company

5. DIGITAL industry use to orchestrate their differentiated data becomes available
internal value chain as well as for other geographies. Despite this
CAPABILITIES interactions within their industry limitation, we believe that the index
ecosystems, including strategic provides a comprehensive picture
partners, financial institutions, of the current state of digitization
or government bodies. The third and why some industries are already
consists of the industry outputs for gaining traction while others are not.
The primary goal of the index is which digitization enables more
straightforward: to understand better efficient delivery of products and The information provided by
which industries in which markets services, including distribution, Eurostat includes data on the
are adopting, and benefiting from, electronic commerce, and the relative sophistication of the digital
digitization first, and which are like. And the fourth concerns the infrastructures to be found in
lagging. A further goal is to gain foundational infrastructure that companies across the 27 national
insight into the specific technological underpins it all, since without markets of the E.U., as well as
factors that are enabling certain the underlying connectivity and data on digital inputs, internal
markets and industries to move computing capabilities, digitization processes, and outputs. Compiling
forward more quickly. To do this, would be impossible. and weighing these four dimensions
we wanted to get a complete picture allowed us to create the overall
of how these markets and industries The most complete and reliable index of digitization, by market and
use technology. This picture source of such data we have found industry, and to understand better
includes four separate but tightly comes from Eurostat, the E.U.’s where certain markets and industries
interconnected dimensions: The first central statistics agency. To our are leading or lagging. Thus, the
is the way in which transactions knowledge, no other country or financial services and insurance
into an industry are enabled by region currently has a comparable sector has an index of 53, which
digitization (through electronic public source of such data; therefore, means that, on a scale of 1 to 100,
procurement or inbound supply chain we have restricted the scope of the sector scored an average of 53
logistics, for example). The second the index to the European Union. for the four factors contributing to
involves the digital platforms and Ultimately, we plan to extend digitization (see “Methodology,”
tools that companies in a particular the index further as sufficiently page 13).
Booz & Company 3

6. LEADERS AND highest-spending industry in terms
of information and communica-
sector’s lead in digitization comes as
no surprise: Our previous analysis
LAGGARDS tions technology (ICT) investments, of the digitization trend found that
first digitizing key transaction information-intensive industries
processes like electronic transfer will naturally spend more to main-
of funds, securities trading and tain their competitive advantage,
clearing, and interbank settlement. and thus will be affected first.
More recently, it has worked to
At the highest level, the top further digitize the front office, • Computers and electronics: The
three sectors in terms of industry moving from traditional retail and various elements of this sector have
digitization are financial services and call center activities to fully online evolved complex ecosystems whose
insurance, computers and electronics, processes by which virtually every supply chains have been divided
and media and telecommunications aspect of retail and home banking among multiple specialized players.
(see Exhibit 1). is digitized, and developing smart The electronics sector, for example,
ATMs and online banking solutions consists of a tiered production
• Financial services and insurance: to boost convenience and service system that includes product design
This sector has long been the delivery efficiency. The financial and integration players like Apple,
Exhibit 1
The Industry Digitization Index
INDUSTRY DIGITIZATION INDEX (2011)
0 5 10 15 20 25 30 35 40 45 50 55
Financial Services & Insurance
Computers & Electronics
Media & Telecommunications
Automotive
Equipment & Machinery
Trade & Retail
Chemicals
Basic Manufacturing
Utilities
Business & Administrative Services
Transportation & Logistics
Consumer Goods
Real Estate, Rental & Leasing
Construction
Hotels & Restaurants
43.3
Leading Midfield Lagging Index average
Source: Eurostat; Booz & Company analysis
4 Booz & Company

7. chip and component makers like which employees at Google and by the way they do business; the often
Samsung and Intel, and assembly elsewhere work and collaborate. lower affinity for digital technology
firms such as Flextronics. In the among their labor pools; and their
search for ever greater efficiency These were the industries that fragmented nature. Taken together,
and specialization, digital process- piloted and perfected technologies these characteristics ultimately reduce
ing is essential to orchestrate and like electronic data interchange, and these industries’ appeal to digital
control these complex value chains, where, more recently, machine-to- suppliers—but by the same token
from electronic procurement to machine (M2M) communications, suggest that digitization offers the
paperless supply chains and trans- smart tags, and mobility are potential for these sectors to make
port logistics to digital factories. providing the next level of efficiency, great strides in pushing efficiency and
transparency, and flexibility. Global customer convenience.
• Media and telecommunications: companies such as Dell have long
This sector, which includes IT ser- focused on digitizing their end-to-end Hospitality, for example, is a huge
vices firms, telecom operators, and supply chains, tying customer demand industry that has already seen
Internet companies, both supplies in real time with custom business great strides in digitization, though
and uses the means of digitization. streams through digital tools. Now, primarily on the reservations front.
As such, its leadership position is Apple, the world’s largest consumer Social media has the potential to
not surprising—companies in the electronics company, is leading the further this process significantly;
sector are the closest to the source pack at combining bricks and mortar indeed, a variety of digital service
of digitization in terms of the with real-time, cloud-based sales offerings will increasingly become
creation and use of infrastructure and service. a differentiator along with service,
and enabling technologies, digital location, and price. Construction,
service integration capabilities, and Down at the bottom of the list, too, will likely see strides in how
the like. Here, examples include on the other hand, are the labor- workforces are managed, through
Cisco Systems, a leader in the intensive, old-economy sectors like the automation of hitherto manual
digitization of its internal opera- hotels and restaurants (hospitality), processes. And though real estate is
tions, and Google, which not only construction, and real estate, rental, already largely online on the sales
has succeeded in playing a visible and leasing. The position of each of front, the identification, development,
role in the everyday digital life of these can be explained by the relative and management of the construction
billions of consumers, but also is simplicity of their value chains; the of specific projects remains a highly
pushing Web-based apps and cloud high degree of hands-on, on-site, fragmented, analog process.
technologies to digitize the way in “personal touch” interaction required
Digitization offers the potential for
old-economy sectors to make great
strides in pushing efficiency and
customer convenience.
Booz & Company 5

8. BUILDING Not only is there a distinctly wide
gap between the digital haves and
zation are moving ahead quickly,
while progress among many of the
MOMENTUM have-nots, but that gap appears to laggards remains relatively slow (see
be growing. The leaders in digiti- Exhibit 2).
Exhibit 2
Industry Digitization Index Change, 2010–11
INDUSTRY DIGITIZATION INDEX CHANGE (2010–11)
0 1 2 3 4 5 6
Financial Services & Insurance Dynamically
innovating
Automotive
Equipment & Machinery
Basic Manufacturing
Construction
Chemicals
Transportation & Logistics
Consumer Goods
Media & Telecommunications
Utilities
Business & Administrative Services
Trade & Retail
Real Estate, Rental & Leasing
Computers & Electronics
Lacking
Hotels & Restaurants momentum
Leading Midfield Lagging
Note: Chemicals and basic manufacturing figures for 2010 are based on expert estimates. Leading
Source: Eurostat; Booz & Company analysis
Midfield
Lagging
6 Booz & Company

9. • Financial services and insur- advantage of consumer interest • Meanwhile, real estate, business
ance, the leader in digitization, is in social media and other digital and administrative services, and
also the most dynamic sector; its technologies. hospitality are making little head-
digitization index grew by more way in their efforts to digitize—
than five index points between • Industries in the middle of the despite their direct connection
2009 and 2011. Industry play- pack, such as utilities, consumer to the consumer. Fragmented
ers continue to invest heavily in goods, and transportation and demand and an inherent lack of
new digital capabilities—most logistics, are also gaining momen- digital skills have kept suppliers
recently, big data analytics, mobile tum, a clear sign that technolo- from aggressively pursuing these
payments, social media, and gies such as smart tags, M2M sectors. Unless conditions change,
lean “bank-in-a-box” concepts. communications, and remote these industries will continue
American Express, for example, metering have reached sufficient to lag.
has developed a company-wide levels of technical maturity and
digital strategy designed to lever- cost-efficiency. Moreover, new These results suggest that as
age its digital assets and capabili- regulatory regimes have pushed digitization progresses, a profound
ties to drive future growth. To that some of these sectors into adopting shift of importance, and ultimately
end, the company plans to capture new technologies more quickly; value, will occur among these
and analyze large amounts of data the utilities sector, for example, industries. Consumers themselves
from both customers and mer- has seen the further liberalization will likely continue to find more
chants to improve segmentation, of energy markets and a push for value in fully digitized industries—
aid merchants in their marketing smart meters, while transportation consider the shift in status from cars
efforts, and ultimately generate continues to make investments to smartphones, especially among
more precisely targeted offers to in digitally enabled new infra- young consumers. And increasingly,
cardholders and participating structure and has achieved overall those industries that are digitizing
merchants. As part of this effort, efficiency gains as a result of fastest will start seeing the highest
the company is also expanding its open-skies agreements and other growth rates.
partnerships with other compa- regulations.
nies such as Facebook to take
Increasingly, those industries that are
digitizing fastest will start seeing the
highest growth rates.
Booz & Company 7

10. INVESTMENT Europe have put in place the key build-
ing blocks of broadband, wireless, and
The results are less encouraging at the
processing dimension, indicating the
PRIORITIES computing infrastructure; according to existence of a substantial gap between
the index, industries vary by no more the base infrastructure needed for
than 10 points in their degree of infra- standard office communication and
structure digitization. This is clearly a daily office work and actually putting
reflection of the maturity of a great deal that infrastructure to work in the form
of the underlying technology, the imme- of differentiated digital processing
Our analysis of different industries also diate benefits to be reaped in promot- capabilities for driving business process
allowed us to “look under the hood” to ing the enabling role of infrastructure, efficiency and effectiveness. The process
examine in greater detail where compa- and, thanks in part to Moore’s Law, the dimension is a good predictor of the
nies in particular industries are pushing relatively low costs involved. degree of digitization in a particular
the digitization envelope in each of the industry, since this dimension captures
four elements of digitization—input, At the input level, companies in many the essence of the respective industry’s
processing, output, and infrastructure— industries are beginning to put together core value chain, while the other three
and where they still have work to do. paperless supply chains to speed up the dimensions primarily enable these pro-
acquisition of raw materials, although cesses, or provide the interfaces needed
And though the results vary by indus- insular digital environments in dif- to interact with suppliers and custom-
try, it is fair to say that for the most ferent industries still slow down this ers. As such, the processing dimension
part, virtually every industry has made process. Companies in customer-facing shows very strong variances among
strides in building the digital infra- industries like financial services, trade industries.
structure it needs, but even the most and retail, and consumer goods are
forward-looking companies have not having greater success in digitizing their Perhaps the most surprising finding
yet reached the stage of true digitally supply-side relationships for a simple, involves the difficulty companies in
enabled, real-time, connected design, structural reason: Being downstream every industry still have in the output
supply, build, sell, and service capabil- players, they are further removed from dimension, despite most consum-
ities—the real long-term aspiration of the non-digital world of raw materials ers’ familiarity with processes such
many corporate players (see Exhibit 3). as the ultimate input factor, but rather as e-commerce. The data suggests
interact with other service or manu- that in most cases, bricks and mortar
According to the Eurostat data, more facturing players that are active in the may still be far more important than
than 70 percent of companies in supply side further upstream. clicks; moreover, there is a great deal
Exhibit 3
Overall Degree of Digitization Across Business Process Dimensions
Input 31.4
Processing 30.5
Output 19.5
Infrastructure 90.1
0 10 20 30 40 50 60 70 80 90 100
Source: Eurostat; Booz & Company analysis
8 Booz & Company

11. of variance between the leaders and the At the sector level, the differences procurement and logistics, network and
laggards in this area. This may be due among the four dimensions stand out IT equipment sourcing, and ordering
in part to the phenomenon that by now, even more vividly (see Exhibit 4). For and warehouse management needed
large corporations have all engaged in instance, financial services and insur- to efficiently build and maintain
e-commerce activities in some shape or ance, the overall leader in digitization, their networks and service produc-
form, while small and medium-sized is particularly strong with respect to tion infrastructure. At the same time,
enterprises often tend to be more tradi- underlying infrastructure, transaction many operators face challenges in the
tional in the sales channels they use. We processing both internally and with output dimension, where their efforts
are still far from a true multichannel external partners, and the digitization to improve the e-commerce and overall
customer-facing capability that would of output processes such as interfaces digital customer experience is not yet
allow customers to move seamlessly among banks, stock exchanges, clearing on par with leaders in this discipline.
from online channels to physical shops and settlement parties, and regulatory
to call centers. institutions. Clearly, the essentially As noted, however, most industries
digital nature of financial products, continue to face difficulties in the
By and large, however, companies in services, and information lends itself to output dimension. Even trade and retail
most industries tend to be more fully digitization. and consumer goods, surprisingly, do
digitized the closer to the customer they not perform better than the average in
are. Many industries, especially those On the other hand, the computers and this area. Despite their well-publicized
that deal in physical goods, still oper- electronics industry, though it out- efforts in the digital realm, these sectors
ate in an essentially analog mode in performs the industry average index continue to be dominated by bricks-
working with suppliers, whereas those across all dimensions, is stronger on and-mortar players that are moving
dealing primarily in information and the input side than the output. And toward a Web-centric, digital model
services have moved forward quickly many telecom operators have created only gradually.
in digitizing their output contact with impressively optimized inbound supply
their customers. chains involving handset and device
Exhibit 4
Industry-Level Digitization Index Across Business Process Dimensions
INDUSTRY VARIATION FROM AVERAGE FOR EACH DIMENSION
Input Processing Output Infrastructure Overall
Dimension Average 31.4 30.5 19.5 90.1 43.3
Financial Services & Insurance 3 15 15 7 10
Computers & Electronics 14 12 6 6 9
Media & Telecommunications 17 6 5 7 9
Automotive 5 9 10 2 6
Equipment & Machinery 5 6 0 4 4
Trade & Retail 5 3 1 0 2
Chemicals -5 3 0 2 0
Basic Manufacturing -3 0 1 1 0
Utilities -4 -2 -7 4 -2
Business & Administrative Services 1 -8 -7 1 -3
Transportation & Logistics -7 -6 -2 -4 -4
Consumer Goods -10 -5 -1 -8 -6
Real Estate, Rental & Leasing -6 -10 -12 0 -6
Construction -7 -10 -9 -4 -8
Hotels & Restaurants -6 -15 -2 -18 -11
Source: Eurostat; Booz & Company analysis
Booz & Company 9

12. THE The process of digitization is differ-
entiated not just along sector lines,
given the complexity of their legacy
production environments.
GEOGRAPHIC but along geographic lines as well.
DIVIDE Europe demonstrates these distinc-
tions clearly. In general, the farther
These distinctions should come as no
surprise, given the well-established
north and west a country is located, link between the extent of digitiza-
the more advanced it is in terms of tion in any particular country and its
digitization, and this is true not just per capita gross domestic product.
in overall terms but on the industry The fact that this relationship also
level as well. Germany, the U.K., and holds true on the sector level—
the Benelux and Nordic countries Germany’s financial services sector is
are the most digitized in Europe, more advanced digitally than Italy’s,
and they lead eastern and south- for example—only confirms the
ern Europe in all but one industry. effect that country-level characteris-
Southern Europe is close behind, tics such as governmental policy and
while eastern Europe clearly lags (see the availability of investment capital
Exhibit 5). have on promoting digitization.
Moreover, the relationship between
On an industry basis, the gaps digitization and wealth creates a
among regions tend to be largest in virtuous circle: The availability of
the old-economy non-service sectors, investment funds enables digitiza-
such as basic manufacturing and tion, and more digitization supports
chemicals. These industries typically higher levels of GDP growth, making
require significantly higher levels of more money available for invest-
investment in order to digitize than ment. Every government would be
do service sectors, and the digitiza- wise to try to encourage this positive
tion process itself is more difficult, spiral in its economy.
10 Booz & Company

13. Exhibit 5
Geographic Distribution of Industry Digitization in Europe
DIGITIZATION IN DIFFERENT REGIONS
Financial Services & Insurance
Computers & Electronics
Media & Telecommunications
Automotive
Equipment & Machinery
Trade & Retail
Chemicals
Basic Manufacturing
Utilities
Business & Administrative Services
Transportation & Logistics
Consumer Goods
Real Estate, Rental & Leasing
Construction
Hotels & Restaurants
10 15 20 25 30 40 45 50 55 60
Central/Northern Europe Southern Europe Eastern Europe
Note: Central/Northern Europe: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, Netherlands, Norway, Sweden, and United Kingdom. Southern Europe:
Croatia, Cyprus, Greece, Italy, Macedonia, Malta, Portugal, Serbia, Slovenia, Spain, and Turkey. Eastern Europe: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Poland, Romania, and Slovakia.
Source: Eurostat; Booz & Company analysis
Booz & Company 11

14. BUILD The real value of the digitization
index is the insight it provides into the
be taking in the future. So they
overspend on infrastructure and
CAPABILITIES risks and rewards for digital leaders underspend on intelligent process
NOW and laggards alike, on both the sector
and the country levels, in an increas-
automation and better digital
output mechanisms.
ingly digital future:
• ICT companies should place their
• Sectors already leading the race to bets on supporting the industries
digitize, such as financial services that are digitizing fastest, as those
and insurance and computers and are the ones spending the most
electronics, have a unique oppor- money to further the digitization
tunity to build sustainably advan- process.
taged positions.
• All national governments need to
• Lagging industries, including real set their digital agendas to take into
estate and hospitality, are at risk of account the importance of digiti-
missing out on the digital revolu- zation—solidifying their current
tion, and becoming less relevant strengths, remedying their current
in the minds of consumers. If this shortcomings, and investing further
trend continues, these industries to compensate for “GDP bias.”
will likely also begin to lag in their
ability to capture their fair share of As the process of digitization evolves
consumer revenues in the future. and matures, monitoring how it is
It is therefore critical that they affecting different industries and
reassess the value of digitization in countries will be critical. Our Industry
their industries and speed up their Digitization Index is designed to do
digitization efforts. just that. Tracking these changes is the
only way to understand where prog-
• Too many companies in every ress is being made, and thus where it
industry fail to understand the needs to be supported further.
direction that digitization will
As the process of digitization evolves,
monitoring how it is affecting different
industries and countries will be critical.
12 Booz & Company

15. Resources
About the Authors
“The Next Wave of Digitization: Setting Your Direction, Building Your Capabilities,”
by Roman Friedrich, Matthew Le Merle, Michael Peterson, and Alex Koster Dr. Roman Friedrich is a partner with
(Booz & Company, 2011). www.booz.com/media/uploads/BoozCo-Next-Wave-of- Booz & Company based in Düsseldorf and
Digitization.pdf Stockholm. He leads the firm’s communi-
cations, media, and technology practice
“The Rise of Generation C: Implications for the World of 2020,” by Roman in Europe, and specializes in the strategic
Friedrich, Matthew Le Merle, Michael Peterson, and Alex Koster transformation of these industries in the
(Booz & Company, 2010). www.booz.com/media/uploads/Rise_Of_Generation_ context of digitization.
C.pdf
Matthew Le Merle is a partner with
“Value Shifts in the Telecom, Media, and Technology Industries,” by Pierre Booz & Company based in San Francisco.
Péladeau, Roman Friedrich, Timo Benzin, and Frédéric Sarrat (Booz & Company, He works with leading technology, media,
2011). www.booz.com/media/uploads/BoozCo-Value-Shifts-Telecom-Media- and consumer companies, focusing on
Technology.pdf strategy, corporate development, marketing
and sales, organization, operations, and
innovation.
Dr. Florian Gröne is a principal with
Booz & Company based in Berlin and
heads up the firm’s CRM Center of
Excellence in Europe. He works with
METHODOLOGY telecom, media, and consumer players on
building world-class front-office processes
The Industry Digitization Index is derived from a wealth of data gathered by and information technology capabilities on
Eurostat, the European Union’s statistical agency, under its 2011–15 information their path to digitization.
society benchmarking framework. Among other dimensions, the program
captures data on how many companies (of the total number of companies Alex Koster is a principal with
with 10 or more employees) use or have deployed various elements of digital Booz & Company based in Zurich. He
infrastructure, tools, platforms, and management capabilities and policies. focuses on strategy, revenue growth, and
business model transformation opportu-
In creating the index, we began by dividing the data into four separate factors, nities across technology, telecom, and
each of which is defined by several sub-factors and components. The four Internet companies, and advises these
dimensions summarize the following underlying data points: companies on their route toward a digitized
world.
• Digital input: The extent of digital processes in the procurement stage of the
business, including data points regarding the use of computer networks as
well as electronic transmissions suitable for automatic order processing.
• Digital processing: The degree to which processes are integrated, both
internally and with external partners. The internal integration sub-factors
include data points regarding the existence and use of digital technologies
such as enterprise resource planning and customer relationship management,
as well as data points regarding the use and purpose of internal information
sharing with different organizational functions like accounting, inventory
management, and production and services management. External integration
comprises such activities as electronic data interchange, including the
electronic transmission of data with business partners, public authorities,
and financial institutions, as well as activities like supply chain management,
which includes the use of electronic data transmissions to and from business
partners both upstream and downstream.
• Digital output: The importance of digital processes in the sales function,
including the use of computer networks as well as electronic transmission of
data suitable for automatic sales processing.
• Infrastructure: The sophistication of the underlying IT technology, focusing
on the presence and use of computers and computer networks (wired and
wireless) as well as the presence and type of connection to the Internet,
including the use of fixed and mobile broadband or other fixed connections,
such as cable or leased lines.
Then, by logically aggregating the results of the data collected for each factor
within each industry, we were able to construct both the overall index and a
deeper understanding of the progress each industry has made in each of the
four factors.
Booz & Company 13

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Today, with more than 3,300 people in 60 offices
around the world, we bring foresight and knowledge,
deep functional expertise, and a practical approach
to building capabilities and delivering real impact.
We work closely with our clients to create and deliver
essential advantage. The independent White Space
report ranked Booz & Company #1 among consulting
firms for “the best thought leadership” in 2011.
For our management magazine strategy+business, visit
strategy-business.com.
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Booz & Company.
©2011 Booz & Company Inc.