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Digital due diligence - Discover the full potential of digitalization


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Investors! Are your companies ready for the digital economy? In this presentation I explain why digital due diligence is an integral part of any investment process. I also list four common sources of digital business opportunity and four areas that explain the company's readiness for digitalization.

Published in: Leadership & Management
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Digital due diligence - Discover the full potential of digitalization

  1. 1. © Marko Luhtala 2017 Click to edit Master title style Digital Due Diligence – Discover the full potential of digitalization – 23.9.2017 MARKO LUHTALA Ajantasalla Yrityspalvelut
  2. 2. © Marko Luhtala 2017 Are your companies ready for the digital economy? 2 YOU NEED DIGITAL DUE DILIGENCE TO KNOW: Does the company have untapped opportunities to deliver unique customer value with digitalization? How can digitalization accelerate company growth and drive valuation? Is digitalization likely to cause a disruption in the industry? How can the company turn data into a strategic asset? What is the company’s capability and readiness to embrace digitalization?
  3. 3. © Marko Luhtala 2017 Investors have a clear interest in digitalization… 3 …because companies who apply digital technologies typically: GROW FASTER BUILD A UNIQUE ADVANTAGE COMMAND HIGHER VALUATION Building a competitive edge today without digital technology is difficult. Tomorrow it will be impossible.
  4. 4. © Marko Luhtala 2017 Digital DD is an integral part of any investment process 4 Digital Due Diligence IDENTIFYING NEW BUSINESS OPPORTUNITIES Map and prioritize untapped digital opportunities. Focus on delivering unique customer value, accelerating growth and building a competitive edge. ASSESSING DIGITAL READINESS AND CAPABILITIES Evaluate implementation readiness. Focus on vision, leadership, competences and technical readiness. A forward-looking process covering two areas
  5. 5. © Marko Luhtala 2017 We examine the common sources of digital business opportunities 5 MAKE YOUR PRODUCTS AND SERVICES SMARTER APPLY NEW DIGITAL BUSINESS MODELS 1 2 SCALE YOUR SALES AND OPERATIONS 3 TURN DATA INTO A STRATEGIC ASSET 4
  6. 6. © Marko Luhtala 2017 Digitalization has a huge impact on the investment case 6 Innovative companies generate total shareholder return premiums of 7.5 percent over their industry peers Source: BCG Recurring revenue is worth 3–4x as much as one-time revenue in company valuation Source: High tech industry statistics Digitalized processes deliver 10x to 100x efficiency gains compared to the current processes Source: Own experience based on several cases Creation and use of unique stocks of data capital correlates with 7x faster productivity growth compared to the industry average Source: OECD survey on manufacturing and service industries
  7. 7. © Marko Luhtala 2017 A company’s readiness for digitalization depends on 4 areas 7 Clear and attractive Realistic roadmap Vision for the digital economy? Company culture? Digital experience Understanding digital tasks and roles Network of digitally savvy partners Availability and quality of data Status of backend systems e.g. ERP, CRM Size of the ICT team and investments Competences? ICT infrastructure? Invests in what’s new Encourages trial and error Agile and fact-based decision making
  8. 8. © Marko Luhtala 2017 Digital Due Diligence is a clear process 8 BASED ON DIGITAL DUE DILIGENCE Amend the investment business case Embed digitalization into the growth strategy Build a digitalization roadmap Appoint required skills in the board and management Total duration: 2–3 weeks Set targets with the investor team Due Diligence: • 1-2 workshops • Interviews • Self-assessment Validate opportunities with customers Report and recommendations
  9. 9. © Marko Luhtala 2017 Recommendations for investors 9 1 ONE STRATEGY Include digitalization in the strategies at the investment phase or when rebuilding the growth plans – don’t make it a separate exercise. 2 PRIORITIZE Compare the digital opportunities against the execution challenges. 3 QUICK WINS Identify quick wins that deliver fast returns and get you on the learning curve. 4 COMMON ASSETS Consider building common digital assets and competences for your company portfolio to accelerate implementation. © Marko Luhtala 2017
  10. 10. © Marko Luhtala 2017 Marko Luhtala – your digital expert 10 MARKO LUHTALA has almost 20 years of experience in digitalization in several industries ranging from retail and consumer electronics to construction and agriculture. He has a rare background combining international corporate executive experience and technology entrepreneurship. As an international sales and marketing executive Marko has applied digitalization extensively in his own business operations globally. Later, as a SaaS and digital marketing entrepreneur he has developed digitalization solutions successfully for dozens of client companies. © Marko Luhtala 2017