Health Care’s Wide-Ranging Maturity
The health care sector has a big share of laggards (43%), but like energy, the picture is more nuanced when looking into the various subsectors: medical technology (medtech), providers, and biopharma/pharmaceuticals (bio/pharma). All three subsectors score highest in having a business strategy driven by digital(medtech DAI 64, providers 52, bio/pharma 46). Even though all have a solid digital strategy, when it comes to digitizing the core,we found that medtech (DAI 61) is far ahead of providers (DAI 40) and even more so bio/pharma (DAI 25). Success in this area is what seems to truly differentiate laggards and champions.
Medtech is the most advanced subsector, with only 10% laggards, which makes sense since technology and software for diagnostic purposes are at the core of its business. Being close to the customer and regularly receiving feedback on product innovation helped them achieve a respectable DAI score of 63 in reinventing customer journeys. Meanwhile, they are also experimenting with connected devices (for example, for remote monitoring) for new growth, which is reflected in the high score for new digital services/products (DAI 50) compared with 29 for bio/pharma.
Medical providers (such as hospitals and medical centers) are much further behind on the digital journey, with 54% being categorized as laggards. But the subsector with the most laggards was bio/pharma (70%). This is due to a very complicated supply chain that some companies still manually manage on Excel spreadsheets. Bio/pharma’s customer journey score (DAI 28) shows room for improvement, especially compared with providers (DAI 44).
But the outlook for health care is positive, especially if it can better utilize two inherent advantages: a broad ecosystem and tons of data. Today, many health care companies have myriad partnerships yet no strategic approach to leverage these networks for new growth. To turn this potential into a reality, they will need digital capabilities and real-time data access, which is currently still an area with lower digital maturity.
For example, bio/pharma scored DAI 13 on data and analytics governance and DAI 7 on digital and artificial intelligence. They will also need to ramp up data analytics capabilities to apply AI and other emerging technologies like blockchain. (See “A Prescription for Blockchain in Health Care,” BCG article, April 2018.) To provide one example, a multinational biopharmaceutical company launched a digital initiative to integrate data sources, gain greater visibility into the supply chain, and generate insights beyond what is possible from traditional enterprise resource planning (ERP) data. This project allowed the company to map the supply chain end-to-end, expose sources of volatility, and get real-time updates on material flow and disruptions. By applying machine learning and smart analytics to this deeper well of data, and leveraging those to guide their process optimization and operational excellence initiatives, the company lowered costs by 3% to 5% and became more efficient, reducing working capital by 5% to 7%.
Automotive’s Digital Know-How
The automotive industry has the highest share of champions, 27%, after telco, tech, and banking. Digital champions scored particularly high in digital roadmap (DAI 87) and manufacturing/Industry 4.0 (DAI 85). Automotive is very experienced—and way ahead of other industries—when it comes to digitizing R&D and production. With the emergence of connected and autonomous cars, digital has become essential to the product roadmap.
Today, fast-moving newcomers pose a threat to the industry. These new entrants have very fast internal cycle times, or, like Uber, they compete using asset-light digital business models. Some of the champions in automotive started responding early to these threats. This is reflected in their high scores for developing digital capabilities (DAI 75), digitizing their core processes (DAI 77), and launching digital businesses (DAI 75). Car lenders, dealers, and OEMs should move quickly and partner with startups or build their own digital platforms or ecosystems to create revenues form adjacent or new businesses. For instance, Daimler and Volkswagen funded AutoGravity, a site where potential car buyers apply for loans and compare rates directly on their smartphones.
The 25% of laggards in automotive face challenges foremost in process digitization and robotics, next-generation sales, and DevOps(each dimension with average DAI score of 25). These laggards risk losing long-term competitiveness with their peers, as well as digitally savvy new entrants.