TECHNOLOGY HARDWARE

The Rates of Success, Goals, and Future Priorities
of Digital Transformations, by Sector

The key ﬁndings for hardware devices, components, andsemiconductor companies
More than half of technology hardware
companies have executed a winning
digital transformation that met theirtransformation objectives and createdsustainable change—a ﬁgure 50%
higher than the cross-industry averageof 35%.

Hardware companies outscore otherindustries on individual successfactors, especially leadership andstrategy, but they struggle on agile
governance, indicating that agile atscale remains a heavy lift for physicalgoods companies.

Successful digital players are prioritizing
areas that are good ﬁts with AI solutions,such as automated lead generation,
dynamic pricing, predictive
maintenance, and demand forecasting.

ESG considerations—especiallyenergy consumption reduction, data
privacy, and cyber resilience—arebecoming more important in thedigital agenda.

Source: BCG analysis.

Hardware companies emphasize
customer experience less thancompanies in other industries,
instead making their top priorities
growth and business model
innovation and sales and marketing
acceleration.

The data in more depth

Rates of successin digitaltransformation

Source: BCG analysis.

Topics of focus
for hardware(devices andcomponents)

Top priorities forthe future

The criticalhuman andtech enablers

The role of ESG
in digitaltransformation

RATES OF SUCCESS

Half of hardware companies reach the win zone, which is 1.5 times thecross-industry average
CASES BELOW SUCCESS SCORE (%)
100Hardware company data points

80

Hardware, devices, components,and semiconductors

60

2021 cross-industry
average: 7.4

40Technologyhardware
sector average: 8.0

20

Cross-industry
Woe zone (success score <6)
Worry zone (success score ≥6–<8)
Win zone (success score ≥8)

002

46810
SUCCESS SCORE1

2021 BCG Global DigitalTransformation Survey overall
Hardware, devices,components, andsemiconductor sector

13%

52%

35%

5%

43%

52%

Limited value created(<50% of target); no
sustainable change

Value created but total Target value met ortargets not met;
exceeded; sustainable
limited long-term change change created

Source: 2021 BCG Global Digital Transformation Survey.
Note: Survey question: “Across the following dimensions, please rate your organization’s digital transformation experience to date on a scale of 1 to 10, using the guidelines in the table below.”
1Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.

1.5x cross-industry average

RATES OF SUCCESS

Hardware companies clear the bar on integrated strategy and leadershipcommitment; they struggle most with employing an agile governance mindset
DISTRIBUTION OF SUCCESS SCORES ON INDIVIDUAL KEY FACTORS1Integrated strategy with clear transformation goals

2Leadership commitment from CEO through middle management3

Deployment of high-caliber talent

4An agile governance mindset that drives broader adoption

5Eﬀective monitoring of progress toward deﬁned outcomes6

Business-led modular technology and data platform
Hardware devices

12

3

4

5

6

78

910

8.1

1Lower extreme

08.8
7.6
7.0
7.6
7.7

Upper or lower quartile Upper extremeWoe zone (success score <6)

Worry zone (success score ≥6–<8)

Source: 2021 BCG Global Digital Transformation Survey.
Note: Survey question: “Across the following dimensions, please rate your organization’s digital transformation experience to date on a scale of 1 to 10 using the guidelines in the table below.”
1Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.

Win zone (success score ≥8)

TOPICS OF FOCUS

Transformation priorities for hardware companies include growth andbusiness model innovation and customer-oriented topics
Strategic objectives

Scope of digital transformation1

SHARE OF RESPONDENTS (%)

SHARE OF RESPONDENTS (%)

CROSS-INDUSTRYAVERAGE (%)

Growth and business model innovation
3026

28

17

Improvement incustomer experienceand go-to-market
Innovation and growthin the core and beyond
Performance improvement
through the operationalvalue chain
Performance improvementin support functions

79
74

Sales and market acceleration
68

Customer experience and journeys

72
71
81

Marketing and dynamic pricing

66

41

Digital manufacturing and operations

66

50

Digital procurement

63

54

Building resilience via cybersecurity
and compliance61

54

Supply chain

61

48

Digital ecosystem and partnerships

55

65

Digitizing support functions

55

45

New business venture

Source: 2021 BCG Global Digital Transformation Survey.
Note: Because of rounding, the percentages given for the strategic objectives do not add up to 100%.
1
Respondents were asked to select all priorities that applied.

4245

TOPICS OF FOCUS

Win-zone hardware companies are shifting their focus from core operations
to sales and marketing and innovation-oriented business outcomes
Scope of digital transformation
SHARE OF RESPONDENTS (%)

21 pp
52 pp
–15 pp–15 pp

45

91

82

82

70

60

60

22 pp

15 pp

60

6 pp

45
30

30

Digitalmanufacturing
and operations

Supply chain

Woe- and worry-zone hardware (combined)

Customerexperience andjourneys

Sales andmarketacceleration

Win-zone hardware companies

Growth andbusiness model
innovation

Change of +5 pp or less4536

New businessventure30Digital
ecosystem andpartnerships

Change of more than +5 pp

Source: 2021 BCG Global Digital Transformation Survey.
Note: Survey question: “From the list of most common digital outcome areas and enablers in digital transformation, please help us identify the scope of your digital transformation (select all that apply).”

TOP PRIORITIES FOR THE FUTURE

Nearly all hardware companies intend to invest about 40% of theirinvestments toward next-generation sales and marketing and digital
operations and support functions
PLANNED SHARE OF WALLET SPENDING ALLOCATED ACROSS DIGITAL TOPICS IN THE NEXT TWO TO THREE YEARS (%)197

Next-generation salesand marketing

2189

Product innovationand design

2197

Digital operations andsupport functions
Smart factories

Digital supply chain

2184
1987
18
Share of respondents allocating any investment toward each digital topic

Average share of total investment

Source: 2021 BCG Global Digital Transformation Survey.
1For example, the uppermost pair of bars can be read as “97% of hardware répondent plan to invest in next-generation sales and marketing, allocating an average 21% of total digital investment.”

TOP PRIORITIES FOR THE FUTURE

Hardware companies’ digital priorities: Next-generation sales and marketing
Digital initiatives (bars indicate relative prioritization of initiatives)
Digital marketing

1.00

Automated lead generation and handling

0.63

E-enabled sales force

0.55

Smart customer segmentation and personalized outreach

0.47

Seller/distributor network ecosystem management

0.38

Visualization and dashboards for key account management

0.29

Dynamic pricing model

0.22

Dealer commission

0.09
Relative prioritization for all hardware companies

Source: 2021 BCG Global Digital Transformation Survey, n = 37.

Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

Hardware companies’ digital priorities: Product innovation and design
Digital initiatives (bars indicate relative prioritization of initiatives)
Using market intelligence to understandcustomer requirement and preferences

1.00

Digital tools for real-time collaboration internally0.88

Data-driven (re)engineering to improve product design

0.69

Using virtual tools (e.g., VR) to correct design errors

0.36

Digitizing product life-cycle management
Data sharing platform between testing
companies and component suppliers

0.33
0.19

Relative prioritization for all hardware companies
Source: 2021 BCG Global Digital Transformation Survey, n = 37.

Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

Hardware companies’ digital priorities: Digital support functions
and operations
Digital initiatives (bars indicate relative prioritization of initiatives)
End-to-end procure-to-pay digitization for procurement

1.00

End-to-end hire-to-retire digitization(including integrated training) for HR

0.72

End-to-end record-to-report digitization of ﬁnance activities

0.66

End-to-end order-to-cash digitization for
management of accounts receivable
End-to-end source-to-contract digitization for contracting
End-to-end contact-to-resolve digitization for contact center
Relative prioritization for all hardware companies
Source: 2021 BCG Global Digital Transformation Survey, n = 37.

0.60
0.52
0.49
Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

Hardware companies’ digital priorities: Smart factories
Digital initiatives (bars indicate relative prioritization of initiatives)
Manufacturing analytics (production optimization, default detection, etc.)

1.00

Robotics and automation on the assembly line

0.97

Predictive and preventive maintenance for machinery

0.65

3D printing and additive manufacturing

0.57

Digital twin

0.49

Shop-ﬂoor labor-force optimization and schedule/shift management

0.44

Shop-ﬂoor simulation

0.19

Energy eﬃciency optimization

0.16

Wearables for workers’ safety and traceability
Relative prioritization for all hardware companies
Source: 2021 BCG Global Digital Transformation Survey, n = 37.

0.10
Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

Hardware companies’ digital priorities: Digital supply chain
Digital initiatives (bars indicate relative prioritization of initiatives)
Demand forecasting

1.00

Network optimization

0.71

Real time product and supplies tracking

0.44

Capacity planning

0.44

Inventory planning

0.43

Automated warehouse

0.18

Real-time inventory tracking

0.13
Relative prioritization for all hardware companies

Source: 2021 BCG Global Digital Transformation Survey, n = 37.

Top priorities for win-zone companies

THE CRITICAL ENABLERS

Hardware companies intend to invest across a broad range of tech andhuman enablers
Nine out of ten hardware companies plan to invest in AI and big data, and modernization of tech organization and operating
model, allocating about 30% of their total digital enablers spending to these areas
PLANNED SHARE OF WALLET SPENDING ALLOCATED ACROSS ENABLER DIGITAL TOPICS IN THE NEXT TWO TO THREE YEARS (%)1Tech90

Human90

81

81

76

62
14

Infrastructure
and cloudenablement

67

62

1711

AI and big data

76

Modernizationof techarchitecture

14

Cybersecurity

13

Modernization oftechnology
organization andoperating model

Share of respondents allocating any investment toward digital topic

7

8

Integrated
ecosystems

Continuous
learning

10

New ways ofworking

Average share of total investment

Source: 2021 BCG Global Digital Transformation Survey, n = 38.
1For example, the leftmost pair of bars can be read as ”81% of hardware respondents plan to invest in Infrastructure and cloud enablement, allocating an average 14% of their total digital enabler spending.”

6New talent andleadershipmodelsROLE OF ESG IN DIGITAL TRANSFORMATION

About 87% of hardware companies
plan to increase investments in ESG(above cross-sector averages)… with greater emphasis on Sand G dimensions

Share of respondents planning to increase/decrease/maintain investment toward ESG in coming years

Leading digital initiatives being prioritized
to support E, S, and G goals

Moderately
increase

52Maintain as inprevious year(s)Decrease vs.
previous year(s)25130Source: 2021 BCG Global Digital Transformation Survey, n = 39.

Environment

3556

171· Reduction in energy consumption inoﬃces and buildings· Digital supply chain optimization

SocialSigniﬁcantly
increase

SHARE OF RESPONDENTS PRIORITIZING (%)

CROSS-INDUSTRY AVERAGE (%)· Ensuring protection of clients’, employees’,
and/or customers’ data
· Reducing employee risk

Governance

HARDWARE AVERAGE (%)· Critical risk incident management,
building cyber resilience· Active management of operationallylinked environment KPIs/metrics~43~58~42If you would like to discuss this topic, please contact one of the authors:

JOSE MARIA MORENO LOPEZ

DEREK KENNEDY

Managing Director & Partner, Madrid
moreno.josemaria@bcg.com+34 91 5206 173

Managing Director & Senior Partner, San Francisco
kennedy.derek@bcg.com+1 415 732 8124

JT HSUSCOTT STEMBERGERManaging Director & Partner, Taipei
hsu.jt@bcg.com+886 2 8722 2038

Managing Director & Senior Partner, Denver
stemberger.scott@bcg.com+1 720 800 9803