Digital product alchemy

Increasingly, organizations are focused on digital products, services, and experiences that provide a competitive advantage and drive topline growth. Researchers expect that, by 2026, 40% of total revenue for the largest 2,000 organizations globally will be generated by these income streams.

To better understand this rising phenomenon, the IBM Institute for Business Value (IBM IBV) conducted a global survey of 1,500 business leaders across 28 countries and 14 industries.

The financial results are dramatic. Companies across industries are seeing an average return on investment of 46% on new digital products and 75% on digital product enhancements. 

We wanted to dig deeper. What factors matter most when it comes to achieving competitive differentiation with digital products? What habits and efforts separate the most differentiated companies from the rest?

Our research found that organizations are achieving competitive differentiation with their digital products in multiple ways, but they’re seeing varying degrees of success. We categorized our respondents into four groups based on the extent of their competitive differentiation from peers. In this report, we focus on the extremes of the four groups: 29% fall into the Least Differentiated cohort. And 20% have the greatest competitive differentiation, a group we call the Most Differentiated.

All groups are spending roughly the same amount on digital products—about 20% of their IT budget. But the Most Differentiated organizations are seeing the biggest return on that investment: 52% return on investment on new digital product creation and 83% on existing digital product enhancements.

So, what accounts for that differentiation—and what factors overall drive success in digital products?

The most differentiated companies outperform in ROI

In this report, we explore five key lessons that emerged from our survey:

Lesson #1. Prioritize customer loyalty–it’s the biggest differentiating factor driving return on investment.

Lesson #2. Empower the product with a portfolio perspective.

Lesson #3. Embed a product-centric culture.

Lesson #4. Don’t just ideate, create something.

Lesson #5. Embrace generative AI and create dynamic digital products.

Throughout, we include case studies on how IBM Software is embracing each lesson. And we present an action guide on how to apply these lessons at different stages of the digital product journey.