#Japan #Tokyo #IT Management #ROIC #EY Consulting

EY's Innovative Approach to IT Management for Enhanced ROIC

In the rapidly evolving business landscape, effective management of IT and digital investments is crucial for companies looking to optimize their capital efficiency and enhance their market value. Recently, EY Strategy and Consulting (EYSC) announced a new service targeting the improvement of Return on Invested Capital (ROIC) through a sophisticated management system incorporating IT investments. This initiative reflects modern business needs, aligning digital strategies with business objectives to foster sustainable growth.

EY-ISAO-RX Framework Overview

At the core of this initiative lies EY's proprietary framework, EY-ISAO-RX (Integrated Strategic Alignment and Optimization—ROIC Execution). The framework connects various financial metrics—like ROIC, ROA, and ROE—with IT and digital investments as well as business Key Goal Indicators (KGIs) and Key Performance Indicators (KPIs). Through this integration, EY aims to offer clear visibility into how tech investments contribute to operational efficiency and overall business value.

The significance of this framework is illustrated by EY's unique research, which indicates that organizations capable of effectively managing their digital investments tend to exhibit higher Price-to-Book Ratios (PBR). This correlation highlights how strategic digital investments in growth areas such as Artificial Intelligence (AI), customer engagement, and Research & Development are linked to robust performance metrics.

A Shifting Focus in Corporate Strategy

As market expectations shift, Japanese publicly listed companies are under pressure to prioritize capital efficiency. Regulatory changes by the Tokyo Stock Exchange (TSE) provide an impetus for businesses to refine their management practices, particularly as institutional investors increasingly demand clear PBR-related strategies. This changing dynamic necessitates organizations to view ROIC and ROE as guiding metrics not just for financial management but for holistic investment judgment as well.

However, challenges remain. There exists a gap between the focus of corporate strategies on capital investment and shareholder returns, and what investors, specifically, are prioritizing. Investors are looking more closely at IT and digital investments as essential growth drivers, which sometimes clashes with the traditional focus on tangible asset investments. The shift resonates deep within corporate governance, as many organizations often overlook the importance of robust IT management in their ROIC-centered discussions.

Addressing Management Gaps

While the focus is on enhancing capital efficiency and maximizing corporate value, inadequate management of IT investments can hinder these advancements. EYSC's findings point to a clear correlation between IT investment management maturity and PBR. Companies excelling in this area not only allocate resources effectively towards growth-oriented technologies like AI but seamlessly integrate these investments into their overarching business strategies and departmental KPIs.

Firms exhibiting lower PBR typically show a tendency towards more defensive investment strategies, such as core business refreshes, rather than proactive growth investments, which underscores the importance of finding a balance between defensiveness and growth.

New Consulting Services Offering

The newly launched service titled “IT Management Support for Enhancing Business Value and Capital Efficiency in the ROIC Era” encompasses a comprehensive consulting approach that guides businesses through redesigning their investment decision-making processes with capital efficiency at the forefront. The service includes everything from current state evaluations to the implementation of a data infrastructure, ensuring that businesses can visualize and analyze their IT spend effectively and align it against their business goals.

Through the application of EY-ISAO-RX, clients will acquire a thorough perspective of how their IT and digital investments affect their key financial metrics. This insight will enable organizations to continuously optimize their investment strategies.

Integration of Teams

Moreover, this new service exemplifies a collaborative approach involving EY-Parthenon’s Strategy and Execution team and their Digital Engineering expertise. By combining strategic consulting with technology-driven change, EY is positioning itself as a leader in helping organizations adapt and thrive in today's competitive environment.

Leadership Insight

EY-Parthenon Strategy Partner Kengo Iwaizumi articulated, “With IT investments becoming a pivotal driver of business growth and increasing corporate value, the fusion of business and IT strategies has never been more critical. Our latest service emphasizes this integration, providing companies a clear path to enhance their ROIC.”

In a similar vein, Digital Engineering Partner Tsuyoshi Matsumoto stressed the need for a new management model that links IT contributions to corporate financial outputs. “By rethinking IT investments through the lens of ROIC, we aim to foster environments where companies can simultaneously pursue financial success and societal value,” he added.

For more detailed information on this service, visit the official EY website.

Upcoming Seminar

In conjunction with these new offerings, EY will host a webinar that explores the relationship between IT/digital investments and corporate value, examining management maturity and market evaluation correlations. The session will also present practical IT management techniques relevant for the ROIC era, utilizing EY's innovative frameworks.

Webinar Title: IT Management in the ROIC Era - The Formula of ‘ROIC x IT Management = High PBR’
Date and Time: April 16, 2026, 16:00-17:00
Format: Online
For registration details, check the webinar page.