It is hard to attach a value to digital-economy benefits for any given company, but the recently announced US mega-deal between Verizon and Yahoo gave us an example of how much it can cost to get your digital strategy wrong: $350 million. This is the amount by which Verizon dropped its original $4.8 billion bid due to cyber data breaches that last year hit over a billion Yahoo users.

There have been many well-publicised cyber attacks in recent years, including TalkTalk and Tesco Bank, and the technological threat from an increasingly digital world is all too clear.

While it may seem something of a tired cliché to refer to technological change as both a threat and opportunity, in our investment experience this still rings true.

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Some traditional industries such as travel, music and retailing have been severely disrupted by digital upstarts such as Airbnb, Spotify and Amazon, whereas other industries including computing infrastructure, data analytics and cyber security have emerged only because of digital technology.

But what will the effects of the digital economy be for UK companies?

For investors, the importance of getting the answer to this question right is only accentuated by the memory, painful for many, of the technology boom and bust at the turn of the millennium.

In our experience, a distinguishing factor between those companies capable of exploiting the opportunity and those that are instead weakened by new market entrants, is a pre-existing barrier to competition. These barriers afford companies the time to respond to technological advances and seize the digital opportunity for themselves, while also frequently providing them with captive customer bases into which they can market their new digital offerings.

At the risk of oversimplification, the broad benefits of the digital economy are threefold: higher revenues, increased efficiency and stronger customer relationships. Some specific examples of companies reaping these benefits can be far more informative than a theoretical overview.

It is hard to look too far beyond the software sector for examples of companies deriving higher revenues from the digital economy. One such software provider is DotDigital, whose core product enables email marketing automation. It allows marketing teams to build, launch and manage customer engagement campaigns quickly and efficiently, and to monitor vast amounts of useful data in terms of how people are engaging with the campaign.

Smaller companies such as DotDigital can often be the biggest beneficiaries of new technology as they can use it to level the playing field.

When it comes to increased efficiency, companies’ decision-making processes and compliance procedures can be refined and streamlined if they are able to harness the power of the data they generate and draw actionable insights from that information. The market research and data analytics group YouGov is a great example of this, harnessing technology to tap the opinions of five million ‘panel members’ on a regular basis to gain insight for its clients. In addition, data can be invaluable in helping businesses to increase capital efficiency by better managing inventories and workflows.

Lastly, digital solutions can help foster stronger customer relationships, often elevating suppliers to the coveted status of trusted partner. The digital economy is not only enabling quicker communication and helping to facilitate transactions, but is being used to gather ever-more information about customer needs, helping companies to embed their products within their customers’ businesses, strengthen ongoing relationships and upsell additional solutions.

Weir Group, for example, manufactures pumps that operate in harsh environments such as those encountered in the oil and gas exploration industry. These products are subject to considerable wear and tear and sales of spares have therefore always formed a significant part of Weir’s business. By now incorporating chip technology into its products to monitor wear and tear, Weir is helping its customers increase production efficiency, minimising downtime while also driving sales of its products.

As observed last year by the House of Commons Business, Innovations and Skills Committee “every day, people, businesses, organisations, communities and Government use digital technology to make decisions, to make goods, and to deliver services more efficiently and more quickly”.

Those that have strong barriers to competition and can harness the power of technology will surely thrive, with some of the greatest growth opportunities to be found among the smallest businesses on the UK market.

Anthony Cross and Julian Fosh are fund managers at Liontrust Asset Management.