http://www.gartner.com/newsroom/id/2745517
Digital business is changing the way organizations use
and think about technology, moving technology from a supporting player
to a leading player in innovation, revenue and market growth, according
to Gartner, Inc. However, digital business should not be considered an
IT program and should instead become an enterprise mindset and lingua
franca, with digital expertise spread across the enterprise and value
ecosystem.
Gartner predicts that a lack of digital business
competence will cause 25 percent of businesses to lose competitive
ranking by 2017.
"CIOs or IT professionals who hear 'digital business'
and think 'IT' will be blindsided," said Ken McGee, vice president and
Gartner Fellow. "Digital business is not synonymous with IT. It is about
revenue, value, markets and customers. It is outward-focused. It is a
metaphorical combination of front office, top line and downstage
compared with back office, bottom line and backstage. True, information
and technology help to build the capabilities for digital businesses,
but they are only part of a complex picture."
"Businesses have used information and digital technology
for some time as sources of efficiency and productivity," continued Mr.
McGee. "However, in a digital business, digital technology, for the
first time, moves into the forefront, into the heart of what the
business is doing and how it generates revenue, seizes competitive
advantage and produces value. Digital business represents a more extreme
revolution than previous technology-driven changes, and CIOs, with
their insight into technology and information, are positioned to develop
and promote a successful digital business."
Gartner has identified six crucial steps that will
enable CIOs and other business leaders to build a successful digital
enterprise and change the game.
Step 1: Create the Right Mindset and Shared Understanding
Digital business is not just about expanding the use of
technology. Digital business leaders must think about technology in a
fundamentally different way than in the past. It is not an enabler to be
applied to what the business wants to do but a source of innovation and
opportunity for what the business could do. This more proactive model
focuses on creative disruption and new business models to gain
competitive advantage.
As digital business continues to mature, the pipeline of
opportunities that will evolve will take on the characteristics of what
Gartner calls a "business moment," defined as "transient opportunities
exploited dynamically." In the context of digital business, a business
moment is a brief everyday moment in time and the catalyst that sets in
motion a series of events and actions involving a network of people,
businesses and things that span or cross multiple industries and
multiple ecosystems. Business moments are important, because they will
force enterprises to rethink the role they play in a value stream.
Business moments illustrate a wide variety of possibilities and players
and help companies envision and design new businesses that integrate
people, businesses and things to do things that were not possible five
years ago. The hallmark of a digital business will be the ability to
spot these opportunities, however fleeting.
Step 2: Put the Right Leaders in Place
The fast-moving digital world is exposing gaps in
digital leadership, especially with regard to front office disciplines
(those related to the customer experience) and head-office disciplines
(those related to enterprise strategy). Three types of digital business
leader have emerged to fill these leadership gaps:
- The digital strategist
- The digital marketing leader
- The digital business unit leader
"These are roles and not necessarily titles," said Lee
Weldon, research director at Gartner. "The title chief digital officer
(CDO) is being used for each of these roles — to date, most often for
the digital marketing leader — although the CDO title is best used for
the digital strategist. Some CIOs play the digital strategist role
already, so it is the most natural digital leadership role for CIOs to
evolve into."
These roles are likely to be around for the next five to
10 years, but are really just interim positions. This is because
digital will simply become a part of the way we do everything soon,
making a single, separate role dedicated to digital initiatives
inappropriate, if not impossible. More generally, there will be
significant innovation in the way businesses are managed and led in the
next decade or two. While three discrete roles are optimal, one person
could play multiple roles, and the people fulfilling these roles could
also have other responsibilities.
Step 3: Launch a Digital Business Center of Excellence
Create a digital business center of excellence (COE) to
provide input, advice and opportunities for the collaborative formation
of a digital strategy and the collaborative advice, innovations and
capabilities needed for execution.
"Start by accessing digital opportunities," said Mr.
McGee. "Examine your strengths, weaknesses and potential opportunities
and identify new technologies and how they might pose a potential
threat. Engage people from throughout the enterprise and, more
importantly, from outside the enterprise and industry, such as current
and potential users, as well as recognized and unrecognized thinkers,
both associated with and orthogonal to the focus of your enterprise's
main vision. Assessing opportunities and especially threats start with
identifying what you have not yet thought about — a task that requires
requisite variety to ask new questions and suggest new ways of thinking
about the issues such as via co-creation and crowdsourcing."
Step 4: Formulate a Digital Strategy to Respond to Opportunities and Threats
Once the necessity of a digital strategy has been established, the following five elements must be addressed:
New Digitally Enabled Business Models — New
digitally enabled business models afford new sources of revenue and
disruptive competitive advantage for some period of time. Creating new
business models will become an almost automatic default position of a
digital business strategy.
The Product and Service Portfolio — In an increasingly digital world, products and services can be virtual, with no physical presence.
Information as an Asset — Information,
and its effective use, has become a strategic asset and a competitive
advantage to the digital businesses best able to exploit it. Although
information strategy is a key element of digital business strategy,
organizations must balance their desire for competitive advantage
against the limitations of regulatory and other legal requirements and
the privacy and manifold ethical concerns of their customers.
Technology — In the digital enterprise
mobile devices and bring your own device (BYOD) are becoming more
commonplace, cloud computing and cloud-based services of all kinds are
proliferating, and data of all types is exploding. As a result, evolving
and implementing an effective technology strategy are more complex than
ever before.
Content, Media and Channels — A
successful digital business strategy critically depends on understanding
customers' preferences for channels, the segmentation, and the
possibilities associated with each instance.
Step 5: Find, Develop and Acquire Digital Business Skills and Roles
Digital business combines the expertise, skills and
roles found not just in IT, but across the enterprise. Digital business
is not an IT program but an enterprise mindset. While digital business
has roots in digital technology, it is ultimately about business.
Decision making will be owned, operated and potentially influenced by
the relationship between CIOs and business leaders.
"Digital business leaders agree that the competition for
talent will make or break their success in digital business," said
Diane Morello, managing vice president at Gartner. "However, according
to Gartner's 2014 CIO Agenda survey, 42 percent of 2,339 CIOs from 77
countries surveyed said their IT organization did not have the right
skills and capabilities in place to meet upcoming digital business
challenges. As digital business picks up speed, CIOs, HR executives and
other business leaders must reimagine their quest for talent,
emphasizing new approaches that accelerate and widen access to talented
people while minimizing the bottlenecks of traditional serial
processes."
Step 6: Create New Digital Business Capabilities
With the expectation that digital business expertise
will spread around businesses within two or three years, but the
acknowledgment by many that their workforce is unprepared and
inadequate, organizations will need to explore the kind of disciplines
needed to drive digital business initiatives. Traditional recruitment
practices will not suffice. Instead, organizations should consider
launching boot camps and other learning programs about digital business
across all areas of the business. They should mine informal networks and
investigate "work mashups" by applying digital business and digital
technologies to the distribution of work and look at piloting new
channels for finding, building and acquiring digital business
capabilities.
More detailed analysis is available in the report "Six
Key Steps to Build a Successful Digital Business." The report is
available on Gartner's website at http://www.gartner.com/doc/2725917.
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