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A New Year’s Wish: Digital Business Transformation

January 26, 2015

So, we’ve just finished that time of year when long-dead Jacob Marley pays a visit to his odorous business partner, Ebenezer Scrooge, to warn him of his impending fate lest big changes are made.

Marley is draped in the chains he forged in life … legacy systems, outmoded business practices, organizational misalignment, incompatible islands of IT, mountains of dormant data.

None too subtly, Marley tells Scrooge that the chain awaiting him has grown proportionately these last seven years. His salvation lies in visitations by three spirits … mobility, cloud and Big Data. If he knows what’s good for him, Scrooge will take their advice to heart.

You know the rest. Scrooge has an awakening. His business goes digital, no more walking the streets of London scribbling down critical data in his journal. He sees his customers for who they truly are, their wants and needs, and he cares. He equips Bob Cratchit with an iPad and iPhone, and now Bob works remotely most of the week. The missus is happy with her iRobot. The Cratchit kids all have smartphones, and there’s no separating Tiny Tom from his Sony PlayStation 4, except for physical therapy, of course.

It seems that many of Scrooge’s CEO peers are having digital-business awakenings of their own going into 2015; the ghosts have been busy. Studies from many leading business consulting and industry analyst firms bear this out.

One such study from Accenture shows that CEOs’ level of support and involvement in driving digital business initiatives has increased from 46 to 61 percent since 2012 and is now on par with CMOs. CIOs are less than 10 percent ahead of both. “Given the focus on growth and rising C-suite interest, it’s no wonder that a sizable share of executives have high expectations for digital. More than one-third of all respondents expect at least 15 percent of their companies’ growth in the next three years will be driven by digital,” according the firm.

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Writing on the same topic in a 2015 predictions report, Gartner identified two overarching themes driving digital business to the fore:

  • The impact of cloud adoption on IT services and the diverse options available for consuming IT
  • The growing attention to a “digital business” future as a means of driving new revenue growth and the opportunities that can’t be ignored.

“These two themes are equally impactful to the providers of IT services (the supply side) and to the consumers of IT services (the demand side),” Gartner wrote. “As this year’s predictions point out, behind the cloud and digital business trends are new prioritization of values and expectations for IT and IT services — cost still matters, but speed, agility, time-to-market, relevance and focus — as well as innovation and business outcome in shortened time frames.”

Another report from McKinsey echoes the first two: “It’s evident that digitization has become a critical asset in many companies’ quest for growth. More than three-quarters of executives say the strategic intent behind their digital programs is either to build competitive advantage in an existing business or to create new business and tap new profit pools.”

The drive to become a digital business has broad organizational impacts, which is another reason why CEOs and boards of directors are recognizing the criticality of their involvement. IT and/or marketing are in no position to drive such fundamental transformations on their own.

“[Organizational] challenges and a dearth of talent are common, significant hurdles that prevent companies from scaling up their digital efforts or seeing clear returns on their investments,” McKinsey continues. “So are limited accountability and a poor understanding of potential value. Less than 40 percent of executives say their companies have accountability measures in place, either through targets, incentives, or ‘owners’ of digital programs, while only 7 percent say their organizations understand the exact value at stake from digital.”

The businesses that get this right and quickly, shedding theirs chains in favor of the new reality, will lead the market disruption and displacement that being a digital business empowers. Will they find the support and innovation they need from the service provider community to make that happen?

The role to be played by service providers is obvious in one way: cloud or, more to the point, hybrid cloud enablement is fundamental to any digital business strategy. What’s not so obvious is the need for providers to recognize for themselves that being simply providers is not enough. Their ability to be true business partners in their client’s digital business initiatives – to contribute value, measure results, make the connections that need to be made, provide agility, understand business objectives and influence direction – will determine their worthiness. Many who are not already oriented in that service model will fail and, in doing so, decrease the surplus population.

Gartner Inc., “Predicts 2015: Cloud and Digital Business Shape Strategies in the Future IT Services Market,” Published 13 November 2014, Analyst(s): Allie Young, Arup Roy, Bob Igou, Ed Anderson, Tina T. Tang, Susan Tan, Julie Short

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