The Business Risk You Shouldn’t Avoid

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The journey to digital transformation may seem daunting, but the bigger risk is not starting down the path at all.

By Stefanie McCann, Editor, Connected Futures

Why build a digital organization? For private-sector executives, the answer seems easy. It can help create a better customer experience. Increase customer loyalty. Even build pathways to new business opportunities.

Kevin Bandy, Cisco chief digital officer, however, advises executives to “look at digital as empowering continuous innovation across every facet of your business.”

The result will be simplifying your organization and improving collaboration. One caution from Bandy, though: “If it is not tied to continuous innovation around growth, then it is not properly aligned.”

Peter High, president of Metis Strategy, agrees. “Digital touches every part of the enterprise. It needs to be incorporated into the entire organization.”

But where, when, and how? Cisco recently conducted research based on 350 private sector digital use cases. The resulting study answers these questions and shows where organizations can capture the most value from digital.

According to Bandy, the research shows that capturing digital value involves challenging the assumptions that have underpinned the success of a company up to now. This includes “stress testing the ways in which you deliver value to customers.”

It also means changing the organization itself. Operations, culture, revenue models. Plus technology maturity and skill sets. Fundamentally and perpetually.

This seems like a tall order. And, depending where an organization is on its digital journey, it can be.

It’s helpful to learn from others. For instance, organizations realizing the highest value from digital business solutions share two characteristics:

  1. They’re IT-intensive — both in terms of the types of products and services they deliver, and how they deliver them.
  2. They display greater convergence between the IT and operational technology (OT) components of the business. In other words, consistent technology and process innovation.

Private sector firms should follow three steps to start building a digital strategy:

1. Determine its place on the digital transformation journey. Most organizations are in one of the following three phases of becoming digital:

Enable: This is where organizations are looking for technologies to enable the digital strategy. This means first looking to achieve IT agility and operational effectiveness.

Differentiate: In this phase, organizations are using digital technology to differentiate their strategies. For instance, delivering the ultimate customer experience. Or using digital to re-define business processes.

Define: Organizations that are the furthest along in the digital journey are harnessing technology to define their strategies. These companies are reimagining entire industries with new business models.

2. Select digital use cases that deliver high-value business outcomes, such as:

Simplify and automate processes: Creates faster time to market and leaner operations.

Empower workforce efficiency and innovation: Promotes increased productivity and better workforce retention.

Personalize customer experiences: Fuels greater customer loyalty and deeper insights.

3. Develop digital business agility, which is enabled through three capabilities:

Hyperawareness: The ability to detect and monitor changes in a company’s business environment.

Informed decision-making: The ability to make the best decision possible in a given situation. To do this, data collected during the hyperawareness processes must be analyzed, scaled, packaged, and distributed throughout the organization. Informed decision making relies heavily on mature data analytics capabilities that augment human judgment.

Fast execution: The ability to carry out plans quickly and effectively. This depends enormously on change management to ensure quality and alignment to corporate strategy. It can also include workflow automation — or the ability to extend real-time offers based on a customer’s location and context.

In a time when budgets are flat, digital transformation can seem out of reach. However, according to the experts, the real cost and risk lies in not digitizing.

“Different organizations are at different levels of maturity when it comes to digital,” says High.

But that shouldn’t stop organizations from continuing to move forward. Digital transformation requires a self-funding strategy. It is important to focus initially on use cases that will deliver the quickest value. These gains can then help fund longer-term digital strategies with the potential to drive even greater value.

The nice thing about developing digital capabilities is that they often do not require entirely new investments. Digital investments made to achieve one business outcome can be repurposed to drive other digital initiatives.

Read more about building a digital roadmap in the recent Cisco study: Where to Begin Your Journey to Digital Value in the Private Sector