I’m not telling you anything new by saying this, but we are in the midst of a digital evolution, or you could say revolution, which is throwing new opportunities and threats at businesses that must be addressed if they are to survive the next five to 10 years.
While many IT organisations have become better at IT strategy and planning in recent years, they now also need to support the enterprise with an integrated digital business strategy. From discussions I have had with many businesses, however, most do not yet have a clear view of what a great digital business strategy looks like, or how to integrate one into their overall strategic planning process.
Much of the digital universe is nascent, and businesses interpret “digital” as many different things, often leading them to chase too many opportunities.
"Digital" is more than enterprise IT or a new marketing channel. The entire business model — not just the customer experience — holds digital opportunities and threats, whether they are in the business model (impacting operations) or have an effect on the business model (impacting the bottom line).
“Digital” refers to all electronically tractable forms and uses of information and technology. It includes technology outside a company's control: smart mobile devices (in the hands of customers, citizens and employees), social media, technology embedded in products such as cars, the integration of IT and operational technologies (such as telecom networks, factory networks and energy grids) and the internet of things (physical objects becoming electronically tractable).
A digital business strategy answers the question, "How will we survive and thrive in an increasingly digital world?" It is becoming an essential part of any business strategy.
By studying businesses that were “born digital” or have grown to become “digital only”, traditional enterprises can learn and apply important leadership lessons to close any gaps.
Trader Media Group, a UK-based auto industry publisher, is a business that started offline but will soon be 100 percent digital. With 11.5 million unique users per month, AutoTrader.co.uk is one of the top motoring websites in the UK, advertising new and used vehicles. The publisher considered its digital strategy integral to its product strategy, making an upfront investment of US$30.92 million to build an online business before making any money, to ensure success.
Trader Media took a multidisciplinary approach, with teams of IT, product development and marketing people working together as peers, focused on identifying and developing solutions that impact the customer experience. This means that tactical issues can be resolved quickly, freeing the team to explore where the next big opportunity lies.
Also taking a very agile approach is China’s online giant Alibaba, which is critically important given its entire business operates on cloud infrastructure. With US$175 billion in revenue and growing, it started with a B2B marketplace and now offers Taobao (a B2C marketplace), Tmall (an online mall), Aliyun (a cloud services platform) and Alipay (a payment mechanism).
To increase agility, the company is reorganising from four monolithic business units to 25 small ones. Its approach to digital talent is just as decisive, hiring more from digitally savvy campuses and less from the highly experienced, yet rigid workforce – only 7000 of its 24,000 employees are engineers. It is also very careful about who it partners with and how these partnerships work – it cannot depend on partners who don’t have significant digital and online experience.
Related: The department of transformers The game has changed and IT has a pivotal role to play in enabling business transformation.
The City of Brisbane in Australia is a traditional organisation with very large digital ambitions. The local government has set itself the ambitious goal of doubling the number of digitally engaged small and midsize enterprises in Brisbane over the next five years and creating a ‘“cyber-city” program.
The strategy illustrates the need to consider the entire digital life cycle, from developing digital talent and stimulating innovation and entrepreneurship, to implementing infrastructure and services that support a “digital city.” Given that the digital landscape is changing so fast, with the Australian people adopting new digital services at three times the rate that Australian businesses do, the City of Brisbane believes flexibility is key. It has appointed the first chief digital officer in local government in Australia.
Digital business strategy is a critical capability for success in the next decade. At some point, digital will simply be embedded in everything we do, but until then, we must ensure that appropriate digital leadership exists to overcome “analogue inertia” and generate the necessary momentum towards digital business.
Linda Price is group vice-president, Gartner Executive Programmes, in Asia Pacific. Email comments to email@example.com