Our last blog on Digital Transformation introduced the notion of digitization as a vehicle to drive positive business outcomes. We described the key drivers of enhanced performance – increased productivity, reduced costs and time-to-market, greater innovation, and enhanced customer experiences – and highlighted the proven correlation between digitization and positive fiscal outcomes.
The benefits of digitization may be self-evident, yet relatively few organizations ever realize their full digital potential, forfeiting critical competitive advantage in lieu of the status quo. With so much to gain, why do organizations willfully leave opportunity on the table? The answer lies in technology’s inherent complexity: That is, few organizations understand their current capabilities, much less those technological capabilities as yet unrealized.
According to George Westerman, research scientist at the MIT Center for Digital Business, “Executives in every industry — from media to electronics to paint manufacturing — face a bewildering array of new digital opportunities.” New technologies mean new ways to optimize, enhance, and engage, but not without challenge. “These executives are paying attention,” he
continues, “but they have few signposts to guide them.” (Source: The Advantages of Digital Maturity)
Understanding organizational Digital Maturity is a logical first step toward technological enlightenment. Why should organizations care about their Digital Maturity? Because it not only frames the current digital state, but also enables a spirited dialogue around the desired to-be state in a manner that ties intimately to business results. “The higher a company’s level
of digital maturity,” says Westerman, “the better its financial performance is likely to be.”
Digital Maturity has been researched at length, and was defined in a landmark study by Capgemini and MIT’s Center for Digital Business as a function of 2 dimensions:
- Digital Intensity, or an organization’s investment in digital, measured through coordinated means (like a portfolio of digital projects) structured toward a digital end; and
- Transformation Management Intensity, or an organization’s digital support structures measured by digital vision, governance, and IT-business alignment.
To arrive at Digital Maturity, performance is assessed against both “Digital Intensity” and “Transformation Management Intensity,” then mapped to a Cartesian-like plane for comparison. Organizations that rank highly along both dimensions will map to the 1st quadrant, while organizations that ranks highly along the X-axis but not the Y-axis will map to the 2nd quadrant, and so on. Through this framework we see that truly exceptional digital performers
will approach the upper-right boundary of the framework, while capable but imperfect performers will map to the bottom-right and upper-left quadrants. The lower-left quadrant is the domain of the digital laggard.
Researchers further defined each quadrant, clockwise from Quadrant 1, as “Digirati,” “Conservatives,” “Beginners,” and “Fashionistas.” (Source: http://ebooks.capgemini-consulting.com/The-Digital-Advantage/)
Beginners often make use of existing traditional technologies such as ERP systems, e-Commerce platforms, and the like, but do little in the way of evolving to advanced capabilities. Some occupy this quadrant by choice, but many are relegated to “Beginner” status for lack of their digital opportunities awareness.
Fashionistas are technologically-inclined, and typically have a portfolio of applications to show for their digital intentions. For all their capability, however, they fail to realize their full
digital potential for lack of strategic vision, enabling governance, IT-business alignment, or some blend of the preceding.
Conservatives most often come in the form of digital skeptics. Support structures are in place to guide digital initiatives to a single, unified vision, but management often sees new technology as faddish and inconsequential unless proven otherwise.
Digirati are digitally-enlightened organizations. Not only do they habitually exploit digital opportunities, but they also inhabit the qualities of vision, governance, and IT-business alignment, the likes of which support their digital transformation. “By investing and
carefully coordinating digital initiatives,” say consultants at Capgemini, “[the Digirati] continuously advance their digital competitive advantage.”
No matter how the competencies derive – from digital intensity, transformation management intensity, or a blend of the two – the rewards of digital maturity are significant. Nowhere is the digital advantage clearer than in the case of the Digirati, which according to Patrick Ferraris, Global Leader of the Technology Transformation practice at Capgemini Consulting, are
“26% more profitable than their non-Digirati peers and enjoy a market value around 12% higher.” (Source: Digital Maturity is a Key Performance Factor for Companies)
How ‘digitally mature’ is your organization? Where are you on your path to Digirati status? How do you compare to your closest competitors? To your industry in general? The answers to these questions will guide your next actions on your path to digital advantage, and the financial rewards that follow.
Stay tuned for the next post in our Digital Transformation series in which we will discuss implementation frameworks.
Brian Lash is a Consultant II at SDLC Partners, a leading provider of business and technology solutions. Please feel free to contact Brian at firstname.lastname@example.org with any questions on this blog post or to further discuss Customer Experience Management.