Do You Have a Digital Advantage? (Part 1 in a Series on Digital Transformation)

>>>Do You Have a Digital Advantage? (Part 1 in a Series on Digital Transformation)

In an era often referred to as “The Information Age,” few                           digital                   business dictums are repeated more than the charge to “harness digital.” But for all its virtues, what are digital’s real drivers of business value? In Transform to the Power of Digital, Didier Bonnet and Priyank Nandan enumerate 4 key sources of digital advantage:

  • Increased productivity
  • Reduced costs and time-to-market
  • Greater innovation
  • Enhanced customer experience

(To read SDLC’s position on Customer Experience as a Business Discipline, see our series of blogs by the same name.)

Naturally, each of these areas has the potential to drive significant business outcomes. But how much do we really know about the correlation between digitization and fiscal performance?

More than you may think.

Owing largely to the work of MIT and its Center for Digital Business, we know that organizations that rank highly in “digital intensity” generate 6-9% greater revenues than those that do not. Similarly, organizations that rank highly in “transformation management intensity” – a rating of C-Level investment in the digital agenda – outperform their counterparts by 9-26%. Perhaps most telling, we know that those organizations excelling along both the “digital intensity” and “transformation management intensity” dimensions are 26% more profitable, on average, than their industry competitors. (Source: http://ebooks.capgemini-consulting.com/The-Digital-Advantage/index.html#/1/)

The evidence is clear: Whether it comes in the form of a mobile application that promotes sales enablement, modernization of a formerly analog business process, or a whole new way of transacting commerce via new business models, digitization yields financial results for those firms that embrace it.

How might an organization capture some of this potential value?

Through “digital transformation.”



According to Karl Moore of Forbes.com, this is “…the process that organizations undergo when they adopt digital technologies such as the Internet, mobile, and cloud computing.” It represents a concerted effort, married to a clear implementation plan, to ‘digitize’ an organization’s customer experiences, business processes, and business models, all in the name of reshaping corporate DNA over time. It’s through this transformation that advantages are not only captured but sustained, and that digital value may endure through the regular course of business operations.

The evolution must begin at the organization’s highest ranks. “In some companies,” according to Capgemini consultants writing in The Digital Advantage: How Digital Leaders Outperform their Peers in Every Industry, “the CIO is the perfect person to suggest and even drive digital initiatives.” Note that digital is neither a purely business nor purely IT initiative, and that joint accountability is a necessary, albeit not a sufficient, condition for the success of a digital campaign. “Shared understanding between IT and business executives,” the consultants continue, “is critical.”

To be sure, the path to digitization is an arduous one, fraught with the dangers of false starts, top-down miscommunication, strategic misalignment, or worse. Nevertheless, its benefits almost universally outweigh its risks, and for many of the world’s largest organizations the rewards of digital may be measured in orders of magnitude; billion-dollar companies often see millions in bottom-line impact by deliberately digitizing parts of their businesses.

Before beginning any ambitious campaign to reinvent the business, the organization should understand its current digital state. How should one assess digital performance? Desired future state? Which areas of the business are ripe for digitization? And what path should the company take to digital transformation?  These critical topics will be discussed in the later parts of our series.

Check back soon for our next topic: Defining Digital Maturity: From Beginner to Digirati.

Brian Lash is a Consultant II at SDLC Partners, a leading provider of business and technology solutions. Please feel free to contact Brian at blash@sdlcpartners.com with any questions on this blog post or to further discuss Customer Experience Management.