A special report and podcast from Gartner analyst Mike Burkett explains why now is the right time to take action on DX. Executives are (finally) starting to acknowledge that digital is going to impact their business (Gartner’s CEO survey found that half of executives believe digital is going to disrupt their industry by 2020).
And they’re turning to IT and business operations leaders to make digital business transformation a reality.
But what is it they need to be doing differently? “Sooner or later someone says, ‘By the way, what is digital? Haven’t we been implementing digital technologies for years?’” says Burkett in the podcast. First, he says, you need to understand how your business model is being redefined or disrupted because of digital technologies.
Some of these technologies are emerging, while some have been around for years (say, cloud or mobile) — but digital transformation is less about how technologies are evolving and more about how business models are evolving because of these technologies.
Take the Internet of Things. “The IoT is changing the way that companies have a relationship with their customers,” says Burkett. “It’s allowing them to be able to serve them in different ways through that connectivity.” It’s also changing the relationship between companies and their partner network, allowing them to deliver a whole new customer experience.
Burkett points to Monsanto, which sells seeds, and John Deere, which sells tractors; the two companies are connecting through IoT to help farmers — their mutual customers — improve crop yield.
“Not only are they connecting to the customer in a different way, but they’re connecting to each other, even though these companies wouldn’t typically relate to each other,” he says.
Many companies know they need to get on board with DX, but something seems to be holding them back. Burkett attributes this to organizational inertia — or the fear to take risk.
“A lot of companies find it very risky to disrupt their own existing business model because they think it’s working fine and they’re concerned about changing it, so while everyone says they want to innovate, actually executing on innovation is pretty hard because oftentimes it introduces a level of risk.”
Another issue is that business leaders pursue digital within their own silos. “That might work if you’re trying to improve your individual operations, but it doesn’t work well if what you’re trying to do is enable the organization to operate with those new digital business models and interact and deliver new customer experiences,” says Burkett.
Innovation requires articulating business value and defining the operational capabilities that need to be put in place to deliver on that — and to deliver it profitably. This requires CIOs and operational leaders to get smart about articulating business value on everything from financials to asset utilization and margins, says Burkett.
“Without that it’s just a complete disconnect between the individual projects going on and the business value that companies are trying to deliver through digital business,” he says.
Most businesses these days are using digital technologies, but DX isn’t about impacting a business process. It’s about impacting your business model — and that requires moving beyond organizational inertia.