Digitising to Differentiate
Author Sukhendu Pal
Digitising business to radically improve performance is a hot topic for many companies. Senior executives in all industries are using digital advances such as big data, analytics, mobility, social media and smart embedded devices as well as improving their use of traditional technologies to change customer relationships, internal processes and value propositions.
As businesses continue to experience unpredictability and unprecedented competition, senior executives are increasingly embracing digitisation and reinventing their businesses to remain relevant according to a recent Sirius & Company survey. The survey was carried out from July 2013 to July 2014, and received responses from 1,054 senior executives representing the full range of industries, regions and company sizes. To provide balanced perspectives, 847 respondents were business leaders such as CEOs, business unit heads, marketing heads or COOs, while only 207 of these senior executives have either direct or indirect responsibility for information technology (IT) in their orgainsations. In the survey, we asked respondents about six digitisation trends:-
1. Big data;
2. Cloud computing;
3. Information technology infrastructure management;
4. Information security;
5. Bring your own device (BYOD); and
6. Productivity of digital workers.
We specifically inquired about their organisations’ adoption of and focus on each trend, what impact technologies can (and do) have on the productivity of their workforce, and what barriers organisations face in achieving their strategic objectives. We found that the companies we surveyed are moving forward with digitisation at different speeds and experiencing varying levels of success. Some are changing many parts of their organisations while others are still doing only the basics. Many companies are encountering organisational issues that prevent them from digitising their businesses. However, we found one clear trend – smart companies combine digital activity with strong leadership to reinvent their businesses.
Analysis of the survey results also shows clear patterns. Executives are digitally transforming three key areas of their enterprises: customer experience, operational processes and business models. Currently, no company in our survey has fully transformed in all 3 areas. Rather, executives are selecting among these building blocks to move forward in the manner that they believe is right for their organisations. More than 80% of executives say the strategic intent behind their digitisation programmes is either to build competitive advantage in an existing business or to create new business.
So, how are companies managing the spread and scope of digitisation? We have found that companies are using one or more of three approaches to managing digitisation:-
Convergence: This approach brings all digitisation investments together and places them under a single executive. Convergence requires the introduction of new organisational structures to create efficiencies and synergies and to increase reuse of resources. Companies using a convergence approach will often organisationally consolidate the key assets of people, data, infrastructure, skills and management processes.
Coordination: This approach doesn’t change the organisational structure but adds mechanisms (such as “lean centre”) to increase the coordination of big digital investments across business unit silos. Leaving the organsation structure “as is” reduces disruption while the mechanisms help facilitate working together across the business units
Autonomous: Companies with this approach believe the key to their success is innovation via local management. Each of the different product groups, business units, or geographies is left alone to maximise its own local value without any coordination.
Identifying a company’s core strategic drivers is the key to deciding which approach is best to follow. Convergence is about reducing cost, reducing risk, and achieving synergies. Coordination is the right choice for enterprises that are trying to achieve a few enterprise-wide goals such as improving customer experience or asset utilisation. Finally, the autonomous approach is right for companies that believe autonomy helps improve innovation and local customer responsiveness.
For the full survey results please see “Digitising to differentiate – Sirius & Company Global Survey Results” (../resources/our_thinking/Sirius_and_Company_Sirius_and_Company_Digitising_to_differentiate.pdf)
Authors: Anthony Williams, David J. Evans and Dr Gina Sum. The authors would like to thank Sukhendu Pal for his contribution to the development of this post.