Digital Enterprise Transformation is Altering Companies and the Business Landscape

Stephen DeAngelis

June 9, 2016

We’re all aware how digital enterprise transformation has swept across the entertainment industry forever altering that business landscape; however, the digitization tsunami is just reaching the shores of other industries about to feel its full effects. Maribel Lopez (@MaribelLopez), a strategy adviser and analyst at Lopez Research, notes, “Never in the history of computing has there been so many monumental changes occurring simultaneously at such a rapid pace.”[1] She continues:

“Unlike the move to the Internet, where everyone placed an ‘e’ in front of their title, everything about this technology era is different. We have more options for purchasing and utilizing the best hardware and software infrastructures (cloud and SaaS). We have access to data and the Internet wherever we are (mobility). We have more data, coming from a wide variety of connected devices (mobile and Internet of Things), in a less structured format. But fortunately we also have new ways of storing, analyzing and driving insight from this data (big data processing, cognitive computing). The question is how do we harness the power of all of multiple waves of technology evolution that are happening simultaneously?”

Another way of asking that question is, “How does an industrial age company transform into a digital enterprise?” You might be asking yourself, “What is a digital enterprise?” David Woods (@DatumWoods), a principal partner at Datum Strategy, believes it’s easier to define what a digital enterprise is NOT before defining what it is.[2] He claims a digital enterprise is NOT:

 

  • An ecommerce company – Of course the enterprise likely has an ecommerce component, but the term ‘digital’ is not synonymous with ‘online’ in this sense.
  • A marketing term – If you Google ‘digital strategy’ you will likely get a lot of results that relate to a company’s online marketing strategy. We are talking about a much bigger picture.
  • An IT endeavor – The second you say ‘digitalization’ many people start thinking computers and technology, which leads them to believe that this is purely an IT concern. While IT needs to be involved, it is certainly not an IT-owned strategy.

 

He’s right on all counts. So what is a digital enterprise? Woods writes:

“Let’s consider a definition from Gartner Inc., which states ‘[Digital Business] is about revenue, value, markets and customers. It is outward-focused. It is a metaphorical combination of front office, top line and downstage compared with back office, bottom line and backstage.’ Here’s a different definition from TechTarget Search CIO: ‘A digital enterprise is an organization that uses technology as a competitive advantage in its internal and external operations.’ Although the two definitions are on opposite ends of the spectrum in terms of simplicity, they both have the same heart. A digital enterprise or digital business is an organization that leverages technology to solve business problems like: internal collaboration, process optimization and customer engagement in an effort to increase their competitive advantage and profitability.”

By now it should be clear that transforming into a digital enterprise requires more than putting a little digital lipstick on an industrial age organization. A 2016 survey by KPMG found “that only one in four organizations has a fully integrated digital strategy and just over one-fifth describe themselves as ‘high-performing’ or believe they are ‘highly advanced’ at using digital initiatives to deliver substantial business value across their enterprises.”[3] The survey also found that companies are aware they must transform. According to survey participants, “44 percent say they anticipate their companies will be highly advanced digital enterprises in the next three years.” Lopez mentioned the technology I believe will lie at the heart of most digital transformations — cognitive computing. Cognitive computing is required to make sense of the massive amounts of data that will be collected and analyzed. Cognitive computing will be used both for Cognitive Process Automation™ and for insight generation. In an interview with Sohini Bagchi (@sohinidiva), Ajit Kumbhare, Founder and CEO of FreshGravity, stated, “Enterprise software is getting more advanced to do more ‘intelligent’ tasks than just being an information store. With technologies like Machine Learning and Natural Language Processing, there is more intelligence being built into enterprise software.”[4] Because cognitive computing systems use Natural Language Processing, non-technical people are going to be able to communicate with these systems without the need for a technical middleman. Or as Patrick Nelson (@Patnet) put it, “Digitization is ‘flattening’ privilege.”[5] IDC forecasts, “By 2020, 40% of all business analytics software will incorporate prescriptive analytics built on cognitive computing functionality.”[6]

 

Hailey Lynne McKeefry (@HaileyMcK), Editor in Chief of EBN, asserts, “The digital enterprise is more than just hype. It’s a collection of technologies that are set to transform, not just organizations, but especially the supply chain. From the Internet of Things, cloud computing and big data analytics, to intelligent equipment and collaboration platforms, the capabilities of the digital enterprise are remaking the way [companies] are designing, building, and transporting products.”[7] McKeefry notes that in a video interview McKinsey director Paul Willmott talks about three inherent challenges to this emerging digital age. They are:

  1. Deciding who has the role and responsibility of the digital footprint of the organization. It might be the IT department, or perhaps a chief digital officer. However, there has to be support at the top.
  2. Figuring out how to compete with organizations that have digital processes in their DNA. Organizations that are ‘born digital’ have speed and agility that is unmatched, and can innovate quickly. Organizations saddled with legacy systems can’t always keep up.
  3. Supporting and building digital skills across the enterprise. Once the bailiwick of marketing and sales, digital expertise is now critical for operations, logistics and supply chain as well. To succeed, organizations need to find and attract individuals with this type of talent.

McKeefry included an infographic created by Jabil to illustrate some of the biggest opportunities and strategies for this new age. The infographic can be accessed by clicking on the following link .

 

Footnotes
[1] Maribel Lopez, “Preparing For The Digital Transformation Tsunami,” Forbes, 9 January 2016.
[2] David Woods, “What is a Digital Enterprise? (Part 1),” Datum, 10 March 2016.
[3] KPMG LLP, “Sharp ‘Digital Divide’ Exists In Organizations: KPMG Survey,” PR Newswire, 16 May 2016.
[4] Sohini Bagchi, “Being Nimble, And Quick In A Digital World,” CXO, 13 January 2016.
[5] Patrick Nelson, “How the ‘digitization of everything’ will become a reality,” Network World Disruptor, 12 January 2016.
[6] Peter Dinham, “Billions in benefits for business from being ‘data-driven’,” IT Wire, 21 January 2016.
[7] Hailey Lynne McKeefry, “Embracing the Digital Enterprise,” EBN, 6 May 2016.