The definition of "digital business" is a lot broader than you may think. "It's not just about technology companies and start-ups anymore," said Michael J. Biltz, an executive at Accenture, a firm specializing in consulting, technology services and outsourcing. "Every company is a technology company at its core and in the process of converting to a digital business."
Think of a company that's looking for new ways to weave social, mobile, analytics and cloud technologies into its next generation business strategy — and don't stop at Google. Instead, consider how almost every business of any size — from multinational conglomerates like General Electric to fledgling neighborhood retailers and restaurants — are reimagining themselves, exploring opportunities and embracing the digital wave.
And while businesses differ in size and scope, they share common goals. As Andy Markowitz, director of Global Digital Strategy at GE, noted: "The objective of our role, from a global perspective, is to help our businesses — no matter where they are and what they do — connect with our customers or sell more product."
Can you afford to sit on the sidelines? Not if you believe Biltz — director of Accenture Technology Vision and co-author of the Accenture Technology Vision 2014 report, the firm's annual take on the future of technology and how it will affect businesses in the next three to five years. He thinks mastery of digital technologies is an essential core competency for any successful business.
Yes, Size Matters
Innovation is growing … from the makeshift offices of technology-focused start-ups to the siloed halls of the world's largest corporations.
The days when the new things on the block — Instagram, Twitter, Zipcar, YouTube, TripAdvisor and Airbnb — were the market disrupters and grew faster than their larger, more established competitors may be coming to an end, Biltz told CMSwire.
Now "big is the next big thing." Large, traditional companies are embracing the transformational — make that disruptive — ideas that emerging technologies provide to become digital giants.
"One of the biggest trends in play is the way the GE's of the world are using their resources, scale and process discipline to reinvent themselves through digital transformation. It's enabling them to reassert leadership in their markets and rewrite much of the digital playbook," he explained.
GE is betting on the industrial Internet. By building cloud-based services with intelligent analytics, the company can collect and combine vast amounts of industrial-machine and equipment data, extracting unique insights that it can use to set new performance standards in major industries such as energy and aviation, the report explains. It further notes:
"Enterprises are embracing technology in the way they do business and also as a catalyst to create something new—new markets, new products, and new areas of growth and revenues. The change is revolutionary. Industrial companies are becoming customer service companies. Consumer products companies are becoming Internet companies. Energy companies are becoming information companies. And media and entertainment companies are becoming logistics companies."
Benefits and Risks
Biltz noted that industrial powerhouses like GE, Disney, P&G, Tesco, Walmart and Shell have learned by doing, steadily gaining the skills and the competencies to pull ahead of their competitors, blunting the startups’ advantages and proving to their stakeholders that they have what it takes to excel in the new digital economy.
But it is more than a way to appease investors. The report states:
They are acutely aware that digital expertise can confer exceptional strategic advantage. They realize that not only can they control their own markets, but they can actually disrupt and establish footholds in others, often creating new business and market models in the process."
General Motors is "raising anxiety in the car rental business" by partnering with RelayRides, a startup whose use of mobile phones makes ride sharing easy. AT&T is entering the home security market with its Digital Life service, "allowing customers to remotely control everything" in the home, from alarms to lights to door locks. The report adds:
The concept of the “fast follower” is becoming obsolete. In a world of nonstop change, there is no time to catch up. Instead, we expect the emerging digital leaders to be master orchestrators — uniquely able to strive for convergence on a huge scale as they capitalize on a wide array of technology breakthroughs to rapidly advance and innovate with their systems and strategies."
It's a significant change, Biltz said. And like all change, it carries risks. "When you start talking about disruption, there is always the possibility that you will disrupt yourself," he said.
But it may be too late to stop. As Paul Daugherty, chief technology officer at Accenture, noted, big business is adopting digital to drive their processes more effectively and transform how they go to market, collaborate with partners, engage with customers, and manage transactions.
"Digital is rapidly becoming part of the fabric of their operating DNA, and they are poised to become the digital power brokers of tomorrow,” he said.
6 Drivers of Digital Disruption
Becoming a digital business is no longer just about the way a company incorporates technology.
It’s about using that technology to create fundamental changes in the way work is done, Biltz said. The report identifies six IT trends, based on extensive research, as drivers of this digital power shift:
- Digital-Physical Blur: The real world is coming online as wearable devices, smart objects and machines provide us with real time intelligence, changing how we live and how businesses operate. This new layer of connected intelligence augments workforce capabilities, automates processes, and incorporates machines into our lives.
- From Workforce to Crowdsource: Technology now allows organizations to tap into vast pools of resources around the world, just as companies like MasterCard and Facebook do through organizations such as Kaggle, a global network of computer scientists, mathematicians, and data scientists who compete to solve problems ranging from finding the best airline flights to optimizing retail-store locations.
- Data supply chain: Currently, just one in five organizations integrates data across the enterprise. To truly unlock data’s potential value, companies must start treating it more as a supply chain, enabling its easy and useful flow throughout their organizations and eventually throughout their ecosystems, too.
- Harnessing Hyperscale:. Advances in areas such as power consumption, processors, solid state memory, and infrastructure architectures are giving enterprises new opportunities to massively scale, increase efficiency, drive down costs, and enable their systems to perform at higher levels than ever before.
- Software as a Core Competency:Enterprises are adopting apps in a push for greater operational agility. According to Accenture research, 54 percent of the highest-performing IT teams have already deployed enterprise app stores, facilitating this shift towards simple, modular apps for employees.
- Architecting Resilience: Businesses have to be built to survive failure. They are expected to support the non-stop demands placed on their processes, services and systems. This has ripple effects throughout an organization, especially in the CIO’s office where the need for “always on” infrastructure can mean the difference between “business as usual” and the erosion of brand value.
So Now What?
The report concludes that there is an opportunity at hand for each C-suite executive to be a digital disrupter — to recreate and redefine businesses to create competitive advantage. Do you agree? Is now the time to move from disrupted to disrupter? And what companies are mastering the move successfully?
Title image by taikang (Shutterstock).