Finally, someone has stood up and said it. Digital business is not about IT, applications, software, the cloud or even — as much as it pains us to say it — information management.
Digital business is a mindset. A different way of thinking about business. It includes all the above elements, but it is more than the sum of those parts. According to new research from Gartner, digital business is the new enterprise lingua franca, with digital expertise spread across the entire organization.
For organizations struggling to develop effective digital strategies, this is probably a bit discouraging. How do you change the way an entire organization thinks and establish a digital culture?
Gartner doesn’t say it will be easy, but it a new report by Ken McGee, Diane Morello and Lee Weldon — Six Key Steps to Build a Successful Digital Business — Gartner lists several steps organizations can take to reach digital nirvana.
It's not a matter of "if" but "when. According to Gartner, organizations that fail to embrace digital will loose 25 percent of their competitive ranking by 2017.
The changes Gartner is recommending is as much about the clever use of human resources as they are about the agile application of new software to new business problems. McGee writes:
CIOs or IT professionals who hear 'digital business' and think 'IT' will be blindsided. Digital business is not synonymous with IT. It 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. True, information and technology help to build the capabilities for digital businesses, but they are only part of a complex picture."
If this sounds a bit like the old way of doing things, there is an important difference. For the first time ever, digital technologies are moving out of a supporting role an becoming key ways to generate revenue. McGee adds:
Digital businesses and digital technology, for the first time, are moving into the forefront, into the heart of what the business is doing and how it generates revenue, seizes competitive advantage and produces value. Digital business represents a more extreme revolution than previous technology-driven changes, and CIOs, with their insight into technology and information, are positioned to develop and promote a successful digital business."
Defining Digital Businesses
So in practical terms what is digital business? According to the report, a digital business is the creation of new business designs by blurring the distinction between the digital and physical worlds.
It promises the creation of new business designs and new ways of doing businesses by the convergence of people, business and things. This will result in the creation and development of new revenues opportunities.
It is different than old business models even if, to some extent, it resembles current e-business strategies. However, if many see it as an extension of the old business models — even those created by the internet and email — going forward this will not be the case.
According to the report, the “digital” in digital business has a much wider application than the typical scope of IT in many enterprises. In this respect, Gartner uses the word digital to denote all electronically tractable forms and uses of information and technology.
Surprisingly, Gartner is already defining digital business in terms of the Internet of Things (IoT), but it is not the only kind of technology. Digital business Includes:
- Third-party technology: This refers to all the technology that is outside the direct control of the organization, but which may have an impact on it
- Social media
- Technology embedded in products (such as cars)
- The integration of IT and operational technologies (such as telecom networks, factory networks and energy grids)
- The Internet of Things (physical objects becoming electronically tractable)
If some of these technologies are only emerging now, they are gaining traction quickly. In the case of the IoT, for example, we saw last week that the jury is still out on the shape it will finally take, even if there was a general consensus that by 2020 it will consist of at least 20 billion different devices.
According to Gartner, it is the combination and application of those and other technologies to new business models and processes that will generate the revenue that defines a digital business.
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