Where Do You See Your Enterprise in the Digital Transformation Roadmap?| 1st September, 2015
IDC's Digital Transformation MaturityScape framework can help Malaysian companies understand how a set of business disciplines can be transformed by adopting increasingly mature technological capabilities. From the relatively incoherent ad hoc phase to the aspirational level of an optimized maturity level - here's how a CXO can identify his / her place in the digital transformation roadmap.
Benchmarking Digital Transformation
Business leaders who recognize the real impact of digital technologies on their industry, customers, partners, and business practices stand to gain an advantage over their competitors in the race to the future of the digitally-enabled enterprise. By 2018, one third of the top twenty market share leaders in most industries will be significantly disrupted by new competitors (and "reinvented" incumbents) that use the 3rd Platform to create new services and business models. Aside from rapid technological change, businesses will have to cope with geopolitical, economic, and environmental disruptions—some predictable, but many not. To help business and IT leaders understand and cope with the challenges and opportunities that digital transformation can bring to their enterprises, International Data Corporation (IDC) has developed the " IDC MaturityScape Benchmark: Digital Transformation (DX) "
Over the past few years,
IDC has produced groundbreaking research on the 3rd Platform (mobile, social,
big data/analytics, and cloud) and its impact on business strategies. The IDC
DX framework extends that body of work to identify and clarify the specific
challenges that CXO-level executives need to focus on to lead their businesses
through the minefield of confusing rhetoric surrounding the topic of digital
Key findings from the research:
Most global companies are using digital technologies, old and new, in one or the other way to transform their businesses. However, owing to internal and external pressures, very few of them continue their digital endeavours in the right direction. Therefore, more often than not, digital transformation journeys do not end with businesses gaining the complete value of a technologically-enabled change within the enterprise.
Most Malaysian companies may have employed significant effort and expense on implementing ERP, CRM or other technologies, but have gained very basic levels of value from these investments. The good news is that Malaysian CIOs can help their companies obtain much higher value levels by taking steps that help their IT teams in continuing the effort. Most of this effort lies in reimagining the new capabilities and building a plan to make process changes that reap larger returns from their investments.
The first step, however, for companies toward achieving the true potential of digital transformation would be to identify where they lie in the digital transformation roadmap.
The IDC MaturityScape on DX consists of five stages: ad-hoc, opportunistic, repeatable, managed, and optimized. These stages in terms of digital transformation in the enterprise context are known as:
Digital Explorer and Digital Player:Enterprises in this DX stage are not looking for any change in the next five years. These enterprises are going to ignore or are unaware of the risks they are in by opting out of the digital opportunities that lay around them. Naturally, this is the most dangerous phase to be in for any organization that is looking to be relevant for today’s market demands.
IDC’s research shows that 65 percent of organisations today are ‘digital explorers’ or ‘digital players’. Enterprises in these stages are beginning to warm up to business needs and looking at implementing digital tools in order to satisfy them.
More often than not, someone within begins to realise that things need to change for better. These enterprises have CIOs that have convinced their boards to install digital teams to explore new technological opportunities within the enterprise. They are beginning to exploit the capabilities of digital, social, mobile and cloud by testing and learning through them . Most of these changes do not necessarily have to be organized or centralised, but new opportunities are beginning to rise because of the stir.
The only difference between the explorer and player stages is that the former is mainly focused on strategizing while the latter is on implementing. The ‘Explorers’ are boldly moving forward with testing out new digital tools in the mobile and social space for all their critical processes too, and are prepared to learn from their mistakes. These enterprises have therefore decided to put their money on technologies with the highest impact on their business. As time advances, these attempts and trials will only get more concrete and the learnings will get stronger. The explorers are setting the stage for the new digital stage - the Players.
DX player organizations, however, are already moving forward with considerable momentum which they have gained at their own ‘explorer’ stage. By now, their complete organization is in sync with the changes that are materializing within the company and most of it is appreciated, if not accepted. The board is already confident of the change that is underway and is laying down both long and short term goals for the investments that have been made towards digital transformation. It is safe to say, that most steps taken by the leadership now will look ambitious and will yet be formally accepted as by now most cultural changes have been fruitful.
By this stage, DX is part of the enterprise’s daily work. Every member, from the employee to the CEO, is working towards reshaping their company and working towards better operating procedures for their own level of work. The digital and innovation teams for each department have made sufficient efforts towards creating new models and operating standards and training the LOBs at all levels. Which means that every business unit is voluntarily working towards digital transformation in lieu with the enterprise-wide change. The presence of dynamic architecture and sophisticated digital tools are salient features of an enterprise in this DX stage.
Enterprises in the final stage of DX roadmap means these are organizations that have fostered a culture of innovation within them. They have tried, tested and implemented foolproof innovation models and made concrete digital investments that will keep them afloat in the times to come. These are organizations that will lead the global race of shifting towards innovation and also help other companies accelerate their DX paces by helping them identify new, yet sure opportunities for growth.
The Digital Transformation roadmap clearly spells out the extent and impact of digital technologies on the maturity map and helps organizations decide a starting point. If you are a CIO who is looking to gain a foothold in this direction, try to gauge the progress, orientation and the direction of your organization’s digital journey and map it with the maturity map that we have described just now. For more information, you can watch out for more in this space.