What is Happening?
Conversations from the 2016 Digital Business Summit are still ringing in my head. Three highlights stand out:
- Digital Business is a strategic goal that demands new skills and resources, and a fundamental rethinking of critical internal and external business processes and workflows;
- CIOs, CFOs and other senior executives now have a deeper understanding that using data science to unlock insights from myriad—and growing—internal and external data sources is central to the success of digital business; and
- Budgets for digital business initiatives are being consolidated into ongoing operations as firms get beyond the early stages and are fully engaged and committed.
In short, while digital business is fast becoming woven into the fabric of daily enterprise business and IT, it also requires hard work and substantial funding—funding that is less and less likely to come from dedicated “digital” investments.
Why is it Happening?
Figure 1 uses data from our 2016 and 2015 Digital Business web surveys to illustrate our key points. We can see that while digital continues to gain adherents, although at what looks like a slowing pace, the perceived importance of data science, i.e. advanced analytics applied in business context, continues to climb as well. Meanwhile, dedicated digital business budgeting is experiencing a slight decline year over year.
Key Digital Business Data Points 2015-2016
Source: Saugatuck Technology, an ISG business; “Digital Business” surveys, Nov. 2015, N=129 & Sept. 2016, N=141
The first two data sets make sense given the combination of market enthusiasm and real-world business growth. More than half of our survey participants indicate that digital offerings are contributing more to business growth than are traditional products and services. And given the nature of digital business, we should expect data science to be at its core.
But if digital business is so important to the enterprise, and if data science—which requires substantial investment in people, skills/training, and other resources—is so important to digital business, why then do we see dedicated budgeting declining from 2015 to 2016?
We can answer the question in one word: maturity. Enterprises are moving to second- and third-generation digital initiatives so that the digital effort is starting to become an indistinguishable part of how they do business. Earlier-generation digital marketing initiatives, for example, are giving way to newer models of customer and partner engagement, along with fundamental rethinking of business models, value chains and operating principles. Budgets for digital initiatives are increasingly being consolidated into ongoing operations as enterprises step beyond the early stages, and are fully engaged and committed.
Digital business is the future of business, and it is increasingly seen by enterprise IT and business leaders—regardless of market of industry—as the growth engine.
Success is not a given. Our research supports the fact that digital business is really hard work. Success demands strong executive leadership, organizational alignment and a culture willing to evolve and change, down to the process and function levels. And while all enterprises must follow their own path(s), there are three imperatives that we recommend in practically every situation. These are the investments that are most likely to enable sustainable business success in the digital era:
- Digital engagement. Customers (and increasingly, partners) expect a seamless, personalized experience that spans physical and virtual worlds and that enables useful interaction regardless of user, location or access method.
- Digital insights. Data is at the heart of digital business; building strong data science skills is critical for next-generation insights.
- Digital backbone. Business success in the future will depend on a platform that can continuously and flexibly adapt over time.
Detailed insights, experiences and best practices from the 2016 Digital Business Summit will be developed for ISG Insights research clients over the coming months.