By now, most of us have heard “every company is a tech company,” or “every business is a digital business.” It might sound hackneyed, but it’s true. Technology is no longer a commodity or service, it is your core business.
Digital transformation has major implications for every business and industry, but those who rely on outdated technology risk being disrupted. In this article, we discuss what is key to enabling digital transformation – and why organizations must transform their business model to avoid disruption. Is your company the disruptor or at risk of being disrupted?
Digital Disruption is Here
A recent survey found global business leaders believe “roughly four of today’s top 10 incumbents (in terms of market share) in each industry will be displaced by digital disruption in the next five years.” This underscores how powerfully and quickly digital changes the market.
Digital disruption is “an effect that changes the fundamental expectations and behaviors in a culture, market, industry or process that is caused by, or expressed through, digital capabilities, channels or assets.” Like a tidal wave, disruption sweeps away the familiar scenery and forces survivors to adapt to a new landscape.
That new landscape is already here. Consider Gartner’s 2017 predictions: in five years or less 30% of online browsing will be done without a screen; 40% of employees can cut healthcare costs using wellness wearables; and digital giants such as Google, Apple and Amazon will account for 20% of all activities of which individuals engage.
Think back to how you did business five years ago or even ten years ago – what’s changed? What’s stayed the same? Now ask yourself: Where will your organization be in five years? Does your current technology align with your business objectives and future goals?
Modernize to Transform
According to a recent survey, 69% of global retail executives plan to increase investment in digital transformation over the next year to keep their organization relevant and competitive.
In Gartner’s 2017 CEO survey, 47% of CEOs say they have been challenged by their boards to make progress in digital business, while 56% say digital innovations have already improved profits. Despite this push for innovation, CIOs are still trapped managing budgets bogged down by operations and maintenance.
The 2016/17 Deloitte CIO survey found there are “significant gaps between CIOs’ perception of how they are delivering value to the business and the business’s stated priorities and expectations.” As Forbes notes, this is likely because “most CIOs are focusing on the parts of the “digital iceberg” below the water: updating legacy systems and antiquated processes.”
As discussed in our series The Real Cost of Aging IT Systems, we know the high costs of legacy systems prevent businesses from spending on innovation that delivers valuable digital capabilities. Many organizations in this position must first modernize their systems before they can begin the important work of digital transformation.
Don’t Get Disrupted, Disrupt Your Own Business Model
To avoid disruption, you must disrupt your own business model. Disruption doesn’t mean wholesale change or throwing out things that work. It means evolving processes, evaluating new areas for growth and creating a strategy for innovation.
As one study found, organizations who successfully implement digital transformation have “a clear digital strategy supported by leaders who foster a culture able to change and invent the new.”
A strong strategy is critical, but one expert cautions, digital technology affects “different businesses in different ways. Miss these nuances and your strategic decisions could lead you seriously astray.”
Ultimately, digital disruption is not just a technology concern, it’s a business problem. This is the opportunity to reimagine your business; engage your employees and customers to be part of this change.
Both disruption and transformation mean change of some kind – disruption being the powerful cataclysmic event, and transformation, the more intentional steady occurrence. Digital disruption has already begun and will continue. The digital future is here. Now is the time for organizations to embrace deliberate change, reinvention, and bold ideas backed by strong strategy.