Six out of 10 CEOs are focusing on digital transformation strategies in the year ahead, according to IDC. The reason? Digitization is the golden ticket to driving greater revenue and acquiring new customers.
It’s no wonder the IT research firm pegs digital transformation as the number one issue facing business leadership.
Digitize or disappear. Transform or be trivialized. These are non-negotiable as the blinding pace of change accelerates in 2016.
This, experts say, is the new, new normal.
Crossing the Digital Divide
There are many changes that need to happen quickly for companies to successfully become a digital era enterprise.
This includes rethinking leadership, corporate culture, and revenue models. However, the most important is having the right digital platform in place to make new applications and services accessible to customers, development partners, and other participants.
IDC Vice President and analyst in the SaaS and cloud practice Robert Mahowald explains, “Digitization goes well beyond mere automation or simply speeding up non-digitized processes. Digitization is what enables access by, and input from, other sources that can enrich a product or process. You have an expanded palette of tools to work with.”
“If a company can digitize a business process it does well, it can then leverage it to sell both upstream and downstream,” notes Mahowald. That means new sources of revenue and, ultimately, greater profits.
In 2015, for example, nine percent of the 2700 SaaS providers that IDC tracks had virtually zero revenue from SaaS offerings in the previous year. “Now, they’re making money from technology and they’ve also operationalized as a service,” Mahowald says.
In Rolls the Cloud
This is why cloud is so important to the digital enterprise, according to Mahowald. “With cloud, your assets become accessible and are not sitting in silos where you can’t get access.”
This is especially important as the Internet of Things (IoT) expands. Thousands of devices—everything from toasters and baby monitors to medical implants and automobiles—are becoming IP-enabled. To make productive use of the new data they generate, the data must first and foremost be open and accessible. And that means cloud technology.
Given this, it’s not surprising that cloud adoption is soaring, doubling year-over-year in unregulated industries and nearly tripling in regulated industries like financial services and healthcare.
Cloud enables organizations to offer more and better services, at a faster pace, in today’s digital era. This is critical in meeting demands of increasingly tech-savvy customers.
With its forecasting platform in the cloud, for example, The Weather Channel grew from forecasting 2.2 million locations, four times an hour, to 2.8 billion locations, 15 times an hour.
This has helped them better understand the weather—and provide a more valuable service and have greater impact on consumers and businesses.
In another example, Telstra is shaping the future of work by letting employees choose their best workspace—without sacrificing access to the company’s collaboration tools, video, social technology, or even Tesla’s cloud.
“One of the benefits from going to activity-based working is to drive employee engagement,” says Gwilym Funnell,director of Tesla’s unified communications and collaboration practice. “And employee engagement leads to strong productivity as well as making an organization a much more attractive place to work.”
Barriers Falling Away
Whether it’s hybrid cloud, public cloud, or managed cloud, planning is vital to success. For example, hybrid cloud shouldn’t be an afterthought. It’s an opportunity to reap the benefits of public cloud including agility and freeing up resources with the control, security, and compliance of a private cloud environment.
Today, organizations have more freedom of choice when it comes to their cloud strategy. They can move workloads between public and private cloud in order to keep their business moving fast enough to keep up with digitization.
Contributing to organizations’ growing cloud adoption in the digital era is a growing trust in cloud providers’ ability to address security issues.
“There is a growing realization that for cloud providers above a certain size, security is an everyday job. They have a legal obligation under an SLA to protect your data and your assets,” says Mahowald.
In addition, digitization is not only prompting changes in the technologies that companies use, but also in the IT organization itself.
“We see a restyling of the IT operations’ role to reach out more to the business and to understand the business’ needs and what they require,” especially where cloud is concerned, says Mahowald. “The IT operations role is now more in partnership with the LOB. They’re bringing their technical perspective, but, at the end of the day, their job is all about helping the business to move faster.”
IT is also evolving to understand data better, which is why companies are scrambling to hire analytics experts and data scientists. Working side by side with the business, IT needs to understand data on a much more granular level and understand dashboards and how to make data operational. IT also needs to understand what assets a company has, what syndicated assets may be available, and how they can be combined to create new products and services.
IT leadership models also are changing. Both IDC with its 3-D leadership model and Gartner with its bimodal framework recommend new ways of managing IT with different modes of delivery, one focused on ensuring infrastructure efficiency and security, the other focused on agility and innovation.
Perhaps the most exciting outcome of digitization and transformation? “We’re seeing the line move,” says Mahowald. “With digitization and the cloud, we’re seeing far less maintenance and much more innovation.”
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