Now Is the Time to Invest in Digital Business

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A widening gap is forming between organizations already undertaking digital business initiatives versus those only in the planning stage, according to a recent study by Gartner, Inc. The survey found that 32 percent of leaders at organizations with $250 million or more in annual revenue said they have a business that is a digital business, up from 22 percent in the same survey last year.

Gartner fielded 304 surveys in the U.S., U.K., Germany and Australia between May and June 2015, as part of its 2015 Digital Business Survey of IT, Business and Marketing Executives, in order to understand how businesses and institutions take in, identify and exploit the new opportunities that digital business represents.

"The survey results underlined how digital business leaders are more likely than others to focus on design and the creation of new digital business moments," said Jorge Lopez, vice president and distinguished analyst at Gartner. "We asked respondents to rank the importance of five success factors, breaking down the results according to whether companies were using digital marketing techniques (a precursor to digital business), were planning digital business or had already implemented digital business. Not surprisingly, the last group accorded more importance to design and moments, which are necessary to execute digital business."

Digital business moments are catalysts that set in motion a series of events and actions involving a network of people, businesses and things that spans or crosses multiple industries and multiple ecosystems.

"Digital business moments of untapped opportunity and competition can rapidly change the dynamics across industries," said Patrick Meehan, research vice president at Gartner. "As such, the successful design and development of business moments, which the company can replicate, are the most significant undertaking an organization working to become a digital business can take. Innovative companies are tailoring digital business moments to complement their existing products and services."

The survey also revealed that most companies undertaking digital business initiatives don't make a distinction between digital business strategy and business strategy — to this group, they are the same or integrated with the main business strategy. Those in the planning phase see the two as separate. In practical terms, a company that is moving from strategy to execution will have fewer steps to reach its goals compared with one that has to insert a separate planning process for digital business. Over time, even if the faster team stumbles, it can recover more rapidly than one that has more process for strategy.

Other survey results show that executives already in digital business are invested in piloting and deploying, while those at companies in the planning phase are focusing on investigation and experimentation. The top priority for digital business front-runners is adopting new technology (70 percent). The next highest priorities — creating a highly collaborative environment (56 percent) and supporting customer-driven technology change (53 percent) — represent responses to an external stimulus and are characteristic of a healthy digital business.

When asked to identify what would be the impact of digital business — either positive or negative — over the next five years, organizational leaders overwhelmingly concurred on the upside, anticipating improvements in customer experience and engagement (86 percent), IT organization (86 percent), workforce productivity (84 percent) and sales organization (83 percent). Organizations appear to anticipate little downside to digital business with just 7 percent projecting a negative or significant negative impact in staff, and 6 percent in mergers and acquisitions.

"The disruptive effects of digital business cannot be underestimated," said Mr. Lopez. "To date, a limited number of product categories — music, books, photographs and newspapers — have seen their business models upended. Going forward, organizational leaders in other product and service categories will also need to adapt by restructuring the workforce, eliminating obsolete roles, and finding talent that can help design systems and workflows that optimize the use of things integrated with people and business to drive new value for customers."

More detailed analysis is available in the report "Gartner Survey Shows Digital Business Leaders Breaking From the Pack." Additional analysis on digital business can be found in the Gartner Special Report “Navigate Your Way to Digital Business Transformation With These Resources”.