Digital Business
Incompetence Will Cause 25 Percent of Businesses to Lose Market
Position
by 2017
by 2017
Dubai, July 30, 2014 — As
enterprises move to become digital businesses, opportunities are
arising for service providers to play a crucial role in the digital
era, according to Gartner, Inc. Service providers should begin to
align and adapt their organizational structure, capabilities,
offerings, and engagement and delivery models to thrive in this new
digital environment.
"All signs suggest that
organizations have just begun to tap into the potential of digital
business; however, organizations that don't accelerate their digital
business transformation will lose market position," said Allie
Young, vice president and distinguished analyst at Gartner. "Service
providers can help organizations with the innovation and
industrialization required to transform into digital businesses over
the coming decade."
Gartner predicts that by 2017, 60 percent of Global 1000
organizations will execute on at least one revolutionary and
currently unimaginable business transformation effort and that by
2023, superior digital business capabilities will lead four out of
five industry leaders to reposition their brand promise or build new
brands.
"The market opportunity
arising from broad technology changes is creating a digital business
opportunity that is forcing a restructuring in strategy, talent,
portfolio and organization within services providers," said
Susan Tan, research vice president at Gartner. "In the past 12
months service providers have taken explicit steps to prioritize the
pursuit of digital business opportunities ranging from restructuring
and realigning their organization to forming entirely new business
units or subsidiaries. They have announced new digital leaders and
investments to organically build or acquire digital skills/assets and
many have launched innovation centers to serve as client development
labs. The restructuring and new digital business units and leadership
are needed to focus investment and develop resources for applying
digital technologies to realize business value."
Gartner interprets this as an
indicator of the magnitude of the business impact services providers
already see in their client organizations as well as an impending
threat to their traditional businesses. It also demonstrates a
focused commitment and investment to ensure relevancy to current and
future customer sets as digital business adoption accelerates.
Services providers should invest
executive time in strategy planning and visioning for the future,
focusing on how to close capability gaps, how to optimize
organization structures, what intellectual property (IP) to invest in
and what go-to-market models are new imperatives. This should
determine if the current organization structure and leadership will
support digital business expansion, or if reorganization or
realignment of current organization structures is needed. Once this
is complete it is essential to establish digital leadership skills,
and acquire or hire the right talent, including capabilities in
design, user experience, digital technologies and business
consulting.
Service providers must also come
to terms with the fact that in a digital world, their existing
delivery models will not effectively address new demands evident in
fast-paced, often exploratory digital pursuits with buyers seeking
business outcomes that complement the decisions that they make and
with solutions becoming more sub-vertical, market-specific leaning
toward information-driven alignment versus process-driven alignment.
Gartner has identified two digital business concepts that will shape
the future of client strategies, which service providers must
understand and embrace:
Complementary IT Spending Priorities
Gartner's recent CIO research shows that considerable new spending goes to improving core systems, as well as spending on new and innovative digital technologies. This means that providers, instead of simply selling more services, should position their services in a digital business context for clients' IT spending priorities, aligned to these two explicit and different needs. Both imperatives are important, in fact complementary, and should be pursued in parallel. For example, service providers cannot ignore the importance of renovating the core (the traditional engagement models), as without this step, exploiting the new digital trends will be unachievable or unsustainable.
Bimodal IT
Gartner has also brought forward the concept of bimodal IT to address how organizations must operate to capture digital opportunities. To maintain competitiveness in a world of digital business, CIOs need to deal with speed, innovation and uncertainty. This requires operating two modes of enterprise IT: conventional, industrial-strength, slow-to-change and highly controlled versus experimental, iterative and fast evolving. Just as client organizations will require two modes of operation to optimize IT and capture digital opportunities, service providers will also need to adopt a more flexible business model to effectively compete.
Gartner recommends the adoption
bimodal disciplines through separate organizational structures to
optimally deliver client expectations for the speed and agility
characteristic of digital initiatives ("exploit the new")
and traditional/legacy ("renovate the core"). Traditional
and digital service offerings should be managed as separate
portfolios and relevant capabilities for skills, delivery
methodologies and technologies invested in accordingly. It may, at
times, be necessary to work with third parties to accelerate
solution development and increase marketing success.
"Digital business
enablement will span six domains, requiring service providers to
realign their core competencies toward a new vision, investments and
offerings for a portfolio that delivers innovation, transformation
and industrialization for buyers' digital businesses," said Ms.
Young. "With the broad range of services and equally broad array
of digital strategies of providers, it is critical that service
providers clearly define their own portfolio and focus, and identify
the targeted buyers appropriate for their selected services."
More
detailed analysis is available in the report "What Service
Providers Must Do to Succeed in the Digital Era."
The report is available on
Gartner's website at http://www.gartner.com/document/2808330.
Additional analysis on the
impact of digital business is available in the Gartner Special Report
"Digital Business." The special report can be viewed at
http://www.gartner.com/technology/research/digital-business/
and includes links to reports and video commentary that examine what
is driving the convergence of people, business and things that
disrupt existing business models, and how IT leaders can take their
place among the digital leaders of the future.
About Gartner
Gartner, Inc. (NYSE: IT) is the
world's leading information technology research and advisory company.
We deliver the technology-related insight necessary for our clients
to make the right decisions, every day. From CIOs and senior IT
leaders in corporations and government agencies, to business leaders
in high-tech and telecom enterprises and professional services firms,
to technology investors, we are the valuable partner to clients in
over 9,000 distinct enterprises worldwide. Through the resources of
Gartner Research, Gartner Executive Programs, Gartner Consulting and
Gartner Events, Gartner works with every client to research, analyze
and interpret the business of IT within the context of their
individual role. Founded in 1979, Gartner is headquartered in
Stamford, Connecticut, USA, and has 6,400 associates, including more
than 1,480 research analysts and consultants, and clients in 85
countries. For more information, email
info@gartner.com
or visit www.gartner.com.