Digital transformation offers an opportunity to create new revenue streams and meet changing customer demands, as well as a way to address the rise of digital insurgents trying to hijack core markets. A recent Forbes Insights ebook, CIO’s Guide to Digital Transformation: Why Data Holds the Key to Success, sponsored by Hitachi Data Systems, examines this opportunity and the advantage offered by enterprise data.
Unfortunately, while the potential of digital transformation is great, so too are the challenges for established companies. Enterprise leaders lack proven models that guide disruptive change. While best practices are emerging, CIOs must create transition road maps that accommodate their organizations’ unique needs rather than expecting ready answers. Also, incumbents are at a disadvantage compared with startups and market insurgents that enjoy the luxury of greenfield operations. Incumbents run significant existing IT operations that continue to provide value and must be blended with transformation cornerstones such as cloud, mobile and analytic technologies.
What’s needed is a common resource that both IT and business managers intrinsically value, one that can guide decisions about new business initiatives and related technology investments. That rallying point is enterprise data. Because incumbents possess richer reserves of business information, they wield a competitive advantage that even the most disruptive insurgents can’t claim. The key is for established companies to unlock the full potential of this important resource to fuel business transformation and help to maintain their leadership positions in volatile and quickly evolving markets.
Data-driven digital transformation has the potential not only to address competitive threats posed by insurgents, but also to uncover opportunities for new business models and revenue streams. For example, a century ago Deluxe Corp. launched a business that turned the company into a market leader for check manufacturing. Deluxe’s executives understand that consumers and businesses are writing fewer checks. So Deluxe is disrupting itself. In recent years the company made a bold move to become a provider of marketing solutions and other services to help financial institutions and small businesses.
The five keys to digital transformation success:
1) Evolve beyond bimodal thinking. Established companies will continue to run proven legacy systems that made them a success in the first place. Meanwhile, new applications and services will likely support emerging business needs with the help of mobile, cloud, social and analytics. Rather than creating rigid mode-1 and mode-2 boundaries, CIOs need to create a common framework that avoids silos.
2) Design an infrastructure for innovation. When deciding on funding priorities, a top goal should be business elasticity.
3) Capitalize on new data management technology. Complement traditional data warehouses and data marts with data lakes.
4) Address skills gaps that can stall transformation efforts.
5) Focus initial transformation initiatives where they’ll have the most impact.
To undergo data-driven digital transformation, enterprises need a new type of leader, someone who can act as a change agent across technology and business disciplines. For many progressive organizations the person who’s emerging to take on this responsibility is the CIO – but in a role that rewrites traditional definitions.
The most notable change is that these modern CIOs are becoming data specialists to drive business innovation, and this is giving them new status within enterprise hierarchies. CIOs now hold dual responsibilities as technology stewards and expert advisors for using information and analytics to better inform the business, improve the company’s agility and employ technology to create enhanced client experiences.
That means adopting a strategic role in which CIOs work more closely with the business to develop new services. But not everyone is ready for this new-look CIO. Pushback will arise from end-users who question why it’s necessary to change current operations or to do so quickly. Others may simply balk at seeing the CIO act as more than just a chief IT officer.
