Is your organization keeping up? Explore three key priorities that drive a successful digital strategy.
Companies across the corporate spectrum are striving to implement digital transformation strategies to drive up agility, responsiveness and enhance the customer experience. While many are finding this difficult, the Harvey Nash/KPMG CIO Survey 2018 sees the emergence of a clear group of digital leaders1 who are seeing higher revenue growth than their competition.
But what are digital leaders doing differently? Our data and experience has identified three key priorities that we believe organizations must embrace to drive a successful digital strategy. The report looks at each of these in more detail and offers key questions for each to ask yourself.
The customer must be at the heart of any organization’s digital transformation. We found that almost half of digital leaders (47 percent) are able to measure the profitability of individual customers – compared to just 22 percent of other businesses. They not only understand the profitability of their customers but can then segment and prioritize them accordingly and engage with them in a differentiated and personalized manner which will improve the customer experience. It isn’t diffcult to see how this can result in greater profitability.
One of the hallmarks of customer-centricity is taking an outside-in perspective to develop empathy with customers and truly understand what they want and need. The customer experience is everything. Customer-centric leaders focus their efforts across five key customer focused capabilities.
When your organization can properly understand customer needs, and the factors driving both customer revenue and costs, then you can truly focus on making the right digital changes across the front, middle and back offices that will drive the greatest value and show the fastest results.
Digital and customer-centric leaders foster an agile culture – 41 percent of digital leaders do so, compared to just 11 percent of other businesses.
This culture matters because it is the people within your organization that will make digital transformation actually happen. They are just as crucial as the customer. It is essential that they are empowered through a culture of agility and innovation that allows them to take responsibility for decisions and keep things moving quickly. They need to understand and buy into the digital vision and, at the same time, be given the right levels of support throughout the changes that might affect their day-to-day roles.
Leadership teams have to recognize that digital development requires a different organizational approach. In many businesses, work happens in functional silos such as Marketing, Finance or HR – but for digital transformation to be a success, you need to break down the barriers between functions and create integrated teams in a boundary-less approach that creates a looser, more fexible and networked organization. These teams will be driven through a product or experience owner structure, i.e. one that is based around the product or experience being created or delivered rather than the traditional functional model.
However, it can’t just be a creative free for all. The right balance has to be struck that enables people to work and experiment in innovative ways, but that retains clear structure and protects investments. Our research found that digital leaders are twice as likely to understand the need for governance to be defined and understood.
Digital leaders are much more likely to be investing in new technologies across the board compared to other companies, and often vastly so. For example, over half (52 percent) have invested in cloud compared to less than a third (29 percent) of other businesses, while 17 percent of digital leaders have invested significantly in Artificial Intelligence (AI) compared to just five percent of others.
But no matter where the investment is going, businesses need a clear and continuous mechanism to control, monitor and manage it. In order to get value from innovation you need to measure the benefts from it and also know when to switch things off.
In the experience of KPMG professionals, a framework needs to be created that can become the mechanism for governing the investment portfolio – and that has control at executive committee level.
Traditionally, many investment projects are carried out in pockets of the business within functions, and almost go under the radar. With a digital innovation framework, small teams of design thinking facilitators can be assigned to work with the business - including capturing any projects or spend that could be classed as ‘shadow IT’ - to drive sessions in which ideas and concepts are developed, following which engineering capability can be brought to build the solutions. A financial mechanism is overlaid to measure the benefits and returns.
As the framework sits across the business rather than in disparate functions, the digital transformation effort can be effectively measured and directed. The executive committee can make decisions at a portfolio level. Value can be demonstrated, building executive confidence, and investment decisions can be validated more quickly.
of organization have a clear digital vision and strategy that is enterprise-wide.
This actually represents a drop from the previous year, when
of organization believed their digital strategy was truly enterprise-wide.
Nearly eight our of ten CIOs
admit their digital strategy is at best only moderately effective.
Many organizations are struggling to make significant headway with their digital strategies – but the prize is clear for those that get it right.
We have begun to see the emergence of a clear cohort of digital leaders. Other businesses are in real danger of falling behind. Catching up will only become harder.
That is why all businesses need to stay committed to their digital goals and redouble their efforts through the three key lenses: customer, people, innovation.
In all of this, the CIO is key. He or she is the agent for digital change. Acting as the bridge between the executive committee and the customer and user experience, the CIO is the common thread that can pull things together.
With the engagement of the Board behind them, the opportunity is clear for energetic, focused and driven CIOs to make a critical difference to the success of their organization.
1Organizations identified in the KPMG / Harvey Nash CIO survey 2018 as being very or extremely effective at using digital technologies to advance their business strategy.