Digital and analytics technologies on the rise
As companies explore how to better understand the connected customer journey, many are exploring the notion of adopting digital and analytics technologies. According to a Gartner’s “2015 CEO Survey: Committing to Digital,” “Twenty-five percent of CEOs cite technology-related issues in their top business priorities for 2015 and 2016. Digital revenues will double to 41% by 2019.”
We are finding that businesses are focusing on three key areas:
1. Big data and analytics
2. Digital marketing and social media
3. Mobility solutions and cloud integration
Of the three, the survey reports, many companies are implementing the first two, with more than 50% of executives claiming that they have made it one of their top ten corporate priorities. They believe that implementing big data and analytics, digital marketing, and social media will increase their operating incomes by more than 11%. Almost 75% of these executives believe that their implementations will be positive for their businesses.
The effects are quite evident, even in organizational structure. The leadership position of the CIO has changed significantly. Within the board of directors, more than half are being directly associated with digital business initiatives.
About half of companies perceive these digital business trends as part of offensive strategies which include leveraging this technology to build more refined competitive advantages or using the trend data to design new products, services, or solutions. Regarding competitive advantage, instead of people and their viewpoints being the authorities to represent things, the things themselves are the authorities for viewpoints.
Data analysis now decides what information is strategically important for gaining competitive advantages, and it helps gain insights that will create new industries and capture new markets. Intricate data insights, not strategic thinkers, are the new visionaries.
The gap in adoption
With all the promise that digital and analytics seem to bring to enterprises, their implementation is surprisingly still in its infancy. According to Gartner, “almost 50% of the respondents say their companies’ investments in digital initiatives are too small to achieve their strategic goals.”
Half of the companies are focusing their big-data efforts on customer insights, segmentation, and targeting to improve overall performance. Even more say that they are focused on adoption of data and analytics to generate insights. However, when it comes to actual implementation, less than 20% have fully deployed data and analytics as core functions to generate insights in any one business unit. The number decreases even more (13%) for the number of players who have deployed across multiple business units or all of them.
“Around 70% of companies believe Digital and Analytics is the way forward, yet around 50% say implementation is too small.” —Gartner
For most of the companies, adoption of digital marketing and social-media techniques are mainly focused on positioning, branding, and customer-engagement initiatives while the adoption of other practices is modest at best.
The numbers are even sluggish for mobility solutions and cloud integration. The implementation for those are limited to a foundational layer for almost all of the companies, which focuses on very basic functions in these areas, such as implementing only the core functions as part of a mobility solution or keeping only the critical processes under a cloud. Even for the basic implementation of mobility solutions, only 45% claim they have at least a minimum setup; for cloud solutions, it’s only around one-third.
Reasons for shortcomings
Despite all the optimism surrounding digital and analytics, executives point to certain challenges in bridging the gap between envisioning the scope of these technologies and implementing them. Some of the major challenges are described below:
Shortcomings in infrastructure and IT systems are a major reason because companies lack the potential to scale up their IT capabilities. A typical IT system implementation is usually ill-equipped to process insights from the data-rich environment. Processing insights calls for some high-input investments. Companies need to secure around 3% of their total cost base for investing in digital business initiatives, with CFOs and CIOs claiming that even more might be required.
Having the right organizational structure is also one the challenges currently faced by enterprises. Finding good resources to help develop in-house capabilities in digital and analytics is quite challenging. Add to that further competition, not only in their industry verticals but also from startups and tech enablers, coming up with disruptive solutions in this already dynamic and ever-changing avenue. Companies need to secure the right amount of resources with the right dividends, which again requires revisiting the budget.
Overall organizational shortcomings are also one challenge cited by most of the executives. Implementing digital and analytics capabilities calls for a completely different operating paradigm, one with a free flow of information among units. The existing setup comprising of siloed functions (IT, marketing, product research, etc.) becomes an obstruction to a dynamic approach to digital business that enables seamlessly networked architecture with speed and flexibility to create the most value.
Addressing the challenges
While their companies’ current implementations of digital and analytics technologies reveal substantial room for growth, executives are optimistic about their future implications. But to create an all-encompassing, efficient, metrics-directed system of digital and analytics in the future requires taking steps in the present.
CIOs have to shoulder a lot of responsibility to create a tech-enabled digital and analytics ecosystem and to meet their businesses’ transformational challenges. This becomes possible when they understand the business as a whole. The CIO and his team need to be responsible for actively promoting the need to implement digital as a core objective, backed by data-driven returns to the company. Companies in which the CIO plays a more active role implement the digital- and analytics-enabled ecosystem more quickly.
Also, a new approach to talent management is required, where flexible and dynamic team structures are integrated and outside collaborators are brought in as partners. Companies should be resourcefully focused on developing homegrown skills wherever possible.
The positive aura surrounding the application of digital and analytics won’t remain for long. The gap seems to be because of the requirement of a completely different operating paradigm, which is slow in implementation but sure.