BUSINESS TRANSFORMATION
Business goals and digital investments must go hand in hand
Business and technology are so closely intertwined today that it is almost impossible for organisations to manufacture, market or deliver products and services without the right digital solutions. However, implementing technology that does not help the organisation realise its business goals is a waste of resources. Investing in the right digital solutions helps organisations build better solutions, boost productivity, prioritise projects, procure the right resources and ensure information flows smoothly across the board so that business goals can be achieved.
Organisations that are making the right digital investments are reaping generous benefits. Globally organisations are expected to invest USD 6.8 trillion in digital transformation initiatives between 2020 and 2023. However, not all organisations are doing it right and as a result they fail to see positive results. This year, 31 per cent of digital spending has been dedicated to building capabilities, while the remainder is being dedicated to running the organisation.
Here are a few pointers about how to make the right digital investments. Most successful leaders agree with these pointers. Leaders further agree that the right digital solutions include investments in cloud computing, artificial intelligence (AI), internet of things (IoT) and advanced protection from cybercrimes.
- Build and communicate the organisation’s vision
- Understand the market environment and do a SWOT analysis
- Filter ideas for best results
- Prioritise, map the journey, and build a business case
- Build the organisation’s digital strategy
Digital investments are not separate entities but are closely linked to an organisation’s business plan. A well-defined vision helps ensure that all business goals are realistic and achievable. Such a vision will help drive all short-term technology needs and investments of the organisation. It also helps to keep the teams motivated.
Digital teams of the organisation must be kept abreast of the short-term and long-term business goals so that they can select the right digital solutions at the right time. Communication is key. Most organisations that have seen success agree that a clearly defined digital strategy is a prerequisite for success.
An organisation must first understand the market environment that its digital strategy would have to function in before making any investments. The market can be gauged by observing and analysing the threat of new business rivals and the ensuing threat of new products and services in the market, the rivalry among competitors and the power wielded by consumers and suppliers of the organisation. The threat level of each variable can be summarised, and next steps can be consequently planned.
Organisations are known to jump into a SWOT analysis before gauging the market and that decision can create confusion. A proper analysis at this stage enables the organisation to design the future with complete awareness about the realities of the market.
An organisation is likely to have many innovative ideas about projects to take up but if they are not aligned with business goals, the ideas are not likely to become a reality. The organisation must first filter the ideas against a set of parameters that will determine which ideas are worth investigating further. For example, the first level of filters should help the organisation decide if the initiatives would bring the organisation closer to fulfilling its vision.
The filters must be such that the ideas that are finally accepted are worth investing in technologically. They should have good return on investment (ROI), play on the strengths of the organisation, improve customer focus and supplier efficiency, and boost the efficiency of the organisation. The list of ideas must finally be whittled down to a short list of plausible initiatives that are expected to lead the organisation to success. Risky ideas are best eliminated from the final list of preferred initiatives.
Prioritise initiatives as per risk tolerance and proceed. Technologies that can bring the best ideas from drawing board to reality need to be mapped. Finally, a strong business case can be built in favour of the most suitable digital investments.
An organisation can build a strong digital strategy by going through the whole process of selecting the best initiatives to invest in. Digital investments based on such a strategy have the highest likelihood of enabling an organisation to achieve its business goals. Only focusing on new technology without a sound strategy can lead to failure.
Observations
The EY-Parthenon 2022 Digital Investment Index (DII) report has noted that organisations that have successfully implemented their Digital transformation strategies largely focused on four critical actions.
- Increased focus on innovation along with implementation of new products and services so that customer experience gets a significant boost.
- Encouraged a fail-fast and agile culture that allows teams to experiment, fail, learn, and quickly move on to the next innovation.
- Operated an outcome-based model that identifies, measures, and reports digital outcomes quickly. Customer feedback is actively considered for direct input for future strategies.
- Empowered teams to scrutinise and invite scrutiny of digital projects that required more analysis.
Making smart digital investment decisions will continue to be a challenge. The perfect solution does not fit every organisation. Organisations must be willing to design and adopt flexible strategies and nurture a company culture that would help integrate digital investments with agility*.
* For organizations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organizations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organizations that are innovating collaboratively for the future.
