CHAPTER 7

Setting the Stage for the Digital Enterprise

Thus far in this book, our focus has been on the importance of Business–Technology alignment in the digital era and its role as an enabler of success for the digital enterprise. We established that as the focus of technology has shifted to business outcome, one can no longer separate Business from Technology. In other words, Business and Technology are fused at the level of their culture, strategy, structure, process, intellect, function, and tactics.

Much as business management and people management have been integral to enterprise success, the new economy also requires a strong focus on Technology Management as a driver of growth and success.
Technology Management—or managing technology for business—is a vast subject, which is quickly emerging as a coveted discipline of management study and research. Technology Management does not necessitate in-depth and intricate knowledge of technology itself but requires honing the qualities that lead to its effective use for business.

Technology now has the power to alter the business and market landscape of any industry completely. Alignment between Technology and Business in this backdrop, therefore, must be a key strategic priority for the digital enterprise. As obvious as this may seem, most businesses have not been successful in driving this alignment within their organizations, as they have relied on conventional approaches and idealistic assumptions. The truth is, people are too focused on their short-term objectives to seriously work on harmonizing their Business and Technology imperatives, which “sounds like a great thing to do, but not right now.” Obviously, an approach that works on the level of injecting
Business–IT alignment (BITA) into the organization’s DNA is the solution. And this, in turn, brings us back to the seven dimensions we earlier introduced, which constitute the genetic code to program the successful digital enterprise.

Even after at least a decade that this has been a subject of discussion, most organizations cannot boast of having reached the level of alignment required to drive their continuous growth in a tough market. Successfully navigating the ocean of digital business requires a more inclusive and rounded approach to alignment, which focuses on each of the seven dimensions that are now familiar to us (Figure 7.1).

Figure 7.1 BITA score comparisons

The term “rounded” is the key here, by which we mean that isolated focus on a set of dimensions (like strategy, process, and structure) while ignoring others is not going to get you to your destination safely and quickly. In the instances depicted in Figure 7.1, A is the BITA score we depicted in the example we studied in Chapter 6 (inserted here for reference only), and B and C are hypothetical illustrations of higher BITA scores. Here, while B represents a slightly lower BITA than C, it is a much more rounded achievement (i.e., comparable results along all dimensions), and hence preferable to C, which is a somewhat higher BITA score overall but does not stack up comparably on the intellect dimension. This lack of roundedness is the single biggest reason for organizations not achieving targeted long-term success in their digital endeavors, despite good intentions and effort. An enterprise that prides itself on, say, its strategic and functional alignment may yet rue the fact that business results are not commensurate with expectations. They’d probably take the view that this whole BITA thing is just hype. By using the BITA tool covering a good mix of Business and Technology folks in your organization, you should be able to identify such depressions and then work to smoothen them out.

That the digital era is upon us is unquestionable. Yet, many believe that they can brace the winds of change it brings without adjusting their sails. Their refrain is “Haven’t there been environmental changes, economic upheavals, increased competition, and other barriers in the past? They couldn’t slow us down. The new upstarts are the ones that need to worry.” Of course, this is not an openly stated position by most companies, but deep down there is a nonchalance that this entire digital stuff is overhyped and that beyond some surface-level alterations, it is pretty much business as usual. One can only wish that they will wake up before it is too late (many are already lining up the waysides) and take some quick steps in the right direction.

On the other extreme are the new-wave digital disruptors riding on a surge of innovation, chiefly technological. They have achieved some quick successes early in the game, perhaps through some tempting promotional offers, and are therefore firmly of the view that their way is the only way. Many of them scoff at conventional business management and organizational practices as “oh so old-school.” If you have entered with a long-term vision, this too is an unsustainable position. Neither can one entirely ignore digital transformation, even tacitly, nor can one bypass all established practices of business management and conduct. Clearly, a middle path must be pursued on which both these proponents may walk. Therefore, we stress the need for a well-rounded alignment between Business and Technology, considering all the seven dimensions as of equal significance in attaining long-term business value.

There are countless other testimonies to the fact that the world is ready for digital business, imposing a need on enterprises across industries to step up. Amid these expectations, only companies that have achieved breakthrough technological innovation without compromising the established rules of business will survive. A strong BITA is thus the foundation on which a successful digital enterprise is built.

The Characteristics of a Digital Enterprise

An enterprise that uses digital technology as a strategic tool to gain competitive advantage is a digital enterprise. A digital enterprise follows a business model that envisages the use of digital technology to conduct its internal and external business operations. Retailing via web channels, customer self-service through online portals, web-based order booking and fulfillment, targeted digital marketing campaigns, crowdsourcing of ideas to drive innovation, enabling Bring Your Own Device (BYOD) in the workplace, and using social media analytics for managing customer experience are examples of the many characteristics of digital enterprises.

Enterprises, including digital, have their own personalities, shaped by their distinct cultures. They may differ greatly in their internal dynamics, business processes, technology deployment, and addressable markets. All digital enterprises, however, conform to the pattern of a web-based enterprise surrounded by an ecosystem of technology, partners, influencers, and markets (Figure 4.1) and exhibit some standard characteristics. With a well-rounded alignment between their Business and Technology units being vital, all digital enterprises also depend a lot on the seven BITA dimensions for success and sustainability.

When an enterprise goes digital, it is swept by a new wave that changes the way it communicates with its stakeholders, including customers, partners, and employees. The traditional methods of marketing and running operations must be seriously reevaluated. As we have already discussed, its landscape begins to be dominated by new digital technologies like cloud computing, social media, mobility, and analytics until these become an intrinsic and integral part of its value proposition. As central as technology is to its existence, however, technology is not the solitary jewel on the crest of the digital enterprise. Business acumen, economic brilliance, and common sense are as relevant in a digital enterprise as in a traditional one. This fact too underlines the importance of close alignment between Business and Technology in a world where customers are becoming increasingly tech-savvy, sometimes more so than the sales professional who is trying to strike a business deal with them.

A quick enumeration of some of the characteristics that define a digital enterprise is presented in Table 7.1. Of course, not all characteristics are necessarily displayed by any one digital enterprise, but if your organization is actively embracing many of these traits, you are well on the way to becoming a digital enterprise.

Table 7.1 Common characteristics of a digital enterprise

	Perspective	Characteristics
1	Leadership	Visibly passionate about digital vision.
		Reinforces the digital way through constant communication: Digital is our business, not a channel.
		Develops a comprehensive strategy around the digital vision. Ensures it is understood by all.
		Makes data-driven decisions.
2	Organization and Culture	Everyone shares the company’s digital identity and vision.
		Attracts/hires/assimilates talent from other industries to nurture digital initiatives.
		Millennials are well integrated into the org structure and cultural ethos.
		Few layers, fast growth for achievers. Values skill over experience.
		Demonstrates a culture of innovation through internal collaboration.
		Skills and empowerment to manage customer experience over lifecycle.
3	Business Model	Value proposition centered on revenue streams that leverage digital technology.
		Built around value chains constituted of ecosystem partners, who may also be competitors.
		Embraces innovation and transformation in methods of doing business, e.g., agrregation.
		Flexible business model and business processes.
		Monetization using nonconventional channels, like advertising.
4	Go-to-Market	Use of digital channels (web, mobile, social) for engagement with customer through lifecycle.
		Adoption of e-commerce (e.g., B2B) for exchange of products and services.
		New pricing and payment models. Digital revenue streams.
		Multiple agencies collaborate digitally to service customer need.
		Customer engagement is at the center of go-to-market (GTM) strategy.
5	Drive for Innovation	Customer-feedback-driven technology innovation.
		Involvement of customers in innovation and ideation.
		Recruit, promote for the innovative bend. Recognize even tried-and-failed (dare-to-try).
6	Sales and Marketing	Analytics-driven. Use of Big Data for segmentation/target marketing.
		Automated digital marketing processes, solutions and activities (e.g., campaigns).
		Adoption of digital channels to transact proposals, offers, bills, and receipts.
		Use of web-based automated tracker to capture VoC at all stages of customer life cycle (CLC).
7	Customer Interface	Serving a base of informed, tech-savvy, mobile, social media (SM) empowered consumers.
		Able to sense customer stimuli (e.g., to churn).
		Able to handle last-minute customer requests for change with ease.
		Personalized customer experience at all stages of customer lifecycle (end-to-end).
		Establishment of CEM for lifecycle tracking and improvement.
		Use of digital tools including social media for customer service.
		Engagement with customers through online chat
		24 × 7 availability to customers for service, response to queries and assistance.
		Uniform experience over multiple channels: web, chat, mobile/SMS, e-mail, person-to-person.
8	Technology/IT	Aligned with Business (BITA score of 60 or above).
		Leverage new technology (Cloud, Mobile, Analytics, SM) for agility and competitiveness.
		Business-aligned technology roadmap and architecture.
a	Big data/ Analytics	Excellence in analytics: e.g., ability to visualize data using data discovery tools.
		Drills down to base of pyramid for deep insights on customer preferences.
		Important data sources integrated into a single BI system to facilitate decision making.
		Invests in and manages large data warehouse. Appreciates importance of data.
b	Cloud/mobility	Multichannel operation using social media, mobility, cloud for internal and external business
		Use of mobile data for business decision making (e.g., a bank deciding on ATM locations) ).
		Web/Mobile enabled customer apps (cloud-hosted) with interface to all common devices/platforms
		A holistic mobile strategy—for sales, service, employee engagement.
		Uses Mobility for customer service using real-time, in-context data.
		Uses cloud-based systems like SFDC for sales tracking
c	Social Media	Uses corporate social media across the network of stakeholders.
		Social networking and collaboration to collectively solve problems.
		Ability to assimilate social media feeds and analyze market sentiment
d	Security	Manages security risks in protection of Intellectual Property (IP).
		Manages Security Operations Center (SOC) with ability to correlate event logs for fraud detection and prevention.
		Follows latest security protocols to mitigate risks associated with use of digital channels
9	Employee Engagement	Encourages BYOD across levels, locations.
		Mobile access to e-mail, calendar, messaging, corporate intranet, for all employees.
		Routine apps like leave, travel are available through mobile portal.
		Empowered employees thru innovative use of Big data and mobility.
10	Partner Management	Digital rights and royalty management of ecosystem partners.
		Tracking and governance of ecosystem partners through online SRM initiatives.
		Ability to work remotely yet seamlessly and securely with partners over digital channels.
11	Internal Operations	Agile SOPs and development methodology for continuous delivery and improvement.
		Human Resources (HR), legal, supply chain (SCM), Finance—all departments execute on digital strategy.
		Investments in digital technology cover customer solutions as well as back-office operations.

A digital enterprise is almost always characterized by the application of digital technology to an innovative concept or idea. Equating innovation to risk is the biggest impediment to the emergence of a digital enterprise, not lack of ideas or technology. There is no doubt that innovation calls for some bold initiatives, but ultimately, it is what drives the digital economy. While many enterprises have based their core businesses around this model (think Airbnb, Alibaba, Amazon, Google, Netflix, Salesforce.com, Tencent, Twitter, Uber, and hundreds more), others have used this to improve some aspect of their operations.

The Non-Characteristics of a Digital Enterprise

In as much as we could draw out a list of some of the desired characteristics of a digital enterprise, we could also list down the inhibitors to digital evolution. Of course, not displaying the desired characteristics itself would suffice to throttle your aspirations of going digital. Unfortunately, it is not just a simple game of antonyms. There are some subtle characteristics that could water down your most ambitious plans if not recognized and addressed early in the game. Hence while doing the opposite of the characteristics mentioned in the previous table would undoubtedly prove an inhibitor, especially if it is rampant across the list, some other traits can block your path even if you are conforming to many of the desired characteristics. Some of these are very commonly found even in the most enlightened companies and are worth mentioning here.

Taking Advantage of the Digital Opportunity

A digital enterprise may either be born digital or be turned digital. Uber, Alibaba, Facebook, Twitter, Grofer, Instacart, Airbnb, and Google are examples of enterprises that were born digital. Interestingly, born-digital companies are some of the fastest growing companies in history, and yet many of them do not own (or stock) the goods or services that they “sell.” Such is the power of digital technology. These companies rely on a robust Internet, and a sophisticated supply chain (delivery) system, to reach millions across the globe. They themselves are just extremely thin layers that sit on top of these supply systems. All that they essentially do is interface with a vast number of people looking for options at a reasonable price while automating the entire value chain involving supplies, payments, logistics, and service. The value center is clearly shifting from the product to the interface. While this is a compelling business model, digital enterprises that take the opposite path have also emerged—they own all the layers from R&D to marketing and distribution, thus having greater control and higher profits but also more overheads and challenges in scaling up. Both these types of digital enterprises, however, are examples of companies that were born digital. Then there are companies that turn digital. The Indian Railways (ticketing system), fast moving consumer goods (FMCG) companies like P&G, e-governments, and banks are among countless examples of institutions that have turned digital to embrace the changing times. The questions to ask right now are: were you born digital, and if not, have you turned digital yet? Do you have a distinct business model to take advantage of the digital opportunity? An enterprise’s digital makeover is a continuous journey. Are you on that path yet?

The great thing about digital enterprises is that despite the many different models, markets, and ambits, they are all constructed from a similar set of building blocks. These building blocks come together seamlessly in a well-coordinated interplay, creating an inclusive entity that is more than the sum of its parts. A disproportionate focus on technology alone is the commonest reason that many companies fail to reach their potential. It is the seamless integration of technology into a broader ecosystem that is the key to success of a digital enterprise. What are these building blocks, and how do they fit together? To answer this, let us turn to the next chapter.