What makes an organization a leader or follower in leveraging IT to re-imagine its business? To find out Tata Consultancy Services did an online survey of 820 executives in 13 industries in 10 countries. Leaders, Tata says, understand what customers want in new products or services, have improved demand forecasting, and can tailor offerings to small. As a CIO you might use these results in shaping your strategy. All images from Shutterstock.com
70 per cent of respondents agreed digital initiatives are important or most important to their organization. On average they are spending spend $113 million on digital initiatives a year. Eight per cent of respondents said digital re-imagination is their strategy today; nearly a third said it will be their strategy by 2020.
Mobile is vital
50 per cent connect with customers through mobile apps or social media; 34 per cent connect via digital products or services that customers buy and download. Media, telecom and high-tech industries today are making the biggest digital investments. By 2020 more than one third of all companies in retail, banking, insurance and utilities expect to digitally re-imagine their business models.
Leaders vs followers
There are leaders (the 10 per cent who said their digital initiatives had increased business unit revenue by more than 50 per cent last year) and followers (65 per cent of respondents who said their initiatives increased business unit revenue no more than 20 per cent last year). Leaders’ digital initiatives had 10 times the revenue impact of followers’ initiatives.
Cloud vs big data
Leaders took a different approach to their digital spending: They were outspent on big data (Almost 24 per cent of budgets are on big data vs 29 per cent for followers). On the other hand leaders spent more that followers (17.1 per cent vs 12.1 per cent of budget) on cloud computing. They were even on social media and online communities (20 per cent of spending), while on mobile computing and miniature digital devices leaders spent slightly more (22.8 per cent vs 19.8).
Leaders are nearly twice as likely as followers to have already brought a whole new digital offering to market (89 per cent of leaders have done so versus 48 per cent of Followers). Leaders also expect to spend an average of $290 million this year on digital initiatives vs $93 million for followers. Leaders also expect to get more revenue growth than followers from this spending. Companies with the most successful digital initiatives are much bigger firms, spend far more, and are much more likely to have achieved critical new business capabilities than the firms with the least successful initiatives.
Digital leaders said they seek to improve accuracy in demand forecasting and identify product improvements and new offerings; followers want to market and sell their offerings. 57 per cent of leaders have a unified view of how they connect to customers. On the other hand 50 per cent of digital followers let individual business functions decide their digital strategy.