Mark McDonald

A member of the Gartner Blog Network

Mark P. McDonald
GVP EXP
8 years at Gartner
24 years IT industry

Mark McDonald, Ph.D., is a former group vice president and head of research in Gartner Executive Programs. He is the co-author of The Social Organization with Anthony Bradley. Read Full Bio

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Mapping three paths for digitalizing the business

by Mark P. McDonald  |  August 29, 2012  |  3 Comments

Digital technology represents the future of business and IT.  It represents the future in the sense that it represents a style of computing that will replace our current models with their emphasis on process automation, transaction processing and providing means of corporate control.

Digital technology, a broad category including anything with a chip in it, reflects a different style of computing.  Digital technology rests on information flows and using that information, task and service performance and finally context that shapes specific requirements and support for collaboration and judgment rather than conformance and control.

Where, how and to what end are primary questions shaping digital strategies for many organizations, particularly those that see technology applied to business rather than forming a basis for new business capabilities and models.  I make that distinction as IT often charts its own course – how to apply technology – before the business realizes the deeper implications of new technology.

So below is a map that highlights the different courses for digitalization in the enterprise.  The map has two dimensions: operational focus and business focus that provide coordinates for digital solutions and three paths for digitalizing the business.

 

The map outlines different destinations for enterprise digitalization.

Digital Marketing describes a path were digital technology is applied predominately to channel strategies to generate revenue.  This is the path described by product leadership that reflects a path that many have followed in prior eCommerce based strategies.

Digital Operations reflects a different path, one that seeks to leverage the technical efficiencies to drive operational efficiency.  Most organizations are already on this path as CIOs report that on average digital technology comprises 58% of their business processes, but less than 27% of revenue.   This path calls for continued focus on externalizing processes, channels and operations to find new sources of cost savings.  This is the world of digital ecosystems.

Digital Business represents the middle path, the broadest one concentrating on applying digital technology to the core of the business and throughout all of the business.  A digital business creates new customer experiences through new combinations of digital and analog resources.  Those combinations give digital solutions the depth and dimensionality to combat commoditization and deliver contextual value without creating complexity.

Where is your organization in terms of digitalization and digital strategy?  Where do you want to be?

Answering these questions requires having a map.

This is the focus of an upcoming eBook called The Digital Edge that will be out in the fall.

3 Comments »

Category: Digitalization Strategy     Tags: , , ,

3 responses so far ↓

  • 1 Doug Hadden   August 31, 2012 at 4:17 pm

    A friend of mine told me that the value of an MBA was to be able to describe anything in a 2 x 2 matrix or a pyramid. Here you have a pyramid within the matrix, and it’s a rich insight that aligns with the concepts of the “Discipline of Market Leaders”, although brought forward to the current century.

    Many think of social media as another technology-enabled marketing channel. They don’t realize the corporate implications. This single diagram is what these people need to understand the changes in the environment.

    This confirms my experience as an executive in a customer-centric company aiming for improved customer experience. It’s gratifying to have validation. More valuable to help us plan the next strategic steps.

  • 2 Gartner Symposium – Goa India: What I learned from CIOs attending the event.   October 15, 2012 at 6:29 am

    [...] Mapping three paths for digitalizing the business [...]

  • 3 The Digital Edge in Retail   November 26, 2012 at 8:59 am

    [...] Mapping three paths for digitalizing the business Feeling digital is not the same a being digital Digitalization creates new dimensions for disruption [...]