You Can't Buy Yourself Into DX Success

Image credit: iStockphoto/Khafizh Amrullah

If you think that the pace of digital acceleration has increased in the last year, the IBM Institute of Business Value has put a figure on it. We’d have ten years of transformation over the last year.

The pandemic, perhaps, has only been the catalyst for driving what was happening anyway. But the pace of change has ramped up, and companies are implementing new combinations of enabling technologies at speed.

In cooperation with Oxford Economics, the IBM Institute of Business Value has sought to gain a quantifiable understanding of these changes in a recent research project that surveyed 7,175 executives across 28 industries and 47 countries.

“Increased virtualization — in part due to the pandemic — has accelerated the emergence of a new transformative organizational and operating model — what we call the ‘Virtual Enterprise’,” IBM says.

“The Virtual Enterprise re-imagines how and where work is done, re-evaluating the necessity for physical assets, infrastructure, and talent. The model expands the potential for extreme digitalization, extended value chains, intelligent workflows, and new partnership and ecosystem approaches. The Virtual Enterprise is more seamlessly integrated into its environment, leveraging new data and intelligence, providing a new model to which organizations can aspire.”

One of the initial vital insights is that the adoption of new technologies is so widespread that they are no longer a differentiator.

The differentiator today is “the ability to integrate technologies and transform.”

Technology engagement

Almost all, or 97% of respondent organizations, have implemented cloud-based technologies. That may be no surprise, but many may not have expected such a broad implementation of artificial intelligence — at 78% — and the Internet of Things at 82%.

Around 50% of organizations are piloting technologies such as blockchain while surprising on the downside is a response that a modest 69% have implemented robotic process automation (RPA).

Already, it is clear that these technology investments are delivering business results. IBM found that across 13 industries, the leading adopters of these technologies enjoyed a revenue premium of 7 percentage points on comparative laggards.

“The Virtual Enterprise re-imagines how and where work is done, re-evaluating the necessity for physical assets, infrastructure, and talent”

Results varied across different industries, as did the types of technology being engaged with. In the auto industry, for example, where leading adopters enjoyed a 9 percentage point revenue premium, the key technologies were edge computing, AI, and cloud. In healthcare, by comparison, where leading adopters were 12 percentage points ahead, the critical technologies of choice were advanced analytics, RPA, and AI.

It is apparent that it’s not about any one technology, but differentiation comes from combining them in innovative implementations.

Ecosystems might be an abused term, but it does matter because adopters who invest in ecosystems enjoy a 40% revenue premium over those who do not. Other differentiators are the smooth and strategic movement of data and the re-skilling of staff.

“Organizations that combine high levels of technology adoption with other capabilities achieve higher rates of revenue growth than other high technology adopters,” IBM says.

Legacy transforms

One of the case studies cited is the State Bank of India, a 200-year-old institution suffering from eroding market share and declining customer loyalty. With 60% of the population under 35 and digital inclusion growing rapidly, the bank faced the prospect of losing relevance to its customers as India’s finance sector transformed.

The bank adopted agile methodology and created a digital bank, an online marketplace for third-party offerings, and a digital Financial Superstore for its joint venture offerings under the brand SBI YONO (You Only Need One).

Its platform ensures dynamic data integration and analysis and provides greater visibility and real-time insights, accessing vast volumes of distributed data.

It was an ambitious bet, but already the platform has 64 million downloads and 10 million daily logins. At the same time, SBI YONO engages with 100 new partners each month — with Amazon among them — and launches 15 new use cases each month.

The lesson here is that even organizations with a 200-year legacy can use technology to open up and leverage new platforms and ecosystems that connect with partners and customers.

Key to this, the research shows, is investing in the cloud — and the hybrid cloud in particular — to “enable integration, connections, and collaboration.”

“Combine this with other technologies that drive the greatest impact for your business,” IBM says.

“Facilitate integration, movement, sharing, and access to data and workloads across your organization and ecosystems.”

Regardless of how much you attribute to the exceptional circumstances of COVID-19, it is clear that we have entered a new digital era and that organizations are scrambling to respond. The world is unlikely to be the same again.

It is a world where even the government-owned State Bank of India can be a digital leader in a sector and a country known for the glacial pace of its bureaucracy. That is certainly a different kind of reality, but we should get used to it quickly, or we’ll be struggling to catch up.

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their entire business models. You can reach him at [email protected].

Image credit: iStockphoto/Khafizh Amrullah