The Digital Capabilities Your Company Needs

New research suggests that digital transformation will require companies to draw from a core set of four digital capabilities: a unified digital platform; solution delivery; analytics capabilities; and business and IT integration.

Image courtesy of Flickr user iriss.org.uk.

In today’s business environment, digital capabilities are a fundamental building block with which companies can transform customer experience, operational processes and business models. Although CIOs and existing IT departments in many companies have the skills to lead some digital initiatives, most companies find they must hire extra skills or implement separate units to coordinate digital transformation. In fact, 77% of executives we interviewed mentioned skills gaps as a hindrance to driving digital transformation. The skills needed go beyond pure IT to include specific technologies such as social media or mobile, as well as the analytic skills to drive value from big data.

Our in-depth interviews with 157 executives in 50 large companies found that the most fundamental technology requirement for digital transformation is not particular skills or particular technologies. It is a core set of four digital capabilities. These four capabilities revolve around technology but typically not all of them reside in the IT department.

1. A Unified Digital Platform

The most fundamental technology enabler (or inhibitor) of transformation is a digital platform of appropriately integrated data and processes. Many large successful companies have historically operated in silos, each with their own systems, data definitions and business processes. Generating a common view of customers or products can be very difficult. Without a common view, advanced approaches to customer engagement or process optimization cannot occur. Unfortunately, many executives blame their CIOs for problems with a disconnected legacy of systems; fifty percent of our interviewees cited ineffective IT as a challenge.

The difficulty of operating without such a digital platform becomes greater as companies engage in multi-channel operations. Many companies, for example, cannot link customers’ activity in stores or bank branches to their activity on the Web or via mobile devices.