Digitalization: Its Effects on Business and IT

As consumers continue to push for the ability to do more of their business online, modern companies are forced to evolve and adapt their business strategies in order to remain relevant. More often than not, these adaptations are much more than simple shifts in marketing direction and product development. In fact, in addition to replacing old, outdated technologies with cutting-edge options, many companies are completely reworking their operating cultures and procedures; they do this in order to create working environments more suitable for generating the type of innovation required to stand out and succeed in a growing pool of digital businesses. The process used to achieve this, which focuses on replacing traditional business models with models more suited for digital business, is known as digitalization, and IT departments play a critical role in its success.

The Third Era of Enterprise IT

Gartner, one of the world’s leading companies in information-technology research, described the digitalization phenomenon as the third era of enterprise IT. Unlike the last era of enterprise IT, one that focused on improving reliability, predictability, and efficiency, the third era of enterprise IT is one that focuses on IT renovation and innovation in response to larger societal and technological changes. Societal changes, like the aforementioned push for the ability to conduct more business online, force companies to change their business strategies to ensure their short- and long-term success. Technological changes, like the evolving Internet of Things, create new opportunities for innovation in IT and the potential for greater efficiency and scalability. Together, these changes have shifted IT organizations’ focus away from cost management to allow for a more holistic approach to managing technology, one that is better suited to aid companies in their pursuit of long-term success.

Digitization of IT

Evolving Roles and Responsibilities

The digitalization of business is highly dependent on IT infrastructure; so much so, in fact, that it has transformed the roles of Chief Information Officers (CIOs) and Chief Technology Officers (CTOs). While the current economic environment still requires IT departments to reduce operational costs, fundamental changes in business strategy have also sparked major changes in IT. As companies move toward digital business models, their technology teams do more than support revenue-generating departments; they develop and support technology that actively generates revenue. According to data from Gartner’s 2016 CIO Agenda Survey, CIOs expect these digital revenues to grow from 16% to 37% in the next five years, providing ample opportunity for IT departments to take a direct, permanent role in revenue generation. To take full advantage of this opportunity, C-level technologists must equip their departments to handle the following responsibilities:

  • Product Innovation: While digitalization brings plenty of challenges to IT departments, it also brings a wealth of opportunities. By establishing a culture of innovation within their departments, C-level technologists encourage their staff members to experiment and create the products capable of capturing the growing potential for digital revenue generation.
  • Process Improvement: As technological advancements continue to affect companies’ everyday operations, IT departments will have a greater impact on organizational efficiency. Properly equipped IT departments can strategize more effectively to improve operational processes.
  • Customer Service: The digitalization of business provides IT departments with a wealth of data concerning a wide variety of things, including product usage. With this information at their fingertips, IT professionals are in a better position than anyone else to provide exceptional customer service.

The Need for Increased Collaboration

Understandably, taking on new responsibilities associated with the digitalization of business in addition to maintaining operations and reducing costs is something that many C-level technologists have found to be a challenge. One of the most effective success strategies for department heads facing this challenge has been to increase collaboration between their departments and others throughout their organization. Working together with Chief Marketing Officers (CMOs), for instance, provides C-level technologists with the type of insight needed to align their IT goals with the business-related goals of their organization. As the digitalization of business continues, these goals are becoming increasingly intertwined. With digital revenue potential growing day by day, companies are finding that their business and IT goals are often one in the same, and effective collaboration between departments is vital for ensuring the long-term success of their organizations.

Digitization of IT

When asked to advise CIOs struggling with digitalization, Gartner vice president, Mark P. McDonald, discussed evolving IT strategies and how effective partnership can generate the type of platform required for long-term success:

Turning sparks into flame and growing that flame requires a scalable, capable platform. That’s what the CIO brings to the table. The most powerful combinations we’ve seen are the CIO and CMO working together with a shared goal to grow the business. When my goal is to grow the business, everybody has the potential to win. When my goal is to control costs, there is automatically a system of winners and losers.

When C-level technologists make digital revenue growth a priority along with cost reduction, they are better able to support their organizations with innovative solutions. Of course, without the guidance of CMOs or other business-focused partners, C-level technologists are left guessing when it comes to current business strategy and long-term goals; this is why collaboration is key in the digital age. Through increased collaboration, IT departments are able to provide the specific support and structure needed to ensure that their organizations generate quality products in line with customers’ expectations. Furthermore, with digital capabilities playing an ever-greater role in companies’ revenue-generation potential, the lines between business- and technology-related goals will continue to blur. In fact, for companies transitioning to technology-focused business models, IT departments are very likely to be working toward the same goal as their business-minded counterparts in addition to retaining the cost-reduction and efficiency-boosting responsibilities associated with second-era IT.

Be sure to follow our blog for future posts on the digitalization of business and success strategies for companies looking to adapt and grow in an increasingly digital world. To learn more about how Rigor can help your company implement the changes needed for continued success.

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