Digital business is an overarching theme that covers how the blurring of the physical and virtual worlds is transforming business designs, industries, markets and organizations. The continuing digital business evolution exploits new digital models to align more closely the physical and digital worlds for employees, partners and customers. Technology will be embedded in everything in the digital business of the future. Rich digital services will be delivered to everything and intelligence will be embedded in everything behind the scenes.

More and more CEOs are being challenged by customers and their boards of directors to make digital business change happen. Deep transformation can only be enacted at scale if it is systematically driven. There are four important steps: defining what digital means for your business, aligning it to the specific type of growth sought in your economic model, setting the primary success metric to keep check of progress and deciding which KPIs must change to make the progress happen across the business.

Q&A with Gartner experts Chet Geschickter, VP Analyst and Jorge Lopez, Distinguished VP Analyst

  • As digitalization matures, participation in digital ecosystems increases, making the enterprises more digitally interdependent. CIOs must prepare for this transition.
  • Information and analytics skills gaps persist; basic skills too are in short supply as the move to digital ecosystems changes the required IT capabilities. Take steps to mitigate these shortages.
  • Understanding business priorities and applying value disciplines to inform management and execution is foundational to transition to digital ecosystem participation.
  • Though ecosystem participation can take different forms — providing or co-creating an ecosystem, selling or buying through one — an ecosystem creates value by supporting business models that enable participants to achieve performance superior to businesses that operate independently. Likewise, ecosystems enable public-sector agencies to gain efficiency dividends and deliver a superior citizen experience.

In the past year, the realization is that digital business transformation is very hard work and could take much longer to execute than originally planned. There are emerging technologies with great transformation process, such as artificial intelligence (AI) and machine learning. But they are difficult to implement, and this delays business benefits.

Perhaps the biggest mistake organizations make regarding digital business transformation is to assume the effort is all about technology when actually it is about culture and business. There is a growing realization among our clients that digital business transformation is more than a matter of technology. It must entail business model transformation as well. It can be difficult for CIOs to amass support for this level of change. They need to partner with executives to create a shared vision for transformation.

Many organizations, challenged by the sheer magnitude of a transformation, operate incrementally to optimize their business, which can yield helpful and even significant short-term results. There are a lot of lessons to learn from organizations that have embarked on transformation initiatives, even if they are not in your industry. One of the trends we are observing is the creation of alternative structures to pursue digital business transformation. This frees up part of the organization to push the boundaries on how digital business shifts markets and enables new value propositions.

… find that their business or institution is obsolete and not relevant to a digital society.

Expert Q&A with Don Scheibenreif, Distinguished VP Analyst

Digital transformation is one of the hottest topics at Gartner right now. We continue to sharpen our definitions of what digital transformation really means. The term is broadly used by technology firms, consulting firms and agencies. It seems that every digital project is considered digital transformation. It is confusing. One of our biggest opportunities is to continue to help client organizations develop what we call Digital Ambition — having a clear vision of what digital technology and digital business means for the future of the organization. We will continue to share best practices of how organizations are overcoming barriers to digital transformation.

In strategy, 62% of CEOs tell Gartner they have an initiative in place to make their organizations more “digital.” In technology, CIOs tells us they have strong interest in advanced analytics, artificial intelligence technologies, blockchain, cybersecurity, conversational platforms, and the Internet of Things. 

Not being clear on what they mean by digital transformation. Are they looking to their digital strategy to help them use technology to improve their existing business model — digital optimization — or are they using technology to help them create a new business model or new public services that otherwise could not exist without those technologies — digital business transformation?

More and more of our IT clients are helping their organizations have the tough conversations on what digital means for the enterprise — either as a catalyst or partnering with the executive team. They are also evolving their IT organizations and core technology platforms to provide better enterprise agility to take advantage of digital opportunities. Some are even creating cross functional — cross-enterprise digital teams to identify, develop and scale digital initiatives that lead to growth. 

… will be destined to just have a collection of digital projects.

Digital business transformation spotlight sessions from 2019:

Algorithms and Things Will Transform Manufacturing Business Models  Marc Halpern, VP Analyst, Gartner

How Oil and Gas CIOs Can Lead Enterprise Change   Ganesh Ramamoorthy, Managing Vice President, Gartner

Scaling Digital Business Requires an Enterprise Operating Model Perspective  Janelle Hill, Distinguished VP Analyst, Gartner