Digital Business: What Helps Organizations Digitally Transform and Innovate?

After great anticipation, our digital supply chain transformation research study results are in!

While the data confirms the majority of supply chain organizations struggle to drive digital transformation across their organizations, the good news is companies furthest along the digital journey have aligned their digital investments to customer and shareholder value.

Our research data is hot off the press and our analyst community is now fast at work synthesizing the data over the coming months to provide further insights. However, early key study findings indicate:

• Most organizations are still planning or implementing a digital roadmap. Only one in five companies is in the advanced stages of digital supply chain implementation — that includes analytics-based decision making and enablers like Internet of Things, smart machines, 3D printing, mobile, cloud and other digital technologies. See Figure 1.
• Digital goals are generally well defined, with clear goals and priorities as well as executive support, but funding is the main challenge.
• Organizations in the planning stages of defining a roadmap are focusing on integration across the supply chain, while those in the implementation or advanced stages are supporting new business models.
• Automating existing processes is the main focus of digital enablement in the short term; automating predictions and artificial intelligence (AI) is the main focus in the longer term.
• Growing revenue becomes an increasingly important driver for digital supply chain initiatives for more mature supply chains, especially through new business offerings.

The findings are consistent with many discussions we have with supply chain leaders. I can generally categorize digital investment criteria/priorities in four broad buckets:

1. Making digital investments to attack costs and remove complexity within the supply chain and drive revenue growth. Examples: AI machine learning investments in the order-to-cash space or making continuing investments in demand planning advanced analytics.
2. Using digital to improve the customer experience by solving for age-old customer challenges like customer service or inventory management.
3. Investing in digital to disrupt old business models by using new technologies for better value.
4. Using digital as the initiative to achieve end-to-end supply chain capability by moving beyond the traditional supply chain silos that have plagued the industry since its inception.

Identifying what to invest in and why, however, is only half the battle. The other half, and the more difficult half, is the ability to transform and support further innovation within the supply chain.

Study findings indicate that goals, governance, innovation and leadership play key roles in the most successful organizations pursuing digital transformation. So what are the supply chain leaders doing to drive success? The early data suggests:

Goals & Governance:

• Leaders have a formal, dedicated vision statement for their digital supply chain supporting new business model designs and goals over longer planning periods (two-plus years).
• Those who have a formal vision statement benefit from having dedicated funding for digital initiatives (83% vs. 58% of respondents).
• State goals and priorities that are well understood by stakeholders.
• Review or update their digital roadmap quarterly or more often.
• Have a digital supply chain planning process primarily driven by an executive-level strategic business planning process.
• Perceive alignment between digital supply chain and other digital roadmaps to be of highest importance.

Innovation and Leadership:

• Leaders are more likely to use crowdsourcing to drive supply chain innovation.
• Leaders tend to evaluate new experimental innovations at least quarterly.
• Have an enterprise digital strategy led by a single individual.
• Have one or more supply chain centers of excellence teams to define and execute digital supply chain initiatives.
• Perceive the chief digital officer, IT, supply chain emerging technology expert and portfolio manager roles to be important for success and not separate from the rest of the organization.

My takeaway:

It’s not too late to get started on a digital journey or catch up, given that only 22% of organizations identify themselves as being in the advanced stages of digital supply chain implementation. The findings indicate that a digital roadmap should include both a short-term and longer-term vision. This enables the organization to integrate digital initiatives into supply chain processes to enable greater end-to-end capabilities, while seeking revenue growth through the establishment and support of new business models.

Effectively communicating vision, goals and priorities must not be underestimated. Ask yourself how effective your organization has been at communicating strategy. It might be time to invest in people, process or technology to strengthen your ability to communicate and influence internally.

The establishment of a strategic digital business planning process should be a priority, and the data suggests ownership is required. You have a problem if no one raises their hand to the question, “Who owns digital?” or you may have an equal problem if everyone raises their hand. The point is that leaders have established ownership of their digital roadmap to include sponsors, stakeholders and advisors.

Leaders are agile and willing to experiment. Their priority is to invest, learn and scale, knowing their original digital investments might change or be replaced by the continuing pace of technology.

Steve Steutermann, Managing Vice President, Gartner Supply Chain