Today, IT and business are increasingly indistinguishable — they function as corresponding and collaborative parts of a single fused entity. Everything that makes an IT solution successful in delivering business outcomes relies on collaboration, governance, harmonised data and processes, enterprise-grade infrastructure and proactive management of talent and resources.
As organisations evolve to become digital enterprises, new digital capabilities need to be developed. But those capabilities still need to combine business and technology.
When I say “capability” here, I mean something quite specific. A capability is a set of resources required to conduct a specific business activity in a way that expands organisational performance.
While a firm’s assets and human resources are important, they don’t by themselves provide a sustainable advantage. The combination of organisational resources — in the form of capabilities — offers the advantage of being far harder to imitate because capabilities are embedded in enterprise practices and individual competencies within a firm’s culture. Capabilities embed know-how into the entire operating model.
In other words, capabilities are the “what” an organisation does to deliver value. Digital capabilities combine resources that span technology, talent, governance, processes and data.
Too few organisations are actively working toward developing new, and true, digital capabilities. Rather, they are preoccupied with building technologies in isolation. Organisations will need to develop different flavours of capabilities to succeed in the digital economy, but the three most important capabilities will be experiential engagement, information monetisation and operation of a digital business at scale.
- Experiential engagement. This capability is what enables your organisation to effectively collect, control, predict, process, organise, present and analyse all information, documents, preferences, experiences and history related to an individual or organisation — in order to provide rich, seamless, engagement with that individual or organisation.
- Information monetisation. This capability is what enables your organisation to understand the potential business value that data can deliver; develop and manage its value accordingly through an “information value chain”; and, where relevant, generate revenue by selling, exchanging or sharing information.
- Digital business at scale. This capability is what enables your organisation to ensure the efficiency, scalability, reliability, quality and predictability of its digital business needs in the context of high and potentially unpredictable business growth.
Effective digital transformation requires you to think beyond technology as a standalone piece. You have to think about how business and technology resources need to be woven together to deliver true technology-enabled business capabilities. It’s perhaps a cliché to say that people, process and technology are all vital to business operations. But in a digital world, the basic truth remains: Technology by itself will not help you win.
This article is part of the IDC series “Your pathway to digital success,” written to inspire business leaders to overcome common challenges along their organisations’ journeys.