6 May 2014 - 7:38am | posted by | 1 comment

CEOs favour ‘bolt-on’ digital strategies over digital ‘transformation’, says Forrester study

A large proportion of CEOs are failing to grasp the importance of integrating digital into their business strategies from the ground up, with many still favouring a ‘bolt-on’ approach, according to Forrester.

In its the State of Digital Business 2014 report, which polled 1,591 senior business leaders in the UK and US during November 2013 to January 2014, Forrester revealed some major disconnects between the marketing and technology sides of businesses, with responses signalling a “digital strategy execution crisis”.

Although 74 per cent of executives report that that their company has a digital strategy there is a “wide disparity” between strategies according to the report.

Companies like Burberry score highly for demonstrating that its digital strategy is central to its business transformation, yet others regard digital strategy only in terms of adding a new mobile app to their existing business or developing a social media presence – approaches which Forrester categorizes as ‘bolt-on”.

Creative Review: 

Digital strategy is no yet business strategy: (source: Forrester)

Digital strategy is no yet business strategy: (source: Forrester)

It has attributed the bolt-on approach within certain companies to their failure in uniting marketing and technology management on a common path.

In all but the largest firms, CEOs are most likely to set the digital strategy for the business, but as company size increases, the CMO plays a more significant role.

Yet despite their involvement, few CEOs set a clear vision for digital. In firms with more than 250 employees, just 21 per cent of CEOs set a clear vision for digital – a figure which is even worse in larger companies which have between 1,000 and 10,000 employees, where it drops to 17 per cent, leaving a level of “uncertainty” among executives, according to Forrester.

Meanwhile the report has predicted that education and social services will be the “next big industry” to go digital.

Awareness of the digital “threat” in education and social services is high with 83 per cent of executives in this sector expecting digital to disrupt their organisation in 2014, according to the report.

Key takeaways from NIgel Fenwick - author of the report:

A Bolt-On Digital strategy will Not Be enough In 2015 and beyond:
While marketing has been the principal driver of digital initiatives up to 2014, going forward firms must take a more comprehensive approach to digital transformation and avoid simply bolting digital onto the existing business.

CMOs Must Partner with CIOs To Transform Toward a Digital Business: Digital business requires both digital customer experience and digital operational excellence. Without the CIO as a digital partner, chief marketing officers (CMOs) will tend to approach digital as a bolt-on approach to customer engagement.

CIOs must embrace digital as a core technology imperative: CIOs must shift their focus toward systems that support the firm’s ability to win, serve, and retain customers. Digital technologies are central to this shift. The ability of the technology management team to embrace digital will shape the future of the CIO.

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Comments

12 May 2014 - 23:13
dlhaw78639's picture

Large conventional business enterprises are inherently hierarchical. It is very unlikely that existing management will get it (i.e. transformation) during their career. We are already seeing the disintegration at the edges, from 'world cars' to data services. We will begin to see the 'disintegration' of hierarchical' global enterprise, in a kind of fractal geometric progression. Units, process edges (preferentially attached to sources of expertise and skills), value edges (attached to emergent markets, supply chains, etc.) will themselves develop the transformational apparatus, The corporate management will see it as "out-sourcing," a reduction in overhead, or a cost-efficiency strategy. There will be organizational mutations, that yield specialized capabilities required by a range of "operational management" hierarchies (HR, finance, purchase, procurement, marketing, etc). The procurement of the right resources at the right moment in the most cost effective manner, with the lowest possible exposure, will be what "corporate management" does. Enterprise management will evolve into a combination of financial management and market strategy. There will an entirely new class of enterprise able to map and rate the location and capacity of resource, both human and material; both organizational, strategic and tactical. Impact clustering will be used to map consumers to the source, and producers to consumers. Ad hoc value networks will form and dissolve episodically.

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