Digital Readiness Assessment by 2b AHEAD and KPMG
Digitalization effects every aspect of our lives and will lead to a world that is constantly becoming faster, more mobile, and more interconnected. In 2013, tablet sales exceeded those for home PCs for the first time; as a first 2014, mobile internet use exceeded stationary access via desktops. The Internet of Things - meanwhile elevated to the name the "Internet of Everything" - will have connected an estimated 50 billion objects, data, and people together by 2020, thus bringing with it drastic consequences for our future living and working environments. Additionally, intelligent assistance systems will introduce a new form of intelligence into our everyday lives, whether in the physical form of watches, glasses, or clothing, or in the shape of digital assistance systems that filter the environments of their users, make intelligent recommendations, or even autonomously make and implement decisions in given areas.
No doubt about it: These experiences will also fundamentally change what customers will expect from companies in terms of communication, services, and product offers. Which raises the question: Is your industry - and is your company - prepared for this?
Digital transformation as opportunity and challenge for companies
If you read studies on digitalization and talk with corporate decision makers today, a double-edged image emerges: Digitalization offers companies opportunities to make the step from selling products to offering services by entering new partnerships, occupying new market segments, or involving partners and customers in the company's value added chain – for those companies who are prepared to meet the inevitable.
Therefore it is no surprise that almost all companies today desire to improve their competitiveness through the use of data analyses, expect higher efficiency through the automation of processes, and work not only to integrate the customer more intensely, but also to place them directly at the forefront of their business.
On the other hand, digitalization also represents a considerable challenge. Nearly all companies today are pressed to undertake a transformation of their business models, approaches to the customer, organizational structures, and company processes in the face of new competitors, the disappearance of barriers to market entry, and changed customer expectations.
Although, according to their own statements, nearly all companies are feeling this massive pressure to make changes, only half of them currently have a central digital strategy. Where these strategies do exist, one third of them are oriented towards customer touch points-and only one fifth of these companies expect that an actual digital transformation truly can succeed using the measures they have taken so far. In other words, fewer than 10% of German companies today count on being able to master digital transformation successfully and without considerable damages to their organizations.
Before we continue, allow these facts to correct some myths about digital transformation:
- Digitalization is not primarily related to customer experience, but equally to the efficiency and productivity of the company
- Digitalization offers new opportunities to all companies, regardless of their respective industries or their orientation towards b2b or b2c
- Digital transformation means that far-reaching changes will have to be implemented in a short time; experience shows that this is better done top-down than bottom-up
- Isolated initiatives will not lead to success-a goal-oriented management of the process as a whole is more important
- IT is an important lever for making digital transformation possible. In many companies, existing IT systems and capabilities will need to be improved
- Digital transformation is not different for every industry. Rather, specific approaches and decision-making patterns are applicable across the board
- In every industry there are digital "leaders" who are outdoing the competition even today-and whose example other companies can follow
Perry Hewitt from Harvard University recommended recently that companies think from outside to inside, become experimental and analytical, make digital transformation the job of everyone in the company, and go digital not only for its own sake, but rather to concentrate on doing fewer things better. If this sounds familiar to you, then you have probably replaced the concept of "digital" with "innovation" here-and in that area, these kinds of recommendations have long been considered to be aids for sound orientation.
But let us return to the theme of digital transformation and the question of how companies can receive orientation at his point.
Orientation and action recommendations using a digital readiness assessment
Our experience has shown that, in all cases, strategy development requires the use of proven methods, structures, and processes that are intelligently adapted to the company and its aims. This is certainly a difficult thing in the area of digital transformation because - as we have already seen - currently only a handful of companies have implemented any promising digital strategies, and because a company's own strategy can therefore only be oriented on a very limited scale to similar successful approaches from other companies. What can be done? Our recommendation to you is: Start by identifying and evaluating the digital maturity of your company.
With just this kind of "digital readiness assessment," which we have recently developed in cooperation with KPMG, you will receive a very accurate picture of your company's digital readiness, portrayed in seven key areas:
Areas of the digital readiness assessment:
· Organization and control
· Technology management
· People and capabilities
This dimension determines how - and to what degree - a digitalization strategy has been developed and is anchored in the company. In companies that are strong on this point, the goal of the digital strategy is transparent, easily understandable, and is communicated across the entire organization, which genuinely carries this strategy. Middle and top management have an exceptional awareness of the strategic necessity of digital transformation and see the added value of innovative technologies. In cooperation with company departments, managers play a vital role in the process of digital transformation. The basis for this is a business model developed by company leadership that includes technological developments, changes in the market, and future requirements.
The dimension of "culture" encompasses company culture, which offers insights into the digital innovation potential of a company: On the one hand, this culture can serve as a foundation for agile innovation processes and entrepreneurial projects, but it can also act to hinder change. Alongside the consideration of this "innovative mindset," this dimension also covers the openness, dynamics, and intensity of the company's digital communication.
This area determines the presence and status of a holistic approach to a continual evaluation of the progress and the impact of digital measures. In this way, potential for improvement can be identified on an ongoing basis in the implementation of individual projects. With the use of "performance metrics," it can also be determined to what degree the concept of digital transformation is anchored in the company as a clear goal and viewed as a success factor by individual staff members.
This area reveals whether, and to what degree, digital measures are perceived by the customer and the customer data acquired is used by the company's marketing and communication management in a goal-oriented way-for example via social media channels. Additionally, this section examines whether the integration of customer information is occurring, actively or passively, in the (further) development of products or services.
Organization and Control
Here the control of the company based on expansion and processes is examined as a key success factor in the degree of penetration of the company's digitalization strategy. This area examines how comprehensive and consistent the concept of digitalization is being implemented and which mechanisms can take on an essential control function. If - and to what degree - digital channels are being used within internal and external cooperation, and to what extent interfaces are being digitalized is also a decisive factor here. Here the company's agility, as well as its commitment to the implementation of a digital business model, is also tested.
This area examines the company's IT expertise as well as its processes for the identification and evaluation of new technologies before these come into use. Alongside the further handling of these digital solutions and software, these are critical factors for the implementation of a digitalization strategy-both inwards and outwards.
People and Capabilities
Here it is examined to what extent the company possesses digital expertise in general, whether gaps in knowledge can be covered, and to what degree digital competence plays a role in the recruiting process. Also, competencies in project and change management are considered in this area as important key qualifications on the way to digital transformation.
This determination of status by a digital readiness assessment offers companies the necessary initial orientation regarding their capabilities, but also concerning possible deficits. For our DRA, we use a system which we developed together with KPMG in order to provide our customers - as a substantial added value and as quickly as possible - with meaningful benchmarks for individual industries, and to make contact between interested companies possible.
The basic principle behind the DRA also allows companies to focus on strategic decisions. To that end, those areas are identified where companies can most effectively make improvements. Here it is key to develop goal-oriented measures and introduce them into a concrete road map which the company can use for orientation in the development and implementation of its particular digital strategy and of its individual projects, initiatives, and business measures.
Not a contradiction: Trusting in processes, methods, and structures-and in people
Our experience has shown that strategy development require trust in processes, methods, and structures. Equally decisive, however, is trust in people and in their experience, insights, and best practices. This is precisely what we wanted to demonstrate and reinforce with the future!LAB on the topic of the digital readiness assessment, where me made direct use of the experiences and expertise of all participants.
Even leading up to the congress, individual participants were asked to detail their experiences and recommendations concerning digital transformation processes. During the second day of the congress, these statements and recommendations were supplemented through our work in the future!LAB.
The future!Lab on the Digital Readiness Assessment at the 14th 2b AHEAD Future Congress
For each of the seven areas of the DRA, groups worked from different perspectives to answer the question of what kind of companies or company situations would typically have given deficits, what possible solutions exist, which best practices could be applicable, and how the inhibitions which lead to these kind of situations can be removed.
During intensive discussions, and with the energetic support of experienced consultants, corresponding road maps were generated, as were impressive visualizations for each company situation. The results - and also the consolidated road maps, complete with recommended measures and actions for each of the seven areas of the DRA - will be presented to congress participants on a platform developed specifically for this purpose, which will also offer further opportunities to exchange ideas.
In this way, we will ensure that everyone who took part in this work will also profit from the results.
Summary and retrospective
Digital transformation is a challenge that every company will have to face today. New competitors - but also more demanding customer expectations - often make a change in business models necessary. The opportunities, however, that arise from digitalization are diverse. The chance to enter into new partnerships or even to break into new markets is reason enough not to shut ourselves off from this change. As Hubert Buda has recently put it, shaping the future is the main task of the businessperson.
Therefore it is important to us offer companies a way out of this trade-off between risk and opportunity and to provide them with concrete solutions for doing so.
The specific measures worked out together by the participants of our future!LAB are real, practical approaches that can be individualized and implemented in every strategic process. The concept of a digital readiness assessment is a convincing one because it views companies holistically, analyzes them effectively, and focuses on useful measures for success. We believe that the DRA makes possible the individualized and sustainable development of a digital strategy that directly creates added value during implementation. And: The success of this model has not been long in coming-the 2b AHEAD ThinkTank is already using this strategy with the first customers, and even at the congress feedback was very positive.
This reinforces our view that we are on the right track. We look forward to continuing the discussion and exchange on the topics of digitalization, trust, and strategy development with congress participants - but also with you!
I am gladly available to answer any questions you might have about the DRA, this article, or the consulting services of the 2b AHEAD ThinkTank. I can be reached by e-mail at: firstname.lastname@example.org or by phone at: +49 341 12479610.