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Digitization turns inward into the enterprise, survey shows

Posting in Design

While customer interactions and channel management have been on the center stage of enterprise digitization, there has been a recent burst of activity to apply network, cloud and big data resources to operations, from basic decision-making to R&D.

Photo: Joe McKendrick

That's the conclusion of a new survey published by McKinsey & Company, which explored the views and intentions of 850 executives across the globe. The study's authors, Brad Brown, Johnson Sikes, and Paul Willmott, sought to determine how far along organizations are with their digital strategies, and if those strategies are delivering returns yet.

First, a little defining on what, exactly, a "digital strategy" is. It entails the use of information technology to transform and streamline processes to the point where little or no manual intervention is required. As one can imagine, there are varying degrees of IT adoption across the business landscape.

Digital engagement of customers has been the leading, and most visible sign, of the digitization of the enterprise. As the chart below shows, positioning/branding material consistently across online/offline channels is now underway on an enterprise scale at 38% of the organizations surveyed -- up from 31% a year ago. Another 33% say such efforts are underway within at least one business unit.

Even more striking is the degree to which enterprises are turning their digitization efforts inward -- into operations, and even low-level decision-making. "When asked about the next wave of business-process automation, respondents say their companies are automating a wide range of functions to improve the overall quality of processes (by removing breaks or errors, for example) or to build new digital capabilities (for example, remote monitoring) into the processes," the McKinsey team points out. Product design is another area moving to digitization, and 23% say they are now even creating digital-only products.

Big data -- and the expanded analytics it enables -- is a big piece of the digitization initiatives. For example, close to half of the enterprises in the survey say they are using analytics in their budgeting and planning cycles, up from about a third just one year ago. Almost two-fifths are using big data for internal operations improvement, also up from one-third.

There has been a surge of interest in automated decision-making -- at least for common, low-level decisions. Thirty-seven percent of executives say they employ automated decisions on an enterprise-wide scale, up from 20% just one year ago.  Such routine decisions may consist of extending new offers or authorizing late payments.)

While spending and commitment to digital strategies is on the upswing, the study's authors conclude that companies "have a long way to go in accomplishing their digital-business agendas." In most cases, companies are "up to one-quarter of the way toward realizing their end-state visions for their digital programs." Another 40% say they have seen some measurable business results as well.

Digital Strategy

2012

2013

Employing big data analytics to improve budgeting/forecasting/planning 34% 46%
Leveraging big data analytics to improve performance of internal operations 34% 39%
Positioning/branding material consistently across online/offline channels 31% 38%
Using big data analytics to increase automation of straightforward decisions 20% 37%
Employing big data analytics to improve R&D processes 21% 35%
Generating big data analytics to develop new products, ID new markets 17% 29%
Using big data analytics to improve customer insights/segmentation/targeting 21% 26%
Engaging customers through social media channels before, during, after sales 25% 26%
Creating branded applications for mobile devices 20% 24%

Source: 2013 McKinsey Global Survey on Digital Strategies, August 2013

— By on August 14, 2013, 7:05 AM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure