A digital strategy is a plan for utilizing technology to achieve business goals. It involves several elements, such as a diagnosis of challenges, a vision for the future, an understanding of potential success, and a clear roadmap with specific actions. Why is it so important in a rapidly changing IT world, and why do we need to revise and optimize projects while embracing automation and innovation?
A digital strategy in its simplest terms is a plan for leveraging emerging technologies (cloud, IoT, AI, robotics, blockchain, 3D printing etc.) to achieve business goals. Creating a digital strategy can help you capitalize on the opportunities presented by new technologies and market changes, and make sure you don’t get left behind when the world goes digital. While in the past, technology strategy was seen as a functional-level strategy that must be aligned with a company’s overall business strategy, the way we do business has changed fundamentally in recent years with the proliferation of digital technologies. We argue that it is time to rethink the role of technology strategy. It is now no longer enough for it to play a servant role and simply be aligned with an overarching business strategy, but it is a priority to combine the two in order for companies to compete effectively in today’s digital age. This integration is referred to as digital business strategy. At the same time, there is something that clearly distinguishes the digital age, and that is the speed and potential scale of these changes, eliminating outdated, ineffective business models and quickly creating opportunity for entirely new ones.
Key Elements of Digital Strategy
Developing a digital strategy that takes into account new ways of creating value through digital technology consists of several elements that resemble those of any other strategy:
- A diagnosis of what are the main challenges facing the company, including an assessment of your current digital presence (AS-IS). With any strategic business move, the first step is always planning, which involves setting clear expectations, defining metrics and determining what the end result or goal is.
- A vision of where you intend to be, and a forecast of how things might change in the future (TO-BE). To stimulate and support change efforts across the organization, the digital champions should provide a clear vision of where they want the organization to go. This vision should be directly aligned with the business strategy.
- An understanding of potential ways to succeed, and creation of a portfolio of initiatives with specific goals and outcomes to be achieved (HOW-TO).
- For a digital strategy to be implementable, it needs to be translated into a clear roadmap with specific actions, reaching key people in the organization who will implement them. As a next step they should align their strategy and KPIs with their vision to track progress and maintain speed.
The importance and need for a company-wide transformation program should also be explained and communicated to all stakeholders. It is essential to maintain clear communication both upstream, downstream and between management levels.
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ING Bank Case
It may seem odd, but today IT departments in many enterprises are facing a tremendous challenge in terms of their work model and strategy for the next few years. This has been the case of the ING bank as well. Until now, plans and investments were shaped for the long term and were presented as “Build a rock-solid infrastructure for the next 5-10 years.” However, the digital revolution associated with cloud techniques means that this model is no longer flexible enough and suitable for such a rapidly changing IT world. The network team in ING bank also faced such a challenge. The baseline analysis indicated that the infrastructure was mostly static and physical, without the ability to dynamically change and adapt to changing external conditions. In the near term, transformation was needed to get ahead of the coming changes and prepare the team for its new role. Top management team embarked upon this task and got all stakeholders involved on its road to execute.
The vision and goal of the change were clearly defined and extra effort was made to make sure that it was understood by everyone involved in the process. Both by functional and line employees and those responsible for leading the change. The new strategy was intended to get closer to the following vision “Provide the right amount and quality of infrastructure, at the right time and at the right cost.” It clearly indicates the need to revise and optimize projects, also taking into account the idea of “less but better.”
In order to achieve the most dynamic environment possible, it was necessary to generate new ideas and new ways for managing network infrastructure. Until recently, the only way to create an IT environment was to use dedicated devices, each of which performed a well-defined, specialized functionality in the environment. Changes required replacing devices or costly hardware reconfigurations. Modern network management is based on the idea of SD-WAN, a fully dynamic configuration with freely modifiable network components. Additional element revolutionizing the existing infrastructure management is the definition of the entire infrastructure configuration in code, just as applications have been written so far, using the same mechanisms and tools. This greatly facilitates consistency and results in far fewer errors in the environment.
By saving time because of implementing automation and using innovative network management technology, IT staff can start deploying services and products that were not possible before. The combination of new cloud services, their capabilities and economies of scale results in a decisive expansion of the portfolio of new services for customers. Progress is tracked by a set of new KPIs embracing employee engagement, operational efficiency, and new sources of customer value creation.
As can be seen in the vignette case above, digital business strategy is one that considers the fundamental changes that have occurred in the business landscape as a result of increased digitization. In particular, it recognizes that digital technologies are now affecting all aspects of business and must be considered in formulating a company’s overall strategy.