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Gartner: 'Widening gulf' between digital front-runners and everybody else

By 2020, more than 7 billion people and businesses — and close to 35 billion devices — will be connected to the Internet. The prediction, from IT consultancy Gartner, helps make that current “It” girl of IT buzzwords — “digital business” — less abstract. In a reality where the digital and physical worlds are intertwined, old business models don’t suffice.

Hence a need for new digital business designs. Look no farther, says Gartner, than Walt Disney World where wearable RFID-enabled MagicBands now function as room key, wallet, admission ticket and line skipper. (See Gartner’s definition of digital business below.)

The creation of  new digital business designs, however, is really underway at only about a third of companies (32%), according to the firm’s recent “2015 Digital Business Survey of IT, Business and Marketing Executives,” and the front-runners, as Gartner calls them, are “breaking from the pack:”

“…a widening gulf is forming between organizations already undertaking digital business initiatives and those only in the planning phase,” analyst Jorge Lopez and his co-authors state.

Gartner’s data is consistent with recent data from McKinsey & Co., which showed that most companies have not yet realized the full value of digital.

Digital business doers vs. planners

The report, published last month, is based on responses from 304 executives at organizations with $250 million or more in 2014 revenue. The survey showed that digital doers don’t think or act like digital planners. Companies that are already doing digital initiatives, for example, don’t make a distinction between digital business strategy and plain old business strategy. Planners, on the other hand, see the two as separate. Digital investments by the doer group are for “piloting and deploying,” while the planner group “is into investigation and experimentation.” Makes sense.

Here’s where the gap is more than just semantic: Digital business front-runners overwhelming list “adopting new technology” as their highest priority, followed by “creating a highly collaborative environment” and “supporting customer-driven technology change.”

Adopting new technology is also the top priority for digital business planners (although by 21 percentage points lower than the doers: 70% vs. 49%), but — and this is the telltale data point — “renovating core IT toward a digital business future” is their No. 2 priority.

In other words, the doers are already busy transforming corporate culture to support customer-driven change, among other initiatives, while the planners are still mired in renovating legacy IT systems. Widening gulf indeed.

Veep of digital business

Here are a few more findings of interest to CIOs:

“Securing business and customer data” was cited as the leading  requirement for digital business design, followed by “digital marketing capabilities to reach new customers” and “system integration of people, business and things.”

When respondents were asked who were the people responsible for leading digital business innovation at their companies, the leading candidate varied depending on who was doing the answering: CIO or IT director was  among the top three roles, according to 57% of IT executives; CMO was among the top three, according to 38% of marketing execs, and business unit manager or managing director was among the top three, according to 35% business executives.

Also, a new role appears to be gaining ground: VP for digital business was cited by 22% of all survey respondents, up from 11% in 2014.

One thing seems clear in the morass of biased opinion: Everybody wants to get in on digital business.

Here is Gartner’s definition of digital business: 

The creation of new business designs that not only connect people and business, but connect people, business and things (physical objects that are active players and contribute to business value) to drive revenue and efficiency. Examples: use of sensors, asset tracking, smart machines, smart grid, 3D printing and robotics, smart cities and drone delivery.

  MIT Sloan’s Jeanne Ross  offers more insight into the rough road ahead for companies making the shift to digital business, in this SearchCIO Q & A by Nicole Laskowski

Let me know what you think of this post — email me or find me on Twitter@ltucci.