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Digital competence: Exec reveals who's leading, lagging

Not everyone in an organization is on the same page when it comes to digital competence, and for companies to expect that to happen is unrealistic, according to Wolfgang Bauriedel, executive director at global search firm Russell Reynolds Associates Inc. At the recent MIT Sloan CIO Symposium, Bauriedel discussed which parts of the enterprise are leading the charge when it comes to digital transformation and which are lagging. Still, despite the fact that "there will always be areas that are further ahead than others," he said there are ways for organizations to boost departmentwide digital competence.

Editor's note: This transcript has been edited for clarity and length.

Which parts of the enterprise are leading the charge in digital transformation?

Wolfgang Bauriedel: It is clearly the customer-driven side of the organization. A lot of the pressure for organizations to change on a digital basis has come from consumers and customers, but also increasingly from the business side. A lot of work has been done on understanding customer journeys -- both in how they interact with you as an organization and in omnichannel provisions that allow you to move fluently from one channel to the other. Many of the offerings and services an organization is providing are now offered on the web and particularly on the mobile device. We're not fully there yet, but many companies are going to offer their services there. [An omnichannel approach] allows users to interact seamlessly, particularly on their mobile devices, asking any questions they have and also tapping into a larger audience of their peers in terms of solving issues they have with a specific company. That's where I have seen the most success.

Which parts of the enterprise are less far along in digital transformation?

There will always be areas that are further ahead than others, both by structure, but also by mindset and background experience.
Wolfgang Bauriedelexecutive director, Russell Reynolds Associates

Bauriedel: That is the back office. The back office is typically characterized by a lot of legacy. And by legacy, I mean not only in the terms of infrastructure and assets, but also some legacy in the minds and heads of people. On the infrastructure side, what we often find when we look at clients is that their assets are very complex; driven by a product orientation and the platforms and infrastructure following that [orientation] and driven by unresolved acquisitions in the past. You can often clearly discern acquisitions and [mergers and acquisitions] transactions in the landscape of technology in the back office.

[There's also some lagging] around some of the way you provision the infrastructure. If you are a software engineer, for instance, working in agile mode, you would like to have server capacity there on a dime. You would like to have a test environment provided to you in a relatively quick amount of time. Many companies cannot do this. Interestingly enough, in a study we have done, companies who have focused mostly on the back office, simplifying it and getting to a much more modular architecture, have an easier way to engage with the customers and are, in general, also more profitable along the way.

What strategies are effective in getting the entire enterprise to the same level of digital competence?

Bauriedel: First of all, I would challenge that assumption. I do not think that you will be successful in bringing an organization to the same level of digital competence. [Sci-fi writer William Gibson] famously said that the future is unevenly distributed, and I would argue that is true for digital knowledge or prowess distribution in the company as well. There will always be areas that are further ahead than others, both by structure, but also by mindset and background experience.

With that said, there are a number of factors to elevate your digital prowess and excellence. One clearly is to have a mindset from the top; for [the top] to say, 'Hey, digital is our No. 1 focus for the company.' In a recent survey, we found that only 20% of companies are going to really do this from a C-suite as well as board perspective. Second, there is what we call a groundswell of digital talent in every organization -- typically, the younger folks -- harnessing this, empowering this and giving them different career trajectories. That's very critical. Thirdly, bring outside talent and their different culture into your organization -- have that also be an engine to affect and change your culture internally.

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