A digital strategy is a data strategy
Since MWD Advisors published our Digital Enterprise Shift report a few months ago I’ve been involved in quite a few conversations about “Digital strategy”. What is a Digital strategy? Is it a “one size fits all” thing? What does it mean to an organisation and its business?
There are lots of things to say about Digital strategy, but the one thing I want to focus on here is to explain that a Digital strategy has to be fundamentally intertwined with a data strategy – to the point where they are almost indistinguishable from each other – and to explain why this is the case.
First, let’s start with Digital strategy.
The first question we need to tackle, of course, is: what is digital technology, anyway, and what makes it different from good old IT? The answer is that digital technology encompasses four ways in which internet-based technologies are underpinning platforms for new types of connection, exchange and transaction:
An ‘internet of applications and application platforms’ (cloud computing)
An ‘internet of infrastructure and products’ (IoT)
An ‘internet of mobile computing devices’
An ‘internet of conversations’ (social networks).
What do you mean when you say “Digital”? Do you mean multi-channel online customer engagement (including social venues, syndicated platforms, your own web property, mobile apps and so on)?
Maybe when you say “Digital” you mean the creation and delivery of digital products and services (see, for example, GM’s OnStar service, the Weve consortium’s audience marketing products, or Honeywell’s response to Nest).
Maybe when you say “Digital” you mean the use of new kinds of online platform for you to build your own systems on (for example, use of SaaS, PaaS or IaaS models).
In our Digital Enterprise Shift report we signpost three core areas of business activity that digital technologies have the power to reinvent, and if you’re working on a Digital strategy you need to at least consider each of these three areas:
Use of digital technologies to better connect with customers and markets.
Use of digital technologies to reinvent your operations and management systems.
Use of digital technologies to reinvent the products and services you deliver.
Now, in each of these three areas, you could decide to simply build (or rent) new transactional platforms that speed up and broaden the reach of flows of information. That’s a fine place to start. But if that’s where you end, you are failing to realise the more valuable target of a Digital strategy – operational intelligence and optimisation.
Digital platforms done right are open and transparent – they’re not closed systems which hoard their data.
Digital platforms done right are platforms for insight about performance and possibilities.
You could simply use Digital platforms to deliver messages, content, products and services in more efficient ways. Or you could use those platforms to deliver those things, and also give you a way to optimise the information flows that – in an increasingly Digital world – are the lifeblood of your business…
To personalise content, products and services.
To price dynamically.
To cross-sell and up-sell, discount and protect relationships.
To route information and work optimally.
To make faster, better decisions.
To learn how to do business better.
A real Digital strategy has to examine the role of data intensely – whether that’s data about customers, interactions, channels, product and service use, business processes, or knowledge-sharing. A real Digital strategy has to take into account how data is collected, what its value is, how it can be used, the importance of provenance and quality, how to organise it so it’s easy to explore and analyse, and more.
A Digital strategy is a data strategy.
The big challenge in defining and executing such a strategy is a cultural challenge as much as anything.
If you look at the structure of the enterprise software industry today and how it’s grown up, one group of companies has been largely responsible for building business software applications that manage transactions and store the resulting data – and one group of technology specialists has focused on implementing those. Another almost completely separate group of companies has grown up to enable that recorded business data to be analysed to drive insight and action, and they’ve been paired with another group of technology specialists.
A Digital strategy has to knock holes in this wall.
In our report we talk about the need for enterprises to build their ‘data literacy’ as a matter of urgency:
Looking outside the confines of centrally-managed data warehouses at the zoo of technologies and data sources potentially addressable with Big Data technologies, it’s clear that Digital Enterprises are going to have to invest in processes and skills that enable them to avoid a ‘data-rich but insight-poor’ trap. This isn’t about finding and creating armies of Data Scientists; it’s about creating a culture within your business that recognises the value of information as a business resource, and treats the way it’s managed with the same respect as the management of other resources.
Senior leaders need to understand the value of designing and delivering strategies based on data rather than gut feel; planners, project managers and service leaders need to understand the value of understanding the provenance and quality of data when analysing it; technologists need to understand how to support systems of insight that are tuned to answer the questions that subject-matter experts have; and so on.
There’s a whole heap of technology and business-technology strategy decisions that any business wanting to make the Digital Enterprise Shift needs to understand and take. But it’s also vital that we don’t ignore the cultural, organisational and skills issues that need to be addressed.