© 2011 MIT Center for Digital Business. All rights Reserved.
Digital Transformation: State of Management Practice in
Traditional Industries
Project Update
CDB Sponsor Meeting
May 19, 2011
George Westerman [email protected]; 1-617-253-2939
This research project is a collaboration with Capgemini Consulting.
2 © 2011 MIT Center for Digital Business. All rights Reserved.
What is Digital Transformation ?
Radically improving businesses through digital technology,
from strategy to people to operations…
New business models
Richer, more coherent customer experiences
Smarter decisions throughout the organization
Faster and stronger internal collaboration
Seamless links with customers and suppliers
3 © 2011 MIT Center for Digital Business. All rights Reserved.
3-Year Research Program; Now in Month 7
Phase I
Qualitative Study
Phase II
Quantitative Survey
• Interviews with ~100 senior executives in 25-30 large successful firms
• Focus on traditional industries globally
• To date: 54 interviews, 17 companies; 7 countries, 74% non-IT execs
• How is your business and your role transforming?
• What effects are key technologies having? (Social Media, Mobility, Analytics, Embedded devices)
• What are key challenges and enablers?
• Detailed coding
• Cross-case / cross-role analysis to assess extent and drivers of digital transformation in internal and external processes and capabilities.
• Case vignettes
Interview process Core questions Analysis
4 © 2011 MIT Center for Digital Business. All rights Reserved.
Preliminary Findings
Most firms are not taking advantage of the transformative potential of digital technologies, even for technologies they already possess.
Trends will drive transformation
• Globalization affecting all firms. Most starting to rethink structure and process
• Pace of change increasing
• Customers and employees demanding new ways of working
Incremental change underway in most firms
Some companies already starting digital transformation
• Executive-level vision and inter-organizational collaboration required
• Many organizations face difficulty translating vision into reality
• Reliance on vendors has benefits and issues
5 © 2011 MIT Center for Digital Business. All rights Reserved.
Improving Internal Processes
Substitution
• Email and browsing on mobile phones
• Working from home
• Remote collaboration (video, wiki, SharePoint, etc.)
Enhancement
• ERP-informed strategic decisions
• Broader involvement in strategy making processes
• Office without walls
• Location-aware maintenance processes
Transformation
• Simultaneous centralized / decentralized sales force processes
• Analytics-based insurance underwriting
• Digital product design process in sync with suppliers
6 © 2011 MIT Center for Digital Business. All rights Reserved.
Improving Customer Interactions
Substitution
• Corporate Facebook page
• iPad bid books or insurance sales
• Twitter monitoring
Enhancement
• Personalized digital signage kiosks
• Social media community selling for medical devices
Transformation
• Outbound calling to sell products along an intended delivery route
• Customized products through website
• Location-aware mobile coupons based on analytics
7 © 2011 MIT Center for Digital Business. All rights Reserved.
Opportunity: Connecting Internal and External Processes
Home Improvement Supplier Opportunities mentioned
by other firms:
• Connect custom orders
and concept stores to
digital product design
• Transform from medical
products to hospital and
consumer processes
• Transform marketing
into unified customer
experience
Local Distribution
Center
Central
Call Center
ERP + add-ons
8 © 2011 MIT Center for Digital Business. All rights Reserved.
Digital Transformation Framework (Preliminary)
Transformed Customer
Experience
Transformed Internal Process
Chem
Resort
Insure2
Medical
Home
Improvement
Apparel
Mktg
Apparel
Ops
Media
Invest
Insure1
9 © 2011 MIT Center for Digital Business. All rights Reserved.
Inhibitors and Enablers for Digital Transformation
Regulatory / privacy issues
Culture of the company
Organization structure
Poor IT capabilities or IT/Business relationships
Senior executive digital awareness
Internal skills
Siloed vendor relationships
Inhibitors Enablers
Executives willing to challenge sacred assumptions
Transformative vision
• Product Solution; Marketing Service; Multinational Global;
• Digital artifacts and processes
• Investing in strategic bets
Effective transactional core (ERP, Data)
Defined unit with transformation agenda (in some companies)
10 © 2011 MIT Center for Digital Business. All rights Reserved.
Phase I
Qualitative Study
Phase II
Quantitative Survey
Next Steps for Phase 1
Additional Questions Being Examined Do firms need a “digital czar”?
Can the CIO drive digital transformation?
Must core transactions and data be well structured in advance?
Can transformation happen bottom-up?
When is an incremental approach better than transformation?
How can firms balance the new and old effectively?
Others will emerge…
Summer 2011 • Additional interviews / coding
• Develop final framework
• Start case studies
Fall 2011 • Workshops
• Finish Phase 1 Publication
• Launch Phase 2
11 © 2011 MIT Center for Digital Business. All rights Reserved.
Thank You!
+1-617-253-2939
12 © 2011 MIT Center for Digital Business. All rights Reserved.
Project Team*
Dr. Andrew McAfee
Principal Investigator
Principal Research Scientist
MIT CDB
Dr. George Westerman
Project Lead
Research Scientist
MIT CDB
Claire Calméjane
Managing Consultant
Capgemini Consulting
Gregory Gimpel
Post-Doctoral Associate
MIT CDB
Maël Tannou
Senior Consultant
Capgemini Consulting
Didier Bonnet, Vice-President
Head of Strategy and Development
Capgemini Consulting
Patrick Ferraris, Vice-President
Global Leader Digital Transformation
Capgemini Consulting
And also
Cyril Francois (VP Capgemini Consulting),
Martin Hanlon (Director Capgemini Consulting),
Jérôme Buvat (Director Capgemini Consulting)
* Many of the team members are supporting the
project part-time in addition to other duties
13 © 2011 MIT Center for Digital Business. All rights Reserved.
Contact
David Verrill, Executive Director
[email protected]; 617-452-3216
MIT Center for Digital Business http://digital.mit.edu
Directed Research in Digital Business
Sponsors
• Founding: Capgemini, Cisco, Cognizant, GM,
McKinsey, SAP, Suruga Bank, Thomson Reuters
• Research: BT, IPC, Liberty Mutual
• Member: Google, HP, SAS, Siemens Healthcare
Leadership
• Chairman – Glen Urban
• Director – Erik Brynjolfsson
• Executive Director – David Verrill
• Associate Director – Andy McAfee
Special Interest Groups
• Digital Productivity
• Digital Marketing
• Digital Services and the Cloud
Sample Projects
• The Cloud as Platform
• Business Implications of Enterprise 2.0
• Deriving Competitive Advantage from IT
• Productivity and Internal Knowledge Markets
• Systems Dynamics and Business Intelligence
• Measuring the Productivity of Information Workers
• Web & Mobile Morphing to Individual Cognitive Style
Deliverables
• Directed Research Projects
• Thought Leadership
• Recognition
• Education
• Access
• Events