The Digital Transformation: Are You Ready – And Able? [VIDEO]

Dinesh Sharma

The digital economy is being called the next economic revolution, paper lanternsas it has the potential to drive $90 trillion in gross world product by 2020 according a report from Bain & Company. As with any evolutionary surge like this, there is a double-edged sword, where there are opportunities and, of course, challenges.

This is especially true for CIOs and IT departments, as they are being called into higher levels of service, and for a digital transformation to succeed, they must become the transformative leaders. As a CIO from Hewlett-Packard says, “It’s a very cool time to be a CIO. We’ve moved from the back office to the front lines.”

CIOs and IT are back in charge

This is a bit of switch from past trends, where business units often had their own IT budgets and could go off and acquire a software-as-a-solution (SaaS) application to run a departmental process. But this no longer will work in the digital economy. Business departments now expect IT to lead the way in fully digitizing their enterprises. In fact, according Crisp Research, only 12% of respondents in a recent survey consider their business departments to be a driving force in digital transformation, while 69% think IT should lead the charge.

These are prime conditions for allowing CIOs and IT to take over more important strategic and operative roles. In fact, two-thirds of respondents in the Crisp study think of IT as innovators, strategists, and implementers.

It’s time for IT to step up and build a strong digital core that unifies and interconnects organizations internally and externally. The question is: Are CIOs ready to lead this charge? Can they deliver on the value that the digital economy promises? For many, maybe soon, and for others . . . well, not quite yet.

Ready, but not quite yet able?

While this might be an exciting time for companies to capitalize on the digital economy, a digital transformation may not be an easy one. A 2015 report from the Economist Intelligence Unit says that 60% of senior-level executives believe that failing to adapt to hyperconnectivity – the interconnections between people, organizations, and objects – is the biggest challenge they face. Inertia and complacency are driving these executives to recognize that there is a deep need for fundamental organizational change.

When top executives were asked to rank their digital maturity against potential digitization opportunities in a study by strategy consultancy Roland Berger, there were significant gaps between these two qualifiers. In fact, depending on the industry segment, there was a 12% to 28% gap between maturity and opportunity. The largest gap (28%) was in energy systems, with a 36% ranking of digital maturity and a 64% ranking of opportunities.

The above report also noted that the digital transformation could have an especially strong or even disruptive impact on industries such as automotive and logistics. But to take advantage of what the report says is potentially a $400 billion opportunity by 2025 for these industries, companies would need to expand their information and communications technology (ICT) by 17% on average. While this kind of investment may seem minimal, it can be monumental and quite limiting in companies that still have constrained IT budgets.

Readiness is one thing, but ability is clearly another, which is highlighted by Crisp Research. Even though 93% of respondents in the Crisp study consider themselves well prepared for the coming digital era, only 39% think of themselves as avant-garde, or as this study calls them, profiteers or innovators. Another revealing fact is that only 42% of the respondents have been involved in successful digital projects. Without a doubt, many CIOs and their IT departments have some catching up to do across the board.

Where to start? Get a next-generation IT platform

To fully take advantage of the opportunities of the digital economy, companies will need a next-generation IT platform upon which they can build a digital core. This platform will need modern technology, such as the SAP HANA Cloud Platform and the SAP S/4HANA suite.

Together, this technology provides a business foundation that is essential for building an end-to-end digital business. It can help organizations combine the opportunities of the digital economy with the process simplification and capabilities necessary to achieve true, sustainable digital transformation at a time where there are billions of connected devices.

With the SAP S/4HANA suite, companies get instant insight coupled with contextual information and personalized experiences. And with scalable, real-time, predictive, and simulation capabilities, they can unlock the power of data to become a business that is primed for success in the digital economy.

It’s technology like this that will make transformation possible.

Clearly, there are abundant opportunities for companies around the globe that are willing to embrace digital transformation. And it’s equally apparent that wise investments in the digital core will provide a concrete foundation to best capture these opportunities.

Follow me on Twitter: @sharmad

How can a digital core help you succeed in the digital economy? Check out this video below and find out.

If you’re still asking why you need digital transformation. The Answer Is Business Outcomes – Wait, What Was The Question?

This article originally was published in Simplify.IT and republished with the author’s permission.

About Dinesh Sharma

Dinesh Sharma is the Vice President of Digital Economy at SAP. He is a GM-level technology executive with leadership, technical innovation, effective strategic planning, customer and partner engagement, turnaround management and focused operational execution experience at both large enterprise and startup companies. Share your thoughts with Dinesh on Twitter @sharmad