1 Nov - Gartner analysts share insights on how organisations can scale in the digital era, but warn not everyone can make it through this change. Digital is already reshaping industries, says Val Sribar, senior vice president at Gartner. But there is a certain point where affected industries drastically need to take action. Once digital revenues for a sector hits 20 per cent of total revenue, the shakeout begins, he says.
This happened to the retail sector in 2005, when traditional stores were in denial about online shopping.
They thought everybody wanted to buy clothes in the stores, but customers flocked to online stores like Amazon.
Today, Amazon is the largest clothing retailer in the United States.
For the clothing industry, disruption is the new black, says Sribar, speaking at the keynote this week at the Gartner Symposium/ITxpo in the Gold Coast.
“This lesson in retail applies to every industry everywhere,” says Sribar. “Twenty per cent is the point of no return.” He says winners are alreading emerging, but some organisations will not make it through the digital shift.
The new competitors and disruptorsSribar says disruptors are finding new opportunities and are attacking the weaknesses of incumbent businesses.
They are serving unmet customer demands, finding ways to use excess capacity in the supply chain, employ new platforms for awareness and marketing and capitalise on new distribution channels.
Digitalisation also exposes the weakness of the incumbents, as new entrants offer more choices, and better customer experience and price.
Sribar points out incumbents who are not standing still amidst this disruption, are using new digital KPIs for the business, such as the Gartner Digital IQ Index to analyse their brand’s presence in social media, e-commerce, digital marketing and mobile.
Sribar says these organisations measure how many ecosystems they participate in, and the conversion rates in each.
Digital asks for deeper outcome-driven measures and this applies to all industries, including government, he says.
“If you don’t create new efficiencies, new value or new ways to engage with customers and constituents, you are destined to fall behind.”
He proffers three ways organisations can scale in the digital era.
First is to scale up by gaining efficiencies. Second is to scale across by taking capabilities learned from one nit to another, while creating a culture that rapidly learns and adapts. Third is to scale out by combining growth and speed that comes with digitalisation.
He says in this new environment, there will be high demand for skills in three areas - artificial intelligence (AI), digital security and Internet of Things.
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