The past few months I have been working on the concept of Digital Enterprise. To start with, my biggest challenge was defining the concept. The prevailing definitions were like the proverbial blind men’s descriptions of an elephant. The definitions depended on who is defining it and each one was only partially true.
Creating a holistic and integrated definition of a digital enterprise was my first objective.
I arrived at the following definition of a Digital Enterprise:
Digital Enterprise is an IT driven business model created either in response to the emerging digital market place and disruptive digital value chains or with the desire to create such shifts or both.
The Digital Enterprise is built upon the use of IT to automate the processes (both internal and external) to create a digital boundary enabling all stakeholder interactions. This also creates immense amount of information to be consumed and acted upon.
The automational and the informational side of a digital enterprise is converted into an transformational drive through the right digital leadership, a fitting digital strategy and a supportive digital culture.
Digital Enterprise thrives upon digital capabilities to compete in the market place, which requires innovation to be put in the centre of the organization structure.
Digital Enterprise is built upon an agile and responsive digital infrastructure to support the automational, informational and the transformational drive.
The above definition helped me identify the seven defining aspects of a digital enterprise.
1. Digital Marketplace/ Value Chain
A digital enterprise becomes relevant and comes alive only in a (market) context where new digital entrants are denting into the existing value chain by defining new ways to connect with the customers or supply products or doing business. A digital enterprise does not exist in vacuum, there has to be a relevant context, either created by others or by you.
2. Digital Leadership
A new business leadership thinking, which puts digital at the center of the enterprise’s strategy to compete, is very important. Without the right leadership mindset and vision, the internal structural and processual mechanisms to implement a digital strategy will remain absent.
3. Digital Boundary
A very important aspect of a digital enterprise is the digital boundary. How does the enterprise transact with the external stakeholders (customers, suppliers, partners and institutions)? Are these transactions digitized or are they carried out by using physical methods? In a networked world, where organizational boundaries are dynamically changing in response to external opportunities, a digital boundary is an important indicator and an enabler.
4. Digital Strategy
A well defined strategy to exploit the consciously created digital capabilities is required. Who else can do it but the line of business managers. Their conscious efforts at identifying what capabilities are required, active participation in building those capabilities and then exploiting the same are important aspects of the digital strategy formation. Creating the right structural mechanisms is required in equal measures for the digital strategy implementation.
5. Digital Capabilities
Internal business capability is the bedrock of modern strategy thinking. Capabilities (defined as a complex mix of people, process and technology), which are unique to an organization, cannot be imitated or taken away easily and that provides unique proposition to the customers or help do business in a unique way, can be exploited for gaining strategic advantage.
Examples of organizational capabilities include- differentiated product development, ability to gain cost leadership, business agility and change, faster time to market etc.
6. Digital Culture
Everything else becomes irrelevant and less potent if the organization does not have a digital culture. In fact, it is extremely difficult to create digital capabilities, if an appropriate and helpful digital culture is not present. A digital culture is an indication of how decisions are made? Are they fact based or hunch based? Is the enterprise system providing the right information? Is there one version of information? Are employees, partners, and suppliers skilled enough to cull out information and work with it? These are some questions, which would help one understand how strong the digital culture in the organization is.
7. Digital Infrastructure
Last but never the least comes the digital infrastructure. It is the IT infrastructure and enterprise business applications, which provide the basic resources for the digital enterprise to become a concrete reality. The SMAC+ platform adds immense power to the IT infrastructure to provide agility, insights, efficiency and effectiveness. But the underlying applications, infrastructure and the middle-ware also needs to be well automated, optimized and integrated for SMAC+ to come to action. Without appropriate level of user experience, process agility, application integration, data quality and infrastructure automation, SMAC + cannot realize its full potential.
These seven aspects helped me operationalize the definition of a Digital Enterprise, which became the basis for the development of a framework for the organizations to map their digital journey. That was my second objective.
I shall write more about that in the subsequent articles.
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