In brief
- Placing humans at the center, leveraging technology at speed and enabling innovation at scale are key drivers to optimize business transformation.
- A digital foundation is the central capability that successful programs are increasingly relying on.
- Activating a digital foundation relies on your organization’s ecosystems, mindset, current digital capabilities, and executive buy-in.
Most business leaders recognize that building new business capabilities with efficiency is essential to operate in today’s business environment. Regardless of trend or disruptor, companies that are able to outmaneuver competitors in creating better products usually end up winning in the marketplace.
What is the edge of these market leaders? These companies establish models for technology and data focused on driving value extraordinarily fast — a digital foundation. The digital foundation is a solution delivery model that relies on architectures, processes and a mindset aimed at driving step change. The model results in solutioning teams, each resourced with innovative people, emerging technology and enterprise-wide data, organized with a focus on delivering at speed and scale. The model elevates ecosystem services, new solution approaches and focused engineering with the goal of expanding how organizations create value. The digital foundation is the central capability that successful digital programs – or any enterprise transformation effort – are increasingly relying on.
To illustrate the opportunity, consider the following companies that are leapfrogging the marketplace through effective digital foundation models:
- A global retailer is rapidly augmenting the in-store experience with highly relevant online customer empowerment capabilities. Amidst increased sensitivity to prices in customers, the company’s digital platform delivers project learning modules, product selection and planning tools that complement and differentiate the in-store experience. The continued experience development repositioned the company’s value proposition above convenience and economic prices.
- A fitness equipment manufacturer worked to understand the macro lifestyle trends and created an interactive fitness platform with proprietary equipment, networked software and digital content. Using this platform and rapid development, the company continuously publishes new lifestyle management services. The flow of experiences differentiates the organization and created a revenue source that has grown sevenfold in a matter of months.
Transformation in today’s environment requires a different approach. EY is finding that there are three drivers that organizations looking to optimize the value of the transformation need to prioritize: placing humans at the center, leveraging technology at speed and enabling innovation at scale. Market leaders leverage these drivers as broad and fundamental parameters for driving new products, services and business processes.
The models for technology and data required under these new parameters demand a different structure. These new models need to leverage different ways of architecting, constructing and embedding capabilities anchored on modern delivery principles such as cloud native, containerization and MapReduce. The model needs to drive an obsession for applied innovation as the basis for solutioning and a pragmatic approach for delivery at speed and scale. These models need to redefine how business and IT teams drive improvement and re-enforce the long-term commitment to the required change.
Instead of focusing on incremental change of legacy IT models, our recommendation is to focus on developing your digital foundation. EY research around the six habits of digital transformation leaders points to effective transformation leaders being 45% more likely to unlock annual revenue growth of more than 10%, and 50% more likely to see annual EBITDA increase by more than 15%.
Embrace a digital foundation model by committing to delivering a subset of high-impact projects using the new approach. The goal is to cut through the muscle memory of traditional business capability development and streamlining the model for value delivery. In our experience, we found four priorities to activate the digital foundation model.
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