Digital Experts Showcase Key Tactics To Help Organizations Remain Relevant In Today s Digital World GET STARTED
How Digital Experts In Retail, CPG And B2B Drive Results Digital technologies are essential for transforming customer experiences and streamlining existing operations. But while most organizations have some form of digital strategy, many struggle to transform their digital ambition into genuine competitive advantage. This study sets out to explore key learnings and best practices from Digital Experts. We found that the keys to their success are that they: Focus on benefits to their customers rather than on company process improvements. Consolidate digital knowledge from across the organization into a center of excellence (COE). Define clear KPIs to measure success and drive ongoing investment. This study of 150 IT and business decision-makers, commissioned by Salmon and Rackspace in December 2015, outlines the state of digital strategy and execution in retail, consumer packaged goods (CPG), and business-to-business (B2B) companies and examines the key success strategies that separate the Digital Experts from the Digital Laggards. Number of employees: 75% Between 1,000 and 4,999 employees 19% Between 5,000 and 19,999 employees 6% More than 20,000 employees Headquartered in: 35% UK 23% Benelux 22% US 20% Germany
1 2 Business Leaders Acknowledge The Importance Of A Digital Strategy Digital is not a new phenomenon. Digital technologies like mobile, cloud, big data, and the Internet of Things (IoT) have a direct impact on how organizations engage with customers and their workforce. So its comes as no surprise that 81% of surveyed organizations highlighted that they have clearly defined and articulated a digital strategy. Almost three-quarters of respondents believe that their business has the right structure, skills, and processes to deliver and manage digital projects. In addition, 61% of respondents stated that their CEO champions their digital strategy. So organizations understand and prioritize digital, but does that mean they are succeeding with their digital transformation? One in five organizations has established centers of excellence that bring together resources and skills from across the business to address customer needs.
1 2 Digital Projects Are Both Externally Focused And Process-Driven The survey revealed that the main objectives for investment in digital projects fell into two categories: External/customer focus. The highest-ranked objectives focused on improving how organizations can leverage digital to better deliver external services. Nearly 40% of organizations highlighted the main digital objectives as being able to gain new customers, get better customer insights, and drive market share and international growth. Internal/process focus. Over a quarter of respondents demonstrated a preference for more internal focus for digital initiatives, telling us they leverage digital to improve workforce productivity, reduce costs, and improve operational effectiveness. In general, organizations are meeting or exceeding their objectives, with 41% of firms exceeding their objectives in improving processes and operational effectiveness. So, digital expectations are being met and digital has the C-level focus it deserves, but which approach is right and how far along are organizations on their digital journey?
1 2 Only 11% Of Firms Execute Digital Well To assess an organization s maturity, Forrester asked respondents to assess their digital strategy, organization, and technology, examining dimensions such as executive support, vision, resourcing, and operational effectiveness. Based on the results, we segmented respondents into four categories: 1) Digital Experts (11%); 2) Digital Operators (6%); 3) Digital Strategists (26%); and 4) Digital Laggards (57%). Despite digital being a top priority, only a few organizations surveyed are executing digital successfully by demonstrating competence across all dimensions to maximize business value from investments in digital solutions. Digital Experts have the right vision, and they also have the processes, tools, and resources in place to execute their digital strategy and the KPIs to measure success. Organizations began their digital evolution by launching departmental efforts in marketing, ebusiness, or technology management and bolting them onto the existing business processes. Only Digital Experts provided results that demonstrated a commitment to embed digital into their entire organization to deliver customer value. The vast majority of companies (89%) are still playing catch-up. Digital experiences designed to only enhance existing services do not fundamentally change how the company delivers value to the customer.
1 2 Funding And Measurement Are The Key Challenges The delivery of great digital experiences is an organization-wide task that demands unprecedented collaboration between teams and departments. But while the C-suite may back digital strategy, only half of the organizations surveyed agreed that their current organization model encourages cross-functional collaboration. In addition, technology and business leaders overwhelmingly rated a lack of funds allocated to their digital strategy as their No. 1 challenge. Other top challenges included conflicting KPIs between departments, resulting in a lack of alignment on digital objectives (38%); pushback from compliance and legal teams (35%); and poorly integrated legacy systems that make it difficult to share information across different platforms (33%). Conflicting KPIs between departments was a greater concern among CPG and distribution organizations. Forty-five percent of CPG and B2B organizations stated this as a key challenge when executing their digital strategy.
1 2 3 Digital Experts Deliver Unified Customer Experiences To explore how organizations are overcoming these challenges, we identified the key practices among the Digital Experts versus those lagging behind. Assessing the organizations top digital objectives by digital maturity revealed that the Expert group focuses more on external- or customer-facing initiatives (69%), whereas lagging organizations focus digital efforts on employee-facing and internal digital projects (31%). The study revealed that many organizations saw a range of unexpected outcomes from their digital projects. As a consequence of their customer focus, the top unexpected positive outcomes for Digital Experts were the ability to create a unified digital experience for customers across all channels, as well as enabling their organizations to be more competitive. Despite being more internally focused on their digital initiatives, Digital Laggards also saw unexpected benefits for customer-facing objectives. While improved customer satisfaction and customer insight was a top expected benefit for Digital Experts, more than half (56%) of Digital Laggards saw it as an unexpected outcome.
1 2 3 Digital Experts Tackle Challenges Head- On, While Laggards Play Catch Up Analyzing the Digital Experts responses to the survey uncovered some unique tactics that firms embarking on the same journey can learn from. Digital Expert firms demonstrated a need for a: Well-defined funding model. The key challenge for many organizations is the lack of funds. A key tactic for over half of the Digital Experts is to define an appropriate funding and financial model to support their digital strategy. Engaging with financial teams to define investment profiles and success criteria, allocating the right budget, tracking expenses, and optimizing resources help Digital Experts ensure funding is available for future projects. Focus on data analytics and measurement. The other key tactic that Digital Experts showcased was a focus on enhancing data analytics capabilities for better decision and business planning. With data analytics, Digital Experts are able to both demonstrate the value of their digital initiatives and better understand and anticipate their customers needs. Despite their internal focus of digital objectives, 41% of Digital Laggards understand that to catch up, they must reorganize to focus on their customers rather than on their products.
1 2 3 Deep Cross-Function Collaboration Underpins Success For Experts Exploring the role of different teams in setting and executing the digital projects reveals that Expert organizations foster deep crossbusiness collaboration. For Digital Laggards, IT is the primary role involved in setting the digital strategy. Experts equally involve IT, finance, and C-level management. Experts are also more likely to involve human resources in setting digital strategy than Laggards. Experts show similar collaboration in executing digital, with IT taking charge, but operate with more involvement from other functions like marketing, sales, and procurement when compared with Laggards. Almost a third of the Digital Experts that we identified had established a digital center of excellence (COE), compared with only 16% of Digital Laggards. These teams help Digital Experts by consolidating digital resources and skills to break down organizational silos and focus on delivering customers unique needs. Over 40% of Digital Laggards are structured by traditional functional alignment (for example, by offline and online teams). All Digital Expert organizations agreed that their CEO personally champions and clearly articulates their company s digital strategy.
Become A Digital Expert To close the gap and become Digital Experts, organizations need to: Focus on their customers rather than on process improvements. The study revealed that Digital Experts were more customer focused than internally process focused. A clear definition of your digital customer experience must be your North Star. Customer journey maps help challenge functional perspectives and are a vital tool to define a vision for a unified digital experience for your customers. Consolidate digital know-how to kick-start action. Bring together cross-functional digital talent to hot-house it, spur action, and break away from legacy ways of operating. A digital center of excellence (COE) combining business knowledge, customer experience, and technology expertise, supported by HR, supply chain, and other operational functions, is a great start. Define clear KPIs that link investment to business outcomes. Customer-centric metrics like customer lifetime value are vital measures of digital success. This means instrumenting digital experiences to gather analytical and behavioral data about your customers. Identifying KPIs upfront, aligning teams around those KPIs, and rewarding personal and team success based on those measures is critical. Work with finance teams to define a funding model for digital initiatives and to link the results of digital investment to the customer outcomes they drive. METHODOLOGY This Technology Adoption Profile was commissioned by Salmon and Rackspace. Forrester conducted an online survey of 150 retail, CPG, and B2B IT and business decisionmakers in Benelux, Germany, the UK, and the US. The custom survey was conducted in December 2015. ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2016, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to forrester.com. [1-W6JGHE]