What is Digital Business and why does it matter?

Are you and your manager’s buzzword-compliant You know the words and use them (often) but don’t really know what they meant deeper than the standard catchphrase level.

Let’s take a phrase like: digital business”. What does it mean and what are the implications of digitizing your business?

Because the implications of a buzzword as common as “digital business” involve more than just adding more technology to the mix. Digital business and an honest commitment to becoming a digital business, or even becoming digitally savvy involves changing the business model, including the way you think. It’s about people, customers, the business you’re really in, what good business practice is, how fast you innovate and change, and many other factors that need a fundamental re-think.

Searching for denitions of digital business will mire you in a morass of FUD – Fear, uncertainty and doubt. The best denition is probably put forward by Jorge Lopez of the Gartner Group. He says that digital business is: “the creation of new business designs by blurring the digital and physical worlds”. Each word is probably important, because beyond the buzzwords are implications that must be weighed seriously. “Creation” implies change, and constant change. So you’ll have to give thought to becoming an agile organization, which welcomes and drives internal change. “New business designs” are exactly what they say and imply – new business models (yes models – not a single model). This suggests that the standard command and control organizational framework may become too cumbersome – you’ll need to give thought to becoming a lean enterprise. “Blurring” goes beyond just the digital and physical worlds – your organization becomes blurred because you need to establish an ecosystem, in which products and services are constantly evolving – in a digital business you can’t do everything.

Another denition that comes from Professor Erik Brynjolfsson, Director of the MIT Initiative on the Digital Economy: Digital Business gives organizations “scale without mass”. This three word phase is powerful – Brynjofsson talks about digital giving organizations the ability to replicate processes, products, channels and much more without replicating the cost. This doesn’t mean that there is no cost, rather that the costs are signicantly reduced for expansion of markets, products and channels. Also one can replicate competencies without adding people – an important element of ecosystem building.

Tied into the “scale without mass” idea is of course the statistical concept of the long tail which was applied to business by Chris Anderson of Wired Magazine. The idea is a simple one – by being digital, your products can be seen by everyone who is connected to the internet. This allows you to sell to places where you don’t have a presence, or even dreamed of having a presence. The long tail message is clear – expect surprise new markets when your products and services are digital.

Going digital is like most things, a journey. After we’ve gotten over the buzzword phase, the first step in the journey is to get a view of the implications of being a digital business – before you decide to rush into this digital thing. You need to get your leadership team on board, and fully conversant with the implications of digital expansion (scale without mass, the long tail). Then you need to give some thought to increasing the digital competencies of your business. Some organizations do the scale without mass thing for their competencies – for example one can use a service to provide non-core services like IT.

You’ll also need to design your digital platform. A digital platform is more than the common denition of: “The hardware and software that enables digital operations”. It is a technologyenabled business model. It facilitates exchanges between multiple groups. It has open connectivity: it shares data with 3rd parties to create new services and extend the ecosystem. It can scale massively to address millions of consumers without performance degradation.

We believe that you and your business will benet hugely from becoming a digital business. It is for this reason that we oer managed services of IT so you can focus on scaling your business, and reaching more clients.

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