Digital business requires NZ organisations to rethink how they respond to change

Digital business success will require organisations to take bold actions, including inventing new business models and changing the way they function, according to Gartner.

By 2017, 70 percent of successful digital business models will rely on deliberately unstable processes designed to shift with customers' needs.

"Many organisations are either beginning, or in the midst of, digital business transformation initiatives," says Julie Short, research director, Gartner.

"We expect that only 30 percent of these efforts will succeed. To be part of that 30 percent, business and IT leaders must be ready and willing to innovate rapidly from a business model, business process and technology perspective."

As a result of business model innovation, some business processes must become deliberately unstable.

Deliberately unstable processes are designed for change and can dynamically adjust to customers' needs - they are vital because they are agile, adaptable and "supermanoeuvrable" as customers' needs shift.

According to Short, they are also competitive differentiators, because they support customer interactions that are unpredictable and require ad hoc decision making to enable larger, more stable processes to continue.

"It's imperative to break away from linear business processes and deploy a spectrum of standardized and variable processes to reap the benefits of digital business," Short adds.

"The need for this shift is intensified by the introduction of many types of internet-connected 'things' into the business environment.

"Things like smart machines generate real-time information for other machines. Business processes must be designed for change to enable organisations to exploit this information.

Page Break

"Large, stable processes that have no ability to dynamically change according to new information will not enable organisations to deliver on the promise of digital business."

Through 2017, insufficient business process management (BPM) maturity will prevent 80 percent of organisations from achieving the desired business outcomes from their digital business strategies.

"Deficits in BPM maturity prevent change agents (individuals who lead changes) from delivering game-changing business outcomes from digital business initiatives," adds Marc Kerremans, research director, Gartner.

"Delivering expected returns from digital business investments requires process reinvention — that is, significant innovation in how products and services are created, priced, distributed and serviced across not just one group, but often across the entire value chain."

Digital business changes the competitive landscape, so that one-time process reinvention is not enough.

Organisations must become more resilient, adaptive and creative in order to master and sustain sudden, disruptive changes, as well as longer periods of transition — and even radical transformational changes that will be more frequent, unforeseen, varied and often unavoidable.

Because organisations cannot control such changes, they need to sense, recognise and quickly respond to them.

"With adaptive change, the goal is not to try to tackle big change on every front," Kerremans adds.

"Rather, the focus is on coping with the external nature of major change and its impact on organizations, cultures, governance, technologies and metrics.

"Change agents will likely need to employ several change response types to advance BPM maturity to the point where traditional business process improvement initiatives can turn into big change initiatives capable of supporting sustainable competitive advantage in a digital world."