Catch Up to the Cloud: Your Market Position Depends On It

    February 5, 2016

    By Per Bauer

    Experts predict that “digital incompetence” will cause many companies to lose market significance in coming years. But the real problem is that tech is tacked onto old business models when it’s business transformation that’s needed.

    Does buying the latest technology as soon as it comes out make you digitally mature? That’s a question that business leaders will soon have to address, as digital tools begin to fundamentally alter how companies operate.

    Most C-suite executives have acknowledged at this point that they need to incorporate at least some digital tools to maintain market significance. However, there’s less consensus as to how those tools should be deployed, and to what extent.

    The problems surrounding deployment are serious because digital implementations can often turn out messy — Gartner predicts that such “digital incompetence” will cause 25% of business to lose their market position by next year. In the next five years, the cloud will be the fertile ground on which organizations either take root or wither away — that is to say that the cloud isn’t the end goal, but rather the starting point.

    From the Top or Bust

    “[The cloud] will become less about technology and more about business transformation.” That’s the opinion of Garter analyst Tiffani Bova (paraphrased by ZDNet), who anticipates that the cloud will become more of a hybrid model, absorbing both enterprise IT and current cloud functionality as a Software-as-a-Service (SaaS) solution.

    That’s a radical departure from traditional enterprise thinking. However, most businesses are still foiled by their tendency to adopt IT tech in a reactive way, addressing symptoms, but not problems - similar to the way a new paint job covers up a rusty old car. Meanwhile, much more agile innovators are flying drones overhead.

    True digital maturity only stems from top-down, fully fledged solutions, a belief joint Capgemini/MIT research strongly supports. As one of the researchers told Business Insider, “For 100% of the companies we've seen that have changed effectively, none of them were bottom-up. All of them were top-down.”

    And for that, they had 26% higher profits, a 12% higher market capitalization, and their current assets were 9% more lucrative, according to a different Business Insider article on the same study.

    Making an Honest Assessment of Maturity

    This thinking mirrors our own IT Service Optimization (ITSO) Maturity model, which assigns companies IT maturity stages based on their performance, from lowest (Reactive) to highest (Value) level of maturity. While 42% of companies think that they’re at a high level of IT maturity, 71% actually find themselves at the lowest two levels (Reactive or Chaotic).

    This means that most companies are in a poor position to compete in a digital economy, a divide that will grow markedly in the next few years. Indeed, as the Capgemini/HP World Quality Report 2015 found, 55% of companies are struggling to keep pace with the speed of digital transformation.

    For companies that have doubts about their own ability to catch up to the cloud, now is the time to survey their IT systems to get a clear understanding of where they are and where they need to be.

    While adopting digital solutions can seem daunting, the upsides are tangible, especially when informed by data, advanced diagnostic algorithms, and level-headed strategizing. Often, companies find that they can easily optimize their current systems, placing them on a much stronger platform for future change.

    (Main image credit: Wikimedia)

    Category: cloud