[Report] The 2014 State of Digital Transformation, by Altimeter Group

Altimeter, a Prophet Company
Altimeter, a Prophet CompanyResearch and Marketing Manager à Altimeter, a Prophet Company
PREVIEW COPY
EXECUTIVE SUMMARY
Digital transformation isn’t a trend owned by a
particular role, nor a discipline that belongs to
one department alone. It is, however, a significant
movement where daring business leaders venture
into tomorrow’s markets, today. In 2013, Altimeter
Group researched how businesses explore digital
transformation1
. One finding revealed that while the
word “digital” is part of “digital transformation,” the
essence of digital transformation comes down to
people and how their digital behaviors differ from that
of the traditional customers before them.
It’s also more than that.
In our initial report on the topic, Digital
Transformation: Why and How Companies Are
Investing in New Business Models to Lead Digital
Customer Experiences, we set out to determine
how digital transformation unified disparate digital
efforts under a common vision. In the process, we
uncovered a more human story. We followed up
our initial research with a 2014 survey, aimed at
digital strategists, to further understand the state of
digital transformation. This report shares its results
and is designed to complement Altimeter Group’s
annual State of Social Business report . Combined,
this research helps strategists drive social business
evolution and digital transformation based on insight
from peers and market leaders.
2
PREVIEW COPY
`
We still have a lot to learn about digital transformation:
what it is, what it isn’t, and what it offers businesses that
explore its permutations.
In our initial research, we observed that digital transformation
is most effective when it is tied to an end goal or series of
milestones related to a future state. For example, some
organizations invest in digital transformation from a technology
standpoint as a way to improve efficiencies and scale around
a specific area of business focus (i.e., manufacturing, customer
service, marketing, or human resources). Others look at digital
transformation as a series of channel investments to modernize
and enhance customer and employee engagement.
To focus our initial research, we defined digital transformation
as a movement under a customer-centric lens:
The realignment of, or new investment in, technology and
business models to more effectively engage digital customers
at every touchpoint in the customer experience lifecycle.
DIGITAL TRANSFORMATION
MEANS DIFFERENT THINGS TO DIFFERENT
PEOPLE, AND THAT’S OKAY; WE’RE ALL LEARNING
By focusing our research under this lens, we can better learn
how and why companies explore digital transformation in
a particular business area. This makes the idea of change
approachable rather than overwhelming. As each initiative
expands, digital convergence becomes a byproduct, eventually
resulting in the modernization of holistic business practices.
CHANGE HAS TO START
SOMEWHERE.
3
PREVIEW COPY
Digital transformation
is vast and often
misunderstood as a
formal effort to renovate
business vision, models,
and investments for a new
digital economy.
4
PREVIEW COPY
From the onset, Altimeter Group learned that definitions
of and formalized methodologies toward digital
transformation are indeed vast. As a category, it’s
therefore difficult to surface a series of best practices
outlining how businesses are changing and can grow.
When we asked executives and digital
strategists if their organization
was undergoing a formal digital
transformation effort in 2014, 88%
answered “yes” (see Figure 1). Yet,
this directly conflicts with both our
previous qualitative research, as well
as more detailed survey responses
around components that prove digital
transformation efforts are indeed occurring (i.e., journey
mapping and a focus on customer experience, as seen
in Figure 2). For example, when we asked digital leaders
about their investments in identifying digital touchpoints
and behaviors, 25%
had mapped out the digital customer
journey (see Figure 2). In other words: only one-quarter of
the companies we surveyed have a clear understanding
of new and underperforming digital touchpoints, yet 88%
THE STATE OF DIGITAL TRANSFORMATION:
2014 SURVEY
of the same cohort reports that they are
undergoing digital transformation efforts.
THIS LEADS US TO THE
CONCLUSION THAT EVEN WHEN
EXPLICITLY DEFINED, THE TERM
“DIGITAL TRANSFORMATION” IS
STILL MISUNDERSTOOD.
Executives and strategists indicate that their organizations
are undergoing digital transformation, yet the details of
their efforts report the contrary. Altimeter Group found
that digital transformation as an integrated and official
endeavor is something many strategists are truly just
beginning to understand and pursue.
5
25%
mapped
the journey
88%
are undergoing
digital
transformation
PREVIEW COPY
42%
ORGANIZATIONS
UNDERGOING DIGITAL
TRANSFORMATION
EFFORTS
FIGURE 1.
`
Is your organization undergoing a formal digital transformation effort in
2014? Altimeter defines digital transformation as: the re-alignment of, or
new investment in, technology and business models to more effectively
engage digital consumers at every touchpoint in the customer experience
lifecycle.
I don’t know. 2%
No 10%
COMPANIES MUST FOCUS
ON JOURNEY MAPPING TO
IMPROVE CUSTOMER
EXPERIENCE
FIGURE 2.
We’ve talked about
the need to do so
but no one has
taken the lead yet.
Which of the above best describes your company’s efforts around
the customer journey/experience?
We are researching
customer behavior now
and waiting for results
to inform our digital
transformation strategy.
We have completely
mapped out the customer
journey within the last year
and have a clear
understanding of new
digital touch-points.
We have not officially researched the digital
customer journey but we have updated digital
touch points with new social and mobile
technologies and investments.
The need to do
so hasn’t come
up or been made
a priority. 3%
Yes 88%
25%
12%%
12%
Source: Altimeter Group Digital Transformation Survey, 2014. N=59.
6
PREVIEW COPY
TO DOWNLOAD THIS REPORT IN FULL AT NO
COST, PLEASE VISIT OUR WEBSITE AT
http://bit.ly/altimeter-report-2014-state-of-dt
PREVIEW COPY
AUTHOR: BRIAN SOLIS, PRINCIPAL ANALYST
Brian Solis (@briansolis) is a principal analyst at Altimeter Group. He is also an award-
winning author, prominent blogger, and keynote speaker. Solis works with enterprise
organizations and technology vendors to research the state and direction of markets,
competitors, and customer behavior. Through the use of proven frameworks and best
practices, Solis analyzes trends, opportunities, capabilities, and areas for improvement to
align new media initiatives with business priorities.
CONTRIBUTING AUTHOR: JAIMY SZYMANSKI, SENIOR RESEARCHER
Jaimy Szymanski (@jaimy_marie) is a Senior Researcher with Altimeter Group. She has
assisted in the creation of multiple open research reports covering how disruptive
technologies impact business. Szymanski has also worked with Altimeter analysts on
varied research and advisory projects for Fortune 500 companies in the telecomm, travel,
pharmaceutical, financial, and technology industries. Her research interests lie in social TV,
gamification, digital influence, and consumer mobile.
EDITOR: REBECCA LIEB, ANALYST
Rebecca Lieb (@lieblink) is an analyst at Altimeter Group covering content strategy, and
digital advertising and media, encompassing brands, publishers, agencies and technology
vendors. In addition to her background as a marketing executive, she was VP and editor-
in-chief of the ClickZ Network for over seven years. For a portion of that time, she also
ran Search Engine Watch. She’s written two books on digital marketing: The Truth About
Search Engine Optimization (2009) and Content Marketing (2011).
ABOUT THE
AUTHORS
With thanks for support from: Jessica Groopman, Cheryl Knight, Shannon Latta, Briana Schweizer,
Charlene Li, and Christine Tran.
ACKNOWLEDGMENTS
PREVIEW COPY
1 sur 8

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[Report] The 2014 State of Digital Transformation, by Altimeter Group

  • 2. EXECUTIVE SUMMARY Digital transformation isn’t a trend owned by a particular role, nor a discipline that belongs to one department alone. It is, however, a significant movement where daring business leaders venture into tomorrow’s markets, today. In 2013, Altimeter Group researched how businesses explore digital transformation1 . One finding revealed that while the word “digital” is part of “digital transformation,” the essence of digital transformation comes down to people and how their digital behaviors differ from that of the traditional customers before them. It’s also more than that. In our initial report on the topic, Digital Transformation: Why and How Companies Are Investing in New Business Models to Lead Digital Customer Experiences, we set out to determine how digital transformation unified disparate digital efforts under a common vision. In the process, we uncovered a more human story. We followed up our initial research with a 2014 survey, aimed at digital strategists, to further understand the state of digital transformation. This report shares its results and is designed to complement Altimeter Group’s annual State of Social Business report . Combined, this research helps strategists drive social business evolution and digital transformation based on insight from peers and market leaders. 2 PREVIEW COPY
  • 3. ` We still have a lot to learn about digital transformation: what it is, what it isn’t, and what it offers businesses that explore its permutations. In our initial research, we observed that digital transformation is most effective when it is tied to an end goal or series of milestones related to a future state. For example, some organizations invest in digital transformation from a technology standpoint as a way to improve efficiencies and scale around a specific area of business focus (i.e., manufacturing, customer service, marketing, or human resources). Others look at digital transformation as a series of channel investments to modernize and enhance customer and employee engagement. To focus our initial research, we defined digital transformation as a movement under a customer-centric lens: The realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle. DIGITAL TRANSFORMATION MEANS DIFFERENT THINGS TO DIFFERENT PEOPLE, AND THAT’S OKAY; WE’RE ALL LEARNING By focusing our research under this lens, we can better learn how and why companies explore digital transformation in a particular business area. This makes the idea of change approachable rather than overwhelming. As each initiative expands, digital convergence becomes a byproduct, eventually resulting in the modernization of holistic business practices. CHANGE HAS TO START SOMEWHERE. 3 PREVIEW COPY
  • 4. Digital transformation is vast and often misunderstood as a formal effort to renovate business vision, models, and investments for a new digital economy. 4 PREVIEW COPY
  • 5. From the onset, Altimeter Group learned that definitions of and formalized methodologies toward digital transformation are indeed vast. As a category, it’s therefore difficult to surface a series of best practices outlining how businesses are changing and can grow. When we asked executives and digital strategists if their organization was undergoing a formal digital transformation effort in 2014, 88% answered “yes” (see Figure 1). Yet, this directly conflicts with both our previous qualitative research, as well as more detailed survey responses around components that prove digital transformation efforts are indeed occurring (i.e., journey mapping and a focus on customer experience, as seen in Figure 2). For example, when we asked digital leaders about their investments in identifying digital touchpoints and behaviors, 25% had mapped out the digital customer journey (see Figure 2). In other words: only one-quarter of the companies we surveyed have a clear understanding of new and underperforming digital touchpoints, yet 88% THE STATE OF DIGITAL TRANSFORMATION: 2014 SURVEY of the same cohort reports that they are undergoing digital transformation efforts. THIS LEADS US TO THE CONCLUSION THAT EVEN WHEN EXPLICITLY DEFINED, THE TERM “DIGITAL TRANSFORMATION” IS STILL MISUNDERSTOOD. Executives and strategists indicate that their organizations are undergoing digital transformation, yet the details of their efforts report the contrary. Altimeter Group found that digital transformation as an integrated and official endeavor is something many strategists are truly just beginning to understand and pursue. 5 25% mapped the journey 88% are undergoing digital transformation PREVIEW COPY
  • 6. 42% ORGANIZATIONS UNDERGOING DIGITAL TRANSFORMATION EFFORTS FIGURE 1. ` Is your organization undergoing a formal digital transformation effort in 2014? Altimeter defines digital transformation as: the re-alignment of, or new investment in, technology and business models to more effectively engage digital consumers at every touchpoint in the customer experience lifecycle. I don’t know. 2% No 10% COMPANIES MUST FOCUS ON JOURNEY MAPPING TO IMPROVE CUSTOMER EXPERIENCE FIGURE 2. We’ve talked about the need to do so but no one has taken the lead yet. Which of the above best describes your company’s efforts around the customer journey/experience? We are researching customer behavior now and waiting for results to inform our digital transformation strategy. We have completely mapped out the customer journey within the last year and have a clear understanding of new digital touch-points. We have not officially researched the digital customer journey but we have updated digital touch points with new social and mobile technologies and investments. The need to do so hasn’t come up or been made a priority. 3% Yes 88% 25% 12%% 12% Source: Altimeter Group Digital Transformation Survey, 2014. N=59. 6 PREVIEW COPY
  • 7. TO DOWNLOAD THIS REPORT IN FULL AT NO COST, PLEASE VISIT OUR WEBSITE AT http://bit.ly/altimeter-report-2014-state-of-dt PREVIEW COPY
  • 8. AUTHOR: BRIAN SOLIS, PRINCIPAL ANALYST Brian Solis (@briansolis) is a principal analyst at Altimeter Group. He is also an award- winning author, prominent blogger, and keynote speaker. Solis works with enterprise organizations and technology vendors to research the state and direction of markets, competitors, and customer behavior. Through the use of proven frameworks and best practices, Solis analyzes trends, opportunities, capabilities, and areas for improvement to align new media initiatives with business priorities. CONTRIBUTING AUTHOR: JAIMY SZYMANSKI, SENIOR RESEARCHER Jaimy Szymanski (@jaimy_marie) is a Senior Researcher with Altimeter Group. She has assisted in the creation of multiple open research reports covering how disruptive technologies impact business. Szymanski has also worked with Altimeter analysts on varied research and advisory projects for Fortune 500 companies in the telecomm, travel, pharmaceutical, financial, and technology industries. Her research interests lie in social TV, gamification, digital influence, and consumer mobile. EDITOR: REBECCA LIEB, ANALYST Rebecca Lieb (@lieblink) is an analyst at Altimeter Group covering content strategy, and digital advertising and media, encompassing brands, publishers, agencies and technology vendors. In addition to her background as a marketing executive, she was VP and editor- in-chief of the ClickZ Network for over seven years. For a portion of that time, she also ran Search Engine Watch. She’s written two books on digital marketing: The Truth About Search Engine Optimization (2009) and Content Marketing (2011). ABOUT THE AUTHORS With thanks for support from: Jessica Groopman, Cheryl Knight, Shannon Latta, Briana Schweizer, Charlene Li, and Christine Tran. ACKNOWLEDGMENTS PREVIEW COPY