Be the gryphon

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  • BE THE GRYPHONHOW TO CHANGE YOUR ORGANISATIONS

    TRAJECTORY THROUGH DIGITAL BUSINESS TRANSFORMATION

  • THE NEED FOR LEADERS NOW IS TO CONSIDER HOW THEY GO ABOUT TRANSFORMING THEIR ENTIRE ORGANISATION FOR A DIGITAL WORLD

  • 5BE THE GRYPHON

    FOREWORDFOREWORD

    WHAT POINT HAVE ORGANISATIONS REACHED ON THEIR DIGITAL BUSINESS TRANSFORMATION JOURNEYS, AND WHAT IS POSSIBLE?There is an urgency and momentum building behind digital business transformation, as organisations reimagine, reshape and retool for an era in which traditional boundaries are being broken. The accelerated progression of technology and its rapid uptake by consumers has pushed the topic of digital business transformation to the top of the agenda in boardrooms globally. The opportunity, or existential threat, that these seismic changes represent are focusing the minds of business leaders on the future of their organisations and industries as never before.

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    We are fascinated to see what happens next; to identify the point that organisations have reached on their digital business transformation journeys and to explore both what is possible and where the pitfalls may lie.

    Ovum, supported by SapientNitro, set out to interview 50 CEOs (or equivalent) from large organisations in Europe who have recently activated a digital business transformation initiative. Our aims are to understand and share the stage of maturity of digital business transformation initiatives in Europe, and to defi ne the leadership strategies and issues as well as projected timescales and budget considerations.

    This white paper sets out both analysis of the research results and prescription for senior executives to progress towards successful digital business transformation outcomes.

    Email: in[email protected]: +44 0 207 786 4500Web: www.sapientnitro.comTwitter: @sapientnitroFacebook: https://www.facebook.com/SapientNitroLinkedIn: https://www.linkedin.com/company/sapientnitro

    NIGEL VAZ GERRY BROWN

    SVP and European Managing Director

    SapientNitro

    Senior Analyst, Customer Engagement, Digital Technology

    Ovum

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    WHY THIS PAPER? WHY NOW?

    CONSUMERS' RAPID UPTAKE AND USE OF TECHNOLOGY HAS REVEALED A DIGITAL LAG WITHIN MANY COMPANIESWe use the term digital business transformation for a reason. The need for leaders now is to consider how they go about transforming their entire business for a digital world, rather than digitising a piece of it or adding limited digital revenues as an adjunct. While the two-word term digital transformation has meant diff erent degrees of change to diff erent organisations, digital business transformation represents a commercial imperative of an entirely higher order. It compels business leaders to radically rethink the ways in which their entire organisation will meet consumers whose adoption and use of technology are, in many instances, signifi cantly more advanced.

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    One does not have to look far for evidence of this shift in power. Juan Olaizola, Chief Operating Offi cer of Santander UK, in a recent Financial Times article on digital banking, was quoted as saying that massive growth in smartphones means the bank has to respond at a speed that we dont control a speed previously unknown to banks.

    A fundamental challenge for many companies is that increasingly they lag behind their customers expectations and requirements. New standards of service and experience are being set by the likes of Apple, Amazon and Google among others. Legacy businesses with analogue systems and processes are judged by these new standards and fi nd themselves obsolete or antiquated by comparison.

    Digital business transformation is the means by which companies eff ect organisational change, and close the gap between customers expectations and the service and experience they receive. For an airline this means reimagining what travel in a digital world looks like, rather than merely digitising the travel process for a physical world. In automotive, it means acknowledging that the modern car-buyer is focused more on the digital services that a car and its network environment may off er than what is under the hood.

    Digital business transformation, then, is about challenging and changing ingrained perceptions about what a company is, does and says in order to increase relevance to customers.

    EUROPES67BN DIGITALBUSINESS TRANSFORMATION MARKETIn support of Ovums research among CEOs of large organisations in Europe, SapientNitro carried out research to identify the size of the European digital business transformation market. With a market scope that combines soft ware and digital services, digital advertising expenditure, agency and production fees, we have identifi ed a digital business transformation market size of 67bn ($74.6bn) for Europe.

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    DIGITAL BUSINESSTRANSFORMATION AND THE GRYPHON ZONE

    GRYPHONS DISRUPT OUR UNDERSTANDING OF THE WORLD; THEY COMBINE THE BEST TECHNOLOGIES, SERVICES AND EXPERIENCEThe primary drivers for digital business transformation are either signifi cant opportunity or existential threat. The opportunity to reimagine the service and experience your organisation off ers, to increase relevance and revenue, will oft en feel like something that it can get to later. The case for digital business transformation in the face of existential threat is one that is far easier to make.

    Many business leaders have been stung into action by the realisation that the need to actively defend their position has taken on a new dimension the threat of being superseded by an unseen, aggressive and digitally oriented predator that comes from outside the historical competitive set.

    The predator metaphor is a useful one through which to understand the digital business transformation imperative. In any ecosystem, its living things interact and evolve together; behaviours and hierarchy develop in a form that promotes equilibrium. In a business context, large and successful organisations have established themselves as a set of traditional apex predators an ascent based on their decades, or even centuries, of expertise, evolution and depth of capability within a defi ned industry sector.

    When a new predator arrives suddenly in this ecosystem, which looks and behaves diff erently from anything seen before, it causes traditional predators to struggle because its sudden incursion stretches the limit of their comprehension and ability to react. Where the Gryphon of legend was half lion, half eagle and consequently dominant among all creatures, the business Gryphon is equipped with powerful hybrid capabilities, an original approach and the ability to move freely across the Gryphon Zone, where traditional territorial demarcation is obsolete.

    Gryphons are born every day. They disrupt our understanding of the world as it exists today, and instinctively break previously assumed boundaries to combine the best of technologies, services and experiences. AeroMobil, a fl ying car that will soon go to market, is both a near-literal physical example

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    of the hybrid Gryphon and an example of Gryphon business characteristics defying conventions, crossing industry sectors and harnessing mixed technologies. Gryphon-like attributes can be seen in the rapid advances of businesses such as Uber in transportation, airbnb in home rentals, Spotify in music (notably, streaming has already disrupted the emergent download market) and Buzzfeed in media.

    It would be incorrect to assume, however, that the speed, agility and technological power that digital startups display mean the Gryphon Zone can be accessed by them alone. Googles entrance into the driverless car market has galvanized innovation in the automotive industry. Amazon has had a similar eff ect on the outsourced computer services business with its launch of AWS (Amazon Web Services).

    To be a Gryphon organisation is not about age or size, but about state of mind. Apple is an example of a large organisation that continually reinvents itself by creating product lines like Apple Watch and iPhone that supplant previously successful lines such as the iPod itself a byproduct of Apples conquest of the music industry. Netfl ix, similarly, had a pure movies-by-mail business that successfully rivalled its entrenched, larger competitor Blockbuster yet it was only when Netfl ix disrupted itself and embraced the emerging technology of video streaming that it became a true giant-killer. It took another leap forward when it reimagined a future in which it was not merely an entertainment pipe, and began to create its own original programming.

    It is here that the idea of the Gryphon has important parallels with the digital business transformation imperative. The leaders of companies exploring, or embarking upon, digital business transformation initiatives are eff ectively on a quest to transmute from traditional predator to Gryphon and to access the Gryphon Zone the space and time that will allow them to defend and expand; to repel territorial incursions, certainly, but also to re-imagine and re-engineer their businesses for future success.

    TO BE A GRYPHON ORGANISATION IS NOT ABOUT AGE OR SIZE, BUT ABOUT STATE OF MIND

    Figure 1:

    CHARACTERISTICS OF A GRYPHON ORGANISATION

    A CEO and leadership team that leads digital business transformation within the organisation and drives ongoing change and improvements

    Digital as a core competence not a bolt-on

    DIGITAL CORE

    Business is built around the belief that consumers and rapid uptake of technology are the drivers of change

    CUSTOMER-CENTRIC

    The ability to pivot and the notion of speed itself being a competitive advantage

    AGILITY AND SPEED

    A holistic, company-wide commitment to reshape and retool for a digital future

    ALL-EMBRACING APPROACH

    Marketing and technology skills and roles are increasingly hybrid

    HYBRID SKILLS

    Recognise that change is iterative and permanent

    ONGOING COMMITMENT TO CHANGE

    A willingness to challenge norms and disrupt itself in order to enter new markets and categories

    DISRUPTIVE CULTURE

    VISIONARY LEADERSHIP

    Organisational culture and/or defi ned processes by which key executive stakeholders and functions unite behind digital business transformation

    COLLABORATIVE STRUCTURE

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    Figure 2:

    WHAT IS YOUR DIGITAL BUSINESS TRANSFORMATION AGENDA?

    N=50Source: A commissioned study conducted by Ovum on behalf of SapientNitro

    A FORMAL BUSINESS DOCUMENT

    A STRATEGIC INTENT

    A BOARDROOM DISCUSSION

    22% 44%

    34%

    Digital business transformation means transforming an entire business for a digital world, rather than digitising piecemeal. For would-be Gryphon organisations, digital business transformation is a whole-company issue an all-embracing, top-to-bottom approach to adding digital technologies and digital competencies that will positively disrupt their business and grow their market opportunity.

    THE EFFECTIVENESS OF DIGITAL BUSINESS TRANSFORMATION STRATEGIES WILL BECOME AN UNDERLYING SURVIVAL AND SUCCESS FACTOR

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    At present, however, some organisations take a more piecemeal approach to digital business transformation, focusing on digitising processes or isolated business units or functions. Often digital business transformation is confined to individual digital programmes or projects that may pertain to just a small number of departments or even just one, such as marketing. Such pockets of digital transformation will have to be connected if they are to have genuine, sustainable impact on business performance.

    Ovums research identified three main stages in digital business transformation concept development: creating a strategic intent; having a boardroom discussion and strategy debate; and creating a tangible and formal business document that articulates the scope of the challenge and the resources and timescales required to execute.

    We found that 44% of CEOs planning a digital business transformation project have a strategic intent. This is the lowest form of commitment to action, and reflects an ideation phase. For 34% of CEOs, digital business transformation is a boardroom discussion, which reflects an initiation phase for gaining buy-in from functional department heads. Twenty-two percent have created a formal business document, which reflects imminent digital project activation.

    THE IMPACT OF NEW DIGITALLY EMPOWERED PLAYERS IS CREATING NEW EXPECTATIONS OF SERVICE AND EXPERIENCE ACROSS CATEGORIES

    FINDINGMost organisations are still in their early stages of planning digital business transformation. In reality, few are advanced and most are assessing their strategies and evaluating how to progress from legacy enterprise systems, departmental systems and point solutions towards an integrated whole-company digital capability.

    RECOMMENDATIONLarge organisations need urgently to begin a board-level discussion to create a digital business transformation strategy and intent. The effectiveness of digital business transformation strategies will become a key underlying survival and success factor for large organisations to 2020 and beyond. Such transformations are essential if businesses are to deliver customer-centricity. The impact of new digitally empowered players is creating new expectations of service and experience across every category.

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    Figure 3:

    EXECUTIVES NOMINATED TO DRIVE THE DIGITAL BUSINESS TRANSFORMATION AGENDA

    N=50 / N = 34Source: A commissioned study conducted by Ovum on behalf of SapientNitro

    NO

    32%

    YES

    68% CMO26%

    All 50 CEOs considered themselves to be the primary strategic driver of digital business transformation. This is key to the realisation of the Gryphon Zone opportunity, where a strategic organisational understanding of opportunity, purpose and capabilities is crucial. True digital business transformation does not develop in one area of a business, but is driven from the top and permeates the entire organisation.

    Only four CEOs replied that all department heads should be responsible for digital business transformation. This is an enlightened view common to organisations that understand the Gryphon ideal of power and skill sets working in balance. Digital should not be perceived as the domain of a single department, as digital should touch all functions of an organisation. Primary digital stakeholders include IT, marketing, sales, service, finance and the operational supply chain.

    TRUE DIGITAL BUSINESS TRANSFORMATION DOES NOT DEVELOP IN ONE AREA OF A BUSINESS, BUT IS DRIVEN FROM THE TOP AND PERMEATES THE ENTIRE ORGANISATION

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    However, more than two-thirds of CEOs (68%) had nominated another single executive to drive the operational digital business transformation programme. Of the 34 CEOs who had nominated an executive to drive the digital business transformation agenda, nearly half (47%) nominated the CIO (chief information officer) or CTO (chief technology officer). This is nearly twice as many as those that nominated the CMO (26%). The key stakeholders in digital business transformation projects are therefore the CEO, the CIO and the CMO in that order.

    The approach may reflect an operational pragmatism, rather than any intent to isolate the digital business transformation programme within the organisation. It is worth exploring the reasons for the prioritisation of CIO/CTO over CMO in order to understand the challenges for organisations as they seek to develop Gryphon-like strength in balance.

    In a separate 2014 Ovum research study of c. 5,000 ICT executive respondents globally, Ovum asked how influential various organisational roles are when making IT selection and purchasing decisions. Eighty-three per cent rated the CIO / IT department as highly influential or influential; CEOs were rated second with 69%, while the CMO / marketing director was rated eighth with 56% (behind CFOs, sales directors, business units heads, and external analysts / consultants).

    CEOs recognise their leadership role in digital business transformation, whereas in other IT projects the CIO takes the lead. For Gryphon-level gains, understanding that digital business transformation requires a collaborative approach in which the CMO, as well as other key stakeholders, participate is crucial.

    DIGITAL SHOULD NOT BE PERCEIVED AS THE DOMAIN OF A SINGLE DEPARTMENT, AS DIGITAL SHOULD TOUCH ALL FUNCTIONS OF AN ORGANISATION

    FINDINGSSuch is the importance of digital business transformation that all 50 CEOs interviewed considered themselves to be the leader of their companys digital business transformation agenda. Digital business transformation is perceived as one initiative that cannot be delegated down into the management ranks.

    Over two-thirds of CEOs nominated a lieutenant to lead the digital business transformation charge. In nearly half (47%) of these instances, the CIO or CTO was nominated, followed by the CMO with 26% of responses.

    RECOMMENDATIONDigital business transformation is much wider and larger than singularly a marketing or IT issue. The CEO, the CIO / CTO and the CMO should be the key leaders jointly responsible for the overall success by combining the best of their constituent parts. While the CIO / CTO is closer to process and technology and can drive organisational change, the CMO must provide a significant contribution towards the business and customer requirements gathering process.

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    Figure 4:

    FORCES AFFECTING THE ADOPTION OF DIGITAL BUSINESS TRANSFORMATION

    IT-RELATED CHALLENGES BUSINESS-RELATED CHALLENGES

    IT ARCHITECTURE

    DIGITAL TRANSFORMATION

    SPEED OF IMPLEMENTATION

    BUSINESS CASES AND ROI

    SHADOW ITDIGITAL EXPERTISE

    BUSINESS KNOWLEDGE

    Organisations that fully embark on digital business transformation journeys understand that the experience of the customer is the most reliable measure of brand performance. Separation between the way that a brand communicates with customers and their experience of the brand is now an anachronism; experience is forcing the brand promise, technology and operational capability within the business to come together.

    This creates some tensions between the juxtaposed functions of marketing and IT; one is the promise of the business, the other is the delivery of that promise which touch at the point of experience. Many CMOs understand the issues a business needs to go through owing to their proximity to customers, but it is rarely they who are entrusted with transformation. The CIO/CTO is typically someone who can facilitate internal change, as they are closer to process and technology.

    IT and marketing co-existence is important as marketing departments and operations rarely have the capabilities, capacity and appetite to devise a strategic IT vision and build an architectural IT platform. However, digital business transformation requires in-depth knowledge of business functions and business processes, which IT seldom possesses. IT departments can therefore only effectively implement digital business transformation by collaborating with end-user departments. Internal collaboration is improving, especially in regards to developing joint digital business transformation business cases.

    DIFFERENCES IN EXPERTISE AND CULTURE BETWEEN MARKETING AND IT CAN BE HARNESSED TO A MORE POWERFUL END

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    The most important IT decision-making criterion (stated by 36% of ICT executives) is ROI a calculation that the IT department knows well but marketers notoriously struggle with in an IT purchasing context. Multi-year strategic digital business transformation programmes require large and phased capital budget management and ongoing supplier liaison that are best suited to the skill sets of IT departments with experience in managing such technical deployments.

    Although marketing (the CMO) and IT (the CIO) are increasingly recognising their co-dependency in building and developing digital capabilities, cultural differences still exist. Marketing is traditionally very right brain (emotional) in how it thinks and works. Marketers decipher customers needs and wants into products, services and value propositions that engage and excite the customer. Conversely, IT is often very left brain (logical) in how it thinks and works. IT departments engineer and service technical products and services that enable the efficient and effective functioning of organisations. Hence ITs systematic logic acts as a counterbalance to the creativity of marketing to create a dynamic tension.

    The most important element from a marketer's perspective is the ability to execute immediately. Marketers are typically required to be highly market responsive and opportunistic in their behaviour as windows of opportunity open and close quickly in todays hyper-competitive real-time environment. This has encouraged marketing managers to fund SaaS marketing solutions (shadow IT) from operational marketing budgets to speed things up.

    From an IT governance perspective, digital platform provision is key. IT departments are keen to avoid the proliferation of point digital solution tools, which have led to integration, scalability and servicing issues and can run contrary to the digital business transformation agenda. IT wishes to own the technical architecture and the platform that defines the context and scope for marketers and other departments to choose their own digital tools.

    THE EXPERIENCE OF THE CUSTOMER IS FORCING BRAND PROMISE, TECHNOLOGY AND OPERATIONAL CAPABILITY WITHIN THE BUSINESS TO COME TOGETHER

    The Gryphon ideal of distinct skills coming together to create something more powerful than the sum of its parts is apposite here. The Gryphon is the imagined combination of two very different but powerful beasts; the differences in culture and priority between marketing and IT create a tension that can be harnessed to a more powerful end than would have been the case were they to remain isolated from one another. CIOs and CMOs clearly need to be more communicative, collaborative and demonstrate mutual understanding.

    FINDINGSFundamental tensions between the differing cultures and goals of IT and marketing remain. However, at the organisational level there is improved understanding of the need for the CIO and the CMO to collaborate in order to succeed with digital business transformation.

    CIOs and CTOs are equipped to deliver the technical solutions, while CMOs understand their customers needs. Hence CIOs lead digital business transformation projects, whereas CMOs mostly act as influencers and recommenders. CEOs underwrite and hold overall governance for digital business transformation.

    RECOMMENDATIONCollaboration and communication between the CIO and the CMO are important to achieve Gryphon-like power in balance. Organisations should endeavour to build and maintain a culture in which collaboration between these two key executive roles is natural and frictionless. A more formal approach is to develop a joint performance charter that commits both parties to budget and resource investments in the form of a joint service level agreement (SLA). SLAs need to be visible to the management team and should define digital business transformation roles, responsibilities, and performance and KPI commitments.

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    Figure 5:

    NEW HYBRID JOB TITLES ARE EMERGING TO TAKE THE IT / MARKETING MANTLE

    MARKETING

    CHIEF MARKETING TECHNOLOGY OFFICER

    HEAD OF DIGITAL

    CHIEF DIGITAL OFFICER

    CHIEF CUSTOMER OFFICER

    IT

    The emergence of new roles and jobs titles within organisations reflects an implicit understanding that traditional structures and siloes run contrary to the digital business transformation imperative. We see both overarching, organisation-wide digital roles and blended marketing roles being created. Enlightened organisations recognise that the hybrid, or Gryphon approach, can be as powerful on an executive or departmental level as it is on an organisational level indeed they are all key to effecting the organisational change that digital business transformation must drive.

    The notion of a chief marketing technology officer (CMTO) is a reflection of organisations understanding that it is through such roles and titles that marketing will be properly connected to technology. Other titles we observe are head of digital, chief digital officer (CDO) and chief customer officer (CCO). Lack of knowledge with regard to digital within executive teams can hamper development; often these digital specialists reverse mentor executives to bring them up to speed with the latest digital technology developments.

    THROUGH NEW BLENDED ROLES AND JOB TITLES OR THROUGH STRUCTURED INTERDEPARTMENTAL CO-OPERATION, A HYBRID APPROACH REPRESENTS THE GRYPHON IDEAL

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    Marketing roles are in similar flux in response to digital developments. Consider these job titles used by global brands: VP digital, loyalty and marketing; ecommerce and marketing director; director of customer data and relationships, director of CRM, consumer data and privacy; chief innovation officer and VP product marketing; and manager of web and multichannel development; head of omnichannel; and head of customer experience.

    These blended job titles reflect different strains of digital and marketing marriage, with each job title customised to reflect the different operating characteristics and priorities of brands. Digital marketing is not yet a generic, universally common discipline and these active, focused job titles provide commercial accountability for a clear operational end goal.

    A big part of digital business transformation is bringing the customer into the organisation as a source of innovation. Ovums 2014 study into customer communications revealed that 20% of UK executives were concerned that no one in their (large) organisations had overall customer communications responsibilities across marketing, sales, services and operations. As a result, companies such as Barclays and Shop Direct have recently appointed customer directors.

    Shop Directs motivation for appointing a customer director was to become customer-focused and customer-led and to bring the customer into the business. The customer director is tasked with customer retention and loyalty, aligning customer needs to strategic business initiatives and executing a customer engagement roadmap in support of strategic business objectives.

    The establishment of customer directors highlights a risk to marketing of being confined to a customer acquisition role, with less influence over customer-driven innovation and retention. It remains to be seen whether customer director becomes the Gryphon role into which the most capable marketers develop or to which they subordinate.

    ONLY THOSE CMOs WITH A BOARD-LEVEL VOICE WILL SIGNIFICANTLY INFLUENCE DIGITAL BUSINESS TRANSFORMATION STRATEGY

    The status of marketing within the organisation also affects its role in digital business transformation. Those marketing departments that focus on sales support or short term marketing promotional programmes will have little influence on digital business transformation. Only those CMOs with a board-level voice will significantly influence digital business transformation strategy. The main concern of CMOs should be to ensure the brand narrative is upheld and delivered coherently across all online and offline channels so that customer experience is optimal and differentiated.

    FINDINGA minority (9%) of organisations nominated an executive to drive the digital business transformation agenda whose title or remit was non-traditional neither marketing nor IT, nor specific to the transformation agenda. The emergence of a host of hybrid roles and job titles reflects an understanding that marketing and technology must be properly connected at an executive, as well as at an organisational, level and that traditional structures and siloes run contrary to successful digital business transformation.

    RECOMMENDATIONSCustomer experience, as a paramount indicator of brand performance, is forcing brand promise and technology together. At an organisational level it is crucial to develop and embrace hybrid skill sets. Whether through new roles such as CMTO or through structured co-operation between marketing and IT, this hybrid approach represents the Gryphon ideal.

    CMOs need more aggressively to step up to the plate and provide tangible digital business transformation project scoping contributions. A key business outcome that CMOs should own is to empower all customer touchpoints to deliver the brand narrative and ensure that customer experience is universally excellent and differentiated.

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    Figure 6:

    IS THE DIGITAL BUSINESS TRANSFORMATION EXECUTIVE AN EXISTING TEAM MEMBER?

    N = 34Source: A commissioned study conducted by Ovum on behalf of SapientNitro

    NEW

    EXISTING

    6%

    94%

    The vast majority of CEOs (94%) consider the appointment of an existing experienced manager as the digital business transformation czar to be the correct approach. The internal recruitment approach enables the utilisation of existing knowledge of the business, its processes and its leaders and will help to ensure a harmonious fit of digital products and services to meet the organisations needs. If, in combination with the CEOs strategic leadership of the digital business transformation programme, an organisation can create the culture and conditions for positive disruption of their business, then this internal recruitment approach can be powerful. However, the risk is that an internal appointment will always stay within the guard rail and will not naturally be inclined, or pushed, to step forward and ask the bigger existential questions about the future of the business. In this instance, existing processes are digitized and the benefits to be gained from re-engineering business processes as part of a true top-to-bottom digital business transformation will be lost.

    THE DIGITAL BUSINESS TRANSFORMATION CZAR FROM INSIDE OR OUTSIDE THE ORGANISATION?

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    ORGANISATIONS SETTING THEMSELVES ON A SUCCESSFUL TRACK TO DIGITAL BUSINESS TRANSFORMATION ARE ACTIVELY AUGMENTING THEIR EMPLOYEES SKILL SETS

    In our research, only two CEOs were recruiting externally for an executive to lead their digital business transformation initiatives. Interestingly, these two CEOs were two of the four mentioned previously that nominated all departments to drive digital business transformation. An external appointment should circumvent any potential conflict and departmental biases that might surface from the appointment of an internal candidate. This may be an emergent trend as businesses get to grips with the challenge and scale of whole-company digital transformation.

    In making external appointments, whether for a leader of digital business transformation or other key roles within the business, established organisations must resist any tendency to actively hire people with a profile that is biased toward being analytical and risk averse. These traits are the opposite of what is required to build a transformational or Gryphon mentality within the organisation. Organisations setting themselves on a successful track to digital business transformation recognise this deficit and are actively augmenting their employees skill sets.

    Food and drink conglomerate Mondelez International has been vocal about an ambition to become one of the largest technology companies in the world, and to compete with tech giants for the top talent. Bonin Bough, Mondelez Vice President of Global Media and Consumer Engagement, has spoken of the need for organisations such as his to create value by breaking things and breaking careers to compete in the digital age.

    Unilever has created The Foundry, a central ideas and innovation hub where entrepreneurs, inventors and creatives can connect, collaborate and co-create with brands on ideas, fund pilot projects and secure VC funding for their inventions. In fact, Unilever has a stated intent that by 2020 it wants to increase its crowd-sourced co-creation 10-fold, radically changing the way it approaches both brand and product

    development and its marketing. Equally, at Telefnica, every employee is measured on their contribution to disruption, thereby ensuring the transformation or Gryphon mindset is embedded as a cultural behaviour and business norm. Telefnica, too, has a startup accelerator, Wayra, which funds and supports entrepreneurs as a means to drive innovation through the organisation.

    FINDINGMost CEOs prefer internal executives rather than to recruit external specialists to run their digital business transformation programmes. While an internal executive appointment will know the business and should be able to leverage their credibility and contacts within the organisation, this approach may limit the scope and effectiveness of the digital transformation agenda.

    RECOMMENDATIONA defined and active recruitment and learning development process, aimed at counterbalancing any bias towards risk aversion among the employee base, will equip organisations with a talent profile better geared towards an entrepreneurial mentality and the capability to do things differently, faster and more disruptively.

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    Figure 7:

    TIMESCALES FOR DIGITAL BUSINESS TRANSFORMATION

    N = 50Source: A commissioned study conducted by Ovum on behalf of SapientNitro

    Y

    NOT KNOWN

    2 YEARS

    5 YEARS

    THIS YEAR

    20%

    14%

    2%

    64%

    Digital business transformation is akin to permanent disruption a self-imposed regimen that recognises it not as a one-off activity but as an ongoing commitment to adapt in line with changing customer needs and expectations. A good example of a strategic digital business transformation programme is the UKs Nationwide Building Society, whose 1bn investment in digital business transformation has now been running for more than five years. Insurance company Avivas digital business transformation programme has also been active well in excess of this timeframe. This is the kind of customer commitment required to truly enact organisation-wide digital business transformations, which should include digital platform procurement, customer experience and journeys management, cross-channel marketing capabilities and integrated customer data management.

    ORGANISATIONS THAT ARE IN PURSUIT OF THE GRYPHON ZONE AND ITS REWARDS UNDERSTAND THAT THEY ARE ALWAYS IN PURSUIT OF A NEW GOAL

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    Set against these examples, the responses to Ovums question about timescales and budgets were unconvincing: few appeared to have a clear view of the necessary time and cost requirements. Almost two-thirds of respondents replied this year, which implies an urgent intent to do something, but not the strategic perspective implied by an all-embracing organisation-wide digital business transformation. The respondents were given as prompts this year, two years, three years and five years. Only one respondent replied five years. Possibly respondents were under-estimating the task ahead, or were considering a tactical programme, but more likely they were unable to envision the strategic roadmap. Indeed, for 20% of our sample the timescale answer was not known.

    Organisations that are in pursuit of the Gryphon Zone and the rewards that come with it will need to understand that they are always in pursuit of a new goal. Few, if any, products and services are so perfectly evolved that they cannot be superseded by a more useful, engaging, valuable, sustainable or efficient offering. Equally, the way in which products and services are sourced, manufactured, packaged, distributed, retailed, serviced and, most importantly, experienced can and should be challenged as part of the status quo. On a daily basis this will mean small steps in evolving the brand promise, customer experience and the way in which the organisation does business. This mindset will equip and enable organisations to make key evolutionary leaps that disrupt and redefine categories and achieve long-term sustainable growth. The reality of being in business today is that the impact of digital technologies means that nothing stands still for a day.

    SUCCESSFUL DIGITAL TRANSFORMATION IS NOT A ONE-OFF ACTIVITY BUT AN ONGOING COMMITMENT TO ADAPT IN LINE WITH CHANGING CUSTOMER NEEDS AND EXPECTATIONS

    In support of Ovums research among CEOs of large organisations in Europe, SapientNitro carried out research to identify the size of the European digital business transformation market. With a market scope that combines total expenditure on software and digital services, digital advertising expenditure, agency and production fees, we have identified a digital business transformation market size of 67bn ($74.6bn) for Europe. The scale and scope of investment across Europe suggests that organisations recently embarking on digital business transformation have yet to realise the timescales and costs required.

    FINDINGTimescales for digital business transformation are as yet poorly defined. When asked about timescales, nearly two-thirds of CEOs (64%) answered this year. This reflects CEOs urgency to get things moving, more than an understanding of the time and budgets required for an iterative organisation-wide digital business transformation.

    RECOMMENDATIONDigital business transformation is no short-term fix. Leaders need to commit significant resource levels over a five- to 10-year period and seek to elicit cultural change. However, quick wins will be forthcoming and incremental benefits will materialise as the programme progresses. An early step-change in efficiency and effectiveness is not uncommon.

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    RECOMMENDATIONS

    Large organisations need urgently to begin a board-level discussion to create a digital business transformation strategy and intent. The eff ectiveness of digital business transformation strategies will become a key underlying survival and success factor for large organisations to 2020 and beyond. Such transformations are essential if businesses are to deliver customer-centricity. The impact of new digitally empowered players is creating new expectations of service and experience across every category.

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    Digital business transformation is much wider and larger than singularly a marketing or IT issue. The CEO, the CIO / CTO and the CMO should be the key leaders jointly responsible for the overall success by combining the best of their constituent parts.

    2While the CIO / CTO is closer to process and technology and can drive organisational change, the CMO must provide a significant contribution towards the business and customer requirements gathering process.

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    Collaboration and communication between the CIO and the CMO are important to achieve a Gryphon-like power in balance. Organisations should endeavour to build and maintain a culture in which collaboration between these two key executive roles is natural and frictionless. A more formal approach is to develop a joint performance charter that commits both parties to budget and resource investments in the form of a joint service level agreement (SLA). SLAs need to be visible to the management team and should define digital business transformation roles, responsibilities, and performance and KPI commitments.

    4Customer experience, as a paramount indicator of brand performance, is forcing brand promise and technology together. At an organisational level, it is crucial to develop and embrace hybrid skill sets. Whether through new roles such as CMTO or through structured co-operation between marketing and IT, this hybrid approach represents the Gryphon ideal.

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    CMOs need more aggressively to step up to the plate and provide tangible digital business transformation project scoping contributions. A key business outcome that CMOs should own is to empower all customer touchpoints to deliver the brand narrative and ensure that customer experience is universally excellent and differentiated.

    6A defined and active recruitment and learning development process, aimed at counterbalancing any bias toward risk aversion among the employee base, will equip organisations with a talent profile better geared towards an entrepreneurial mentality and the capability to do things differently, faster and more disruptively.

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  • APPENDIX

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    RESEARCH METHODOLOGYThe goal of this research project was to gain a better understanding of the drivers of digital business transformation initiatives within large organisations. Ovum (on behalf of SapientNitro) conducted 50 telephone research interviews with chief executive officers (or equivalent) in companies with 500+ employees operating in Europe that were considering or actioning digital business transformation projects. Around 250 organisations were approached, so around 1 in 5 (20%) of organisations were in the market. Principal countries where these interviews took place were France, Germany, Russia, the UK and Sweden.

    Telephone interviews were time-sensitive and structured, and were conducted in financial services, manufacturing, media and entertainment, pharmaceuticals and healthcare, professional services, public sector, telecommunications, and transportation and logistics industries.

    FURTHER READINGICT Enterprise Insights 2014/15 Global: IT Strategy (August 2014), PT0040-000001

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    DISCLAIMERAll rights reserved.

    No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publishers, Ovum (an Informa business) or SapientNitroSM (part of Publicis.Sapient).

    The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Ovum and SapientNitro deliver will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such we can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.