Digital or die A Citrix manifesto for British businesses
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Executive foreword Just some years ago, we thought of digital Indeed, digital technology is character- technology as a means of support; pow- ised by design flexibility, and, permeated erful, but distant to the heart of the actual by such technology, business processes business. As strategies of the future were are more flexible and interchangeable. In being shaped, digital technology didn't play this regard, the digital enterprise will be a lead role. CIOs governed the IT infrastruc- increasingly engaged in ongoing innovation ture, but such governance was considered of its business, where reprogramming the detached from the actual business. technology and algorithms means repro- gramming the business. However, in many firms, this viewpoint is changing. In our recent research at Warwick Digital technology is also changing how Business School, we have found business companies create ‘value added’ for custom- models in areas such as credit rating, serious ers. WBS research on software platforms gaming, banking, and even ridesharing are has found that value is not predefined but is largely enabled by digital technology – and, shaped iteratively as customers are invited to many, doing business without considering to contribute = to instigate changes and digital is virtually unthinkable. improvements. For example, we must consider how four out Finally, another implication of digital trans- of the five of the most valuable companies in formation is the change it makes to our the Fortune 500 have built their businesses understanding of industries. We traditionally on digital platforms. Just ten years ago there discuss industries and competition within was only one such company among the top the scope of verticals. In contrast, digital 20. Digital technology does not only support transformation triggers competition across the efficiency and leanness of the business, horizontals. Consider how cars now depend but is increasingly imperative for the creation on some hundred million lines of code, and of value and customer experience. No wonder it is easy to understand how General Motors, that many UK businesses have increasingly BMW, and others no longer look at each other embraced digital technology, and recognised only; in fact, the biggest competition now how it can shape the future of business arrives from traditional tech companies such as they know it. The appointment of Chief as Google and Apple. Digital Officers in recent years manifests this movement. It is clear that digital transformation has the potential to shape the UK business Accepting that digital transformation is landscape. Digital transformation brings ongoing, it makes sense to think about its much opportunity – and challenges – but wider implications. One of the most pro- for organisations to benefit from its poten- found ones is the ease by which businesses tial will require diligent digital leadership can be changed. Our studies of digital and a commitment to competent change. ventures show that they may revamp, or extend, their business several times per This Citrix report offers a thorough as- year. sessment of the current state of digital transformation amongst British businesses and provides food for thought for anyone committed driving digital change in their organisation. Ola Henfridsson | Professor of Information Systems and Management | Warwick Business School Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 2
It is not the strongest of the species that survives, nor the most intelligent that survives, it is the one that is the most adaptable to change - Charles Darvin The extent of digital transformation across for examples of companies championing bold- the business strategy. This modest take-up UK businesses today ness and reaping the rewards for doing so. indicates that, even if the potential of digital is acknowledged, most are struggling to know Just as the most successful species adapted to Experts and leading analyst houses have how to harness it. survive in a changing world, businesses now been highlighting the importance of digital find themselves faced with a similar mountain transformation for years, with IDC citing Worryingly, but not surprisingly, less than one to climb – adapt to the shifting needs of the in its most recent projections that by 2021, in 20 (4%) of the UK board-level respondents world, or prepare for possible extinction. one third of CEOs and COOs of Fortune 2000 questioned could confirm that their business companies will have spent at least 5 years has already moved to a fully digital operat- At the World Economic Forum in January 2016, of their career in a technology leadership ing model - while 14 per cent have no plans Pierre Nanterme, CEO at Accenture, stated: role1. to change business and working practices “Digital is the main reason just over half of the to incorporate digital methods across the companies in the Fortune 500 have disap- Consumers and businesses alike are demand- organisation. Many boards are made up of ex- peared since the year 2000.” ing increasingly seamless experiences, driven ecutives who have made careers on practices by new channels of engagement and tech- from a different age. Incredibly, 15 per cent of With changing digital expectations from nologies. Changes to business practices and businesses still use fax to communicate with consumers, workers and the wider economy, processes are taking place across many UK customers and over half (54%) are using let- the gauntlet has well and truly been thrown organisations in order to meet these demands, ters. It begs the question, are these business- to business leaders. Those best prepared to although some are further ahead than others. es set to become the next HMV or Blockbuster make ambitious changes, and disrupt the sta- Our research into the state of digital trans- Video, and what implication will this have on tus quo will do so by implementing the right formation across UK businesses, undertaken the UK’s economic and digital development? change management leadership and customer by YouGov, has revealed that 35 per cent of Digital needs to be a board-level topic which engagement models, successfully navigating medium to large UK businesses have a single reflects the associated cultural and practice the risks of transformation and setting the digital delivery plan for the whole organisa- changes, not just IT change. agenda for the years to come. We need look tion. Yet, over one third of businesses (36%) no further than the likes of Uber and Airbnb are struggling to adopt technology fully into 1 Source: IDC (2016) 2017 predictions for digital transformation and for CIOs Figure 1 To what extent, if at all, are you con- organisation? This includes examples sidering changing your business and such as business processes all being fully working practices to incorporate digital digitised, employees feeling comfortable methods and practices across the and competent in using digital tools. Don´t Know Not at all – our current To some extent – specific To a large extent – most Across the whole We have already moved corporate IT strategy is service areas and business departments and service business – we are to a fully digital operating sufficient streams areas have been reviewed reviewing our total model and adapted operation Total 13% 14% 37% 22% 10% 4% Large Companies 16% 13% 33% 25% 10% 4% Medium Companies 8% 15% 46% 17% 10% 4% 0% 25% 50% 75% 100% Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 3
Over two thirds of UK businesses (69%) are The UK is a global leader in many aspects of considering changing business and working digital – in finance, in open government, in practices to incorporate digital methods internet retail, in adoption of smartphone further in the organisation. As we well technology. But, arguably with Brexit, and know, considering is not enough, and only growing international competition, we need 14% of respondents said they had already to up our game further still. reviewed digital methods across the whole of their business, or had already moved to a This report will seek to make a thorough fully digital operating model. This highlights assessment of the current state of digital a significant opportunity for companies to transformation amongst British businesses. It implement a smarter digital strategy across will look to provide insights into the C-suite’s their business, driving innovation that reflects viewpoint on digital technology, look at boardroom strategy and company goals. the key role digital transformation plays to future-proof a business, and outline the steps they have (or have not) taken to implement a digital strategy to give their business a com- petitive edge against increasingly global rivals. Figure 2 Which of the following methods do you use to communicate with customers? 81% Email 78% 89% 75% Phone 73% 82% 74% In person (face-to-face) 72% 77% 54% Letter 51% 62% 52% Social media 52% 52% 33% Online surveys 33% 32% 32% SMS 33% 30% 23% Live web chat 23% 21% 15% Fax 13% 18% 3% Other 2% 3% Total 3% Large Companies Don´t know 3% 2% Medium Companies 0% 25% 50% 75% 100% Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 4
The secret of getting ahead is getting started – Mark Twain How are businesses approaching than half of respondents (47%) claimed that digital transformation? no chief digital officer, head of digital or equivalent was in position at their company. Across the UK, the majority of business- Furthermore, within organisations where es are planning for or already designing these positions do exist, over two fifths (42%) services to incorporate digital methods and of digital leadership roles report to the CEO practices in order to press ahead with digi- while a further 26% report directly to the CIO. tal transformation. While many businesses This is a significant shift away from the previ- are aware of this significant opportunity, ous practice of implementing lines of report to our research revealed that over a quarter the CFO or CMO for these roles, highlighting (27%) of UK board-level executives do not the large expectations at board level around believe their organisation has time to build digital transformation. digital into its business strategy. Perhaps for this reason, large numbers of firms are implementing a chief digital officer role (or equivalent) to stimulate digital transformation across the organisation. Less Figure 3: Which of the following methods do you use to communicate with customers? Figure 3 Does the organisation that you work for have a ‘Head of Digital’ / Chief Digital Officer? 18% 10% know on´t 2% D Ye si t´ sm e 22 % Inner Ring: Medium Companies (49-250 employees) Outer Ring: Large Companies (250+ employees) 22% No 4 2% % 25 ls e ee 58% n eo m so , it´s Yes Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 5
The importance placed on digital transforma- those businesses without a chief digital of- a competitive edge. Business leaders must tion is highlighted by the responsibility given ficer. Over a quarter of businesses (26%) with- learn from today’s digital disruptors. Compa- to those in charge of encouraging digital out a specified individual leading on digital nies such as WhatsApp and Netflix appeared practices. 96 per cent of those companies confirmed that the responsibility for the way to challenge the status quo and are now with an executive focused on digital confirm digital methods and digital service design are reaping the rewards. Their success demon- those individuals have budgetary responsibili- introduced lies with board level employees strates how digital can no longer be viewed as ties, while almost two thirds (63%) admit they such as the CEO and CIO. A further 29 per cent separate from overall business strategy. It is have board level responsibility and nearly half believed responsibility fell to director level. not a ‘bolt on’; digital must be central to every (42%) confirm they report directly to the CEO. Across the UK, an emphasis around digital is part of the corporate planning and strategy being driven by business leaders. processes, even if it can also be extracted into While this attention around executives a single high-level digital plan. focused on digital practices demonstrates the Whether companies employ a chief digital current push towards digitally transforming officer or not, the fact businesses largely view As a first step, organisations should review businesses, there are seemingly two schools digital transformation as a board-level issue current processes across the business to of thought. While a chief digital officer or rightly reflects the current priority around consider where digital processes and tools equivalent can encourage digital transforma- changing business practices to incorporate could result in improved efficiencies and cost tion, some companies may feel that employ- digital methods. Both pushed by business reductions internally as well as an enhanced ing one individual to focus on this need makes leaders and specific roles designed to focus customer experience or reputation exter- digital transformation one person’s respon- on digital, most companies have made a start nally. While this may be driven by the board, sibility instead of pushing it across an entire by at least reviewing operations and consider- companies would benefit from educating organisation and spreading accountability ing how best to digitise processes in order to individual departments on the wider role of across the board. enhance productivity. digital to ensure buy-in across the business. The challenge businesses face is understand- We have already seen that only 14 per cent Ultimately, while processes can be a good ing the nature of this role within their organ- of businesses do not plan to adapt working starting point, digital transformation is much isation – an advocate for digital transforma- practices at all in order to incorporate digital more than this. It is about risk models, mar- tion or a change leader with cross-business methods across the organisation. Of those keting plans, work culture, governance and responsibility to adapt processes across tradi- businesses, though, questions must be asked information use. A successful digital trans- tional departmental silos? True digital leaders as to how they feel they can achieve signif- formation strategy requires IT to re-think may view themselves as the latter but in order icant growth without the enabler of digital IT delivery as well as encouraging business to effect change across the business, they will technology underpinning performance. While leaders to incorporate digital thinking into need a mandate from the board to guarantee they may think they are playing it safe, in their plans. It’s about doing different things as sufficient power and resources to act. Beyond reality, they are running a significant risk. Any well as doing things differently. this support, those in digital leadership roles companies which fail to anticipate the wider need to be keenly aware of different depart- competitive impact of digital in their sector However, with our research highlighting ment priorities - and demonstrate a level of and markets will quickly be left behind. that over one third of organisations (36%) sensitivity around office politics - to ensure are struggling to adopt technology fully into every department rallies behind the change. For the majority seeking to implement a the business strategy, further consideration wider digital strategy, making a start is key: a should be given to potential barriers impeding No matter what point of view, the onus placed successful digital transformation strategy can this process. on digital transformation is clear even across future-proof a business in addition to offering Digital is not a ‘bolt on’ and digital must be central to every part of the corporate planning and strategy processes. Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 6
A house divided against itself cannot stand – Abraham Lincoln Division in the boardroom on digital Worryingly, this division extends beyond Plenty of businesses take false comfort transformation whether or not to push forward with a digital from an “it won’t happen to me/us” men- transformation process to a lack of awareness tality. Yet the rate of change resulting from Despite digital transformation being led around digital strategies themselves. The digital opportunities across every sector by the C-suite, boardrooms are generally extent of this division is clear when consider- means each and every organisation needs divided on whether the benefits of such ing the broad difference of opinion amongst to take care not to be left behind, or else a commitment outweigh the resources used UK board level executives at medium to large new entrant in the market will quickly take to implement it. While almost one third enterprises: while nearly half (48%) believe market share. (32%) of UK board level executives believe a digital strategy is fundamentally different digital transformation is a significant from an IT strategy, 40 per cent view them as Over half of UK board level executives opportunity for UK businesses in the next the same. (56%) agree that most organisations need three to five years, almost a quarter (24%) a digital strategy for the whole business. don’t know why organisations are placing a While the C-suite is widely divided on the In fact, when asked about the biggest op- greater emphasis on the technology. impact of digital transformation, many view portunities for UK businesses over the next it as a huge opportunity. This perspective is 3-5 years, almost one third of respondents Similarly, while 58 per cent think digital is only supported by evidence of businesses (32%) selected digital transformation – useful for some key business functions but failing to keep up with digital innovation only preceded by increased technology not imperative to all areas of the organisa- and consequently falling by the wayside. skills (33%) and global markets (40%). In tion, another 56 per cent agreed that most Simply consider the likes of Woolworths, line with this trend, 40 per cent viewed a businesses need a digital strategy for the Blockbuster and HMV – by seemingly over- lack of skills in the UK as the biggest threat whole business. This split demonstrates a looking the importance of implementing to businesses over the next lack of understanding around the way in digital technologies, these companies and 3-5 years. which digital is changing, and will continue many more quickly lost their competitive to change, almost every function – wheth- edge. er face-to-face, back office or indirect services with little direct technology use. Figure 4 Which of the following, if any, do you UK businesses in the next three to five think will be the biggest opportunity for years? Total Large Companies Medium Companies 50% 40% 41% 40% 38% 35% 34% 33% 32% 32% 30% 31% 30% 30% 29% 28% 27% 27% 27% 24% 24% 24% 22% 22% 20% 18% 15% 15% 10% 11% 9% 8% 2% 1% 1% 0% Global Increased Digital Other techno- Brexit Cloud More Millenials Other Don´t know markets technology transforma- logies – e.g. computing diverse bringing skills tion IoT, big data, workfaces new skills social media, block chain Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 7
The benefits of digital transformation are To successfully adapt working practices to machine learning to improve their perfor- clearly visible for many business leaders, yet incorporate digital methods and attain these mance. In fact, digital can be a key staff almost half (44%) believe a modern IT strat- benefits, each business will need to be led recruitment and retention tool. Employees egy should be sufficient and make a separate by a united board. As Didier Bonnet, senior increasingly want to utilise the benefits of digital strategy unnecessary. With digital vice-president and head of global practices digital to help them do their job better – transformation initiatives across the UK for Capgemini Consulting stated: “The only and to be part of a modern business looking largely led by the board or business directors, wrong move when it comes to Digital Trans- to the future. this division is concerning. It reveals a lack of formation is not to make any move at all.” understanding around the difference between An effective digital transformation pro- ‘digital’ and ‘IT’. Outstanding technology can, The sooner business leaders can agree on dig- gramme can ensure the right processes are for example, hold back digital transformation ital transformation, the more likely businesses adapted. With additional encouragement from by masking out-of-date working practices are to successfully implement the programme business leaders, staff can engage with these and a resistance to changing business models. across an organisation. Part of this agreement processes to transform not only their own While exceptional IT can prop up a business will be pinpointing exactly what digital trans- work experience but also the experience for model that is becoming increasingly uncom- formation means in the context of a business’ customers engaging with the organisation. petitive, a truly digital strategy can propel the operating models. By defining the term, Undertaking this digital journey for the entire business forward and drive market share. organisations can avoid falling into the trap of organisation requires consultation, engage- simply using this latest buzzword to cover up ment and increased communications. In this With technology innovation booming and poor digital planning and understanding. respect, digital transformation often results the prospect of harnessing an increasingly in the creation of an entirely new working digitally-skilled workforce, there should be no Complete support from leaders is necessary culture. confusion when it comes to digital trans- if an organisation is to digitise business formation. From cost savings and improved processes, ensuring employees feel compe- productivity to enhanced customer service tent using digital tools and - most impor- and better business analytics, implementing tantly – encouraging staff to adapt to new digital services can transform organisations digitised ways of working. and ensure they are better placed to demon- strate business agility and confidently deal A recent study from Oracle revealed that with a shifting market. just 44 per cent of employees claim their company uses the latest technology to The benefits of digital are hugely varied: enable them to perform effectively in there is no “one size fits all” when it comes their role2. While it is not simply just about to digital. However, businesses would be employing the latest tech trends, there is a well advised to consider each benefit, its clear willingness from employees to engage relevance to their plans and sector and – with resources such as digital perfor- finally – how digital could be harnessed to mance-management tools or analytics and exploit it. 2 Global Engagement Study, Oracle, 4th October 2016 While exceptional IT can prop up a business model that is becoming increasingly uncompetitive, a truly digital strategy can propel the business forward and drive market share. Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 8
Let our advance worrying become advance thinking and planning – Sir Winston Churchill The digital drive continues, but what does As one example, of those companies that While every project must reach a point in the future hold? have appointed a dedicated Head of Digital which ‘the new way of working’ becomes (or equivalent), nearly one in five (16%) business as usual, to suggest that digital For the vast majority of enterprises seeking saw the role becoming obsolete in the next transformation has a definite end-point to innovate, digital transformation is a key three years, which is even more stagger- could be short-sighted. For example, Ama- focus for decision-makers. Investing to ing when you consider that 22 per cent zon set the pace with it began stock-piling future-proof the business not only results of respondents were the head of digital books to sell online, yet its constant com- in a better experience for customers, but themselves. In reality, however, the length mitment to innovation saw it move to pro- it can also boost career development for of the role will typically be determined by ducing the Kindle, online content streaming employees, especially those who feel ‘set the pace of digital change in each organi- and even same-day grocery deliveries – free’ by new tools and support. sation, and these timescales reflect the fact among a plethora of other services. that these companies are likely at different As our research has already identified, stages on their digital pathway. We’re not suggesting that all business lead- many businesses are seeking to (or are al- ers are adopting a short-sighted approach ready adopting) digital technology into their Although these findings do suggest some to digital, however. In fact, a further quarter business strategy. However, key to making firms believe digital transformation is (28%) of businesses feel the Head of Digital a success of such a large investment is simply a project, with a start and a clear role will be necessary at their organisa- making smart digital choices, which are point of completion. However, as we have tion for at least the next 10 years. But the designed to continue to set the company up certainly seen in the last decade at least, varying responses suggest uncertainty for success in future. technology – and the way people use it – and debate over the long-term influence of is constantly evolving. digital technology, especially at the senior echelons of enterprises. Figure 5 How long do you think ‘Head of Digital’ or ‘Chief Digital Officer’ will be a necessary job role in your organisation? Over 10 years 28% 22% 30% 5.1 – 10 years 17% 16% 17% 3.1 – 5 years 24% 26% 24% 1 – 3 years 14% 12% up to a year 1% 15% 2% Large Companies Medium Companies Base: 155 who have 3% Base: 69 who have Head of Digital 23% Head of Digital Don´t know 12% 15% Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 9
While every project must The Brexit aftermath reach a point in which With the UK set to leave the European Union, whatever terms it agrees on over the next few years, digital transformation is an opportunity ‘the new way of working’ for British businesses to compete on a global scale. However, perhaps understandably, after a recession in the UK economy (50%), Brexit becomes business as (45%) was seen by leaders as the biggest threat to their businesses over the next 3-5 usual, to suggest that years. Comparatively, only 28 per cent of leaders digital transformation saw Brexit as one of the biggest opportunities for UK businesses in the same time period, while two in five (40%) saw global markets has a definite end-point as a key opportunity, an area that we’ve already identified can be supported by digital could be short-sighted. technology. To reach global markets is a challenge that requires ambition, dedication and invest- ment – and many leaders have recognised the role digital technology could play to achieve such goals. Over half (53%) of the C-suite expect spending on technology to increase in future, with one in five (19%) forecasting increases of over £1 million annually. Comparatively, just five per cent expect their business spending on technol- ogy to decrease in future. The challenges associated with an uncer- tain marketplace aren’t anticipated to go away anytime soon, so businesses must have a razor-sharp focus on future plan- ning – and digital transformation should form at least a part of these conversations. The threat posed from agile competition – willing to be bold and take risks – is real. How leaders stand up to this challenge could define the future success of their business. Figure 6 How do you predict your organisation’s technology spend will change in the future? 53% 30% 5% 12% Increase Stay the same Decrease DK Citrix.com | White Paper | Digital or Die – A Citrix manifesto for British businesses 10
Conclusion and recommendations 1. Incorporate secure digital methods and boost digital literacy across the company. This reluctance typically stems from (and is practices across the organisation Too often, flagship programmes are rolled not exclusive to) more immediate priorities, out without the right level of engagement previous IT track records and possible missed In past years, executives might have been with employees in the development phases – promises, legacy IT holding back change, a excused for assuming that digital technology which can lead missed opportunities and even lack of skills and even the fear of damaged was only required for the customer-facing abandoned projects which can hit the bottom reputations should a project fail. aspects of the business. However, today – line hard. for most organisations – this is a narrow Yet, many leaders acknowledge that digital viewpoint that could result in significant By taking a proactive stance, investing in technology is set to impact our lives tomor- challenges and business threats in the very thorough training programmes, mentoring, row in more ways than many can imagine. near future. coaching and support networks upon tech im- From driverless cars to virtual reality and plantation, organisations will boost employee even connected kettles; consumers, workers The most successful businesses of tomorrow engagement and encourage workers to think and businesses will expect first class digital will be equipped not only by having developed about how technology could transform their service delivery everywhere they go. Today, back-office solutions that simplify tasks for service area and roles in the future. consumers don’t need to leave the house to workers but they will talk to each other, se- rent a film, so why would they expect to do curely capture important data and even learn Working in partnership with the chief digital so in order to speak privately with their bank from it in real-time. officer, CIOs can then enable the faster and manager or view a property? more effective adoption of more intuitive, re- It is the combination of both streamlined silient, flexible and secure technology across It’s fair to say our relationship with tech- processes – for customers and employees, the organisation, while also capturing new nology is relentlessly evolving. But within as well as the supply chain and partners – ideas and innovations at board level. remains a constant theme: we’re continually all armed with data-led insights that sep- seeking faster and more seamless ways to arates the growing businesses from those 3. Overhaul a culture of division and unite access content and services. It is therefore that may stagnate. the boardroom behind digital transforma- those companies that are set up to develop tion initiatives bold strategies and place an emphasis on 2. Encourage engagement by giving long-term innovation that are most likely employees a voice on digital Our research has indicated that the board- to succeed in this era. Only by uniting the room is still undecided on the long-term po- boardroom - and anticipating the future op- It is, of course, little use in investing in sition and benefits of digital technology, and portunities, as well as threats - can we unlock advanced digital tools if employees aren’t there appears to be some hesitancy around such potential. utlising them to their full potential. Business wanting to invest in this ‘movement’ as it may leaders should therefore consult with individ- not be necessary in just a few years. uals at all levels of the organisation in order to Locations Corporate Headquarters | 851 Cypress Creek Road Fort Lauderdale, FL 33309 United States Silicon Valley | 4988 Great America Parkway Santa Clara, CA 95054 United States About Citrix Citrix (NASDAQ:CTXS) aims to power a world where people, organizations and things are securely connected and accessible to make the extraordinary possible. Its technology makes the world’s apps and data secure and easy to access, empowering people to work anywhere and at any time. Citrix provides a complete and integrated portfolio of Workspace-as-a-Service, ap- plication delivery, virtualization, mobility, network delivery and file sharing solutions that enables IT to ensure critical systems are securely available to users via the cloud or on-premise and across any device or platform. With annual revenue in 2015 of $3.28 billion, Citrix solutions are in use by more than 400,000 organizations and over 100 million users globally. Learn more at www.citrix.com. Copyright© 2016 Inc.All rights reserved. Citrix, XenDesktop, XenApp and NetScaler Gateway are trademarks or registered trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the United States Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners. 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