Why it’s important to understand the digital business

For the last 50 years, enterprise software traditionally solved a business problem by providing a software stack. Human Resources needed a problem solved, there is a stack for that. Accounting, same thing, Marketing, got one too. And hopefully, there would be a nice database on the back-end to tie it all together. This model has driven significant efficiencies in business over the years. And, if you continue to develop, implement and manage your applications in this manner, you are on the wrong side of history. The future of enterprise software is the digital business.

You can probably sense the limitations of the current business model. While inefficiencies have been wrung out of the system, very little fundamental business innovation has occurred from leveraging these technology platforms. Sure, stacks have been moved to the cloud and apps are integrated with back-end systems. However, it is a rare occurrence when a new platform focuses on the organization’s business needs over technology capabilities.

In a recent article, long-time technologist and author Larry Loeb, puts the potential digital marketplace at about 11 percent of the Global market or slightly more than $11 trillion. Loeb’s market estimates are supported by and, in fact, based on studies and predictions from major global analyst firms that include Gartner, Forrester, McKinsey and Accenture.

So how is a digital business different from doing business digitally?

A successful digital business is supported by three primary pillars

First and foremost, a digital business is a fundamentally different mindset, manner and way of approaching how your organization delivers products or services to a marketplace. On a more granular level, a successful digital business is supported by three primary pillars — market insight, a collaborative leadership team and one or more technology platforms. From a technology perspective, a digital business will include one or more software platforms leveraging the best technology available for your business requirements.

This combination of market insight and technology will be architected, driven and guided from the beginning to address the needs uncovered by a cross-functional team of business leaders and technology engineers who maintain this holistic focus on building increased organizational value. And, once the digital business is built, just like any business, in order for it to succeed it will require consistent care and feeding.

Digital market insight is no different than any other form of market awareness or business understanding. It represents your organization’s ability to identify market challenges leading to opportunities based on your ability to meet these needs by employing technologies. Key to successful digital market insight is the ability to define business success metrics within a given opportunity. Your organization’s view of success provides milestones for both future digital business development and ensures business development efforts do not become over-focused on technology but remain dedicated to building your business.

In order to keep your digital business activities on track you should assemble a team capable of blending business strategy with an expertise in engineering technologies across all devices. These leaders will begin by articulating a clear and concise business vision to all business and engineering team members involved. This collaboration ensures that engineers are immersed in the business vision and developing the digital platform with a complete understanding of the purpose behind each technology decision.

The final pillar of success for your digital business is the platform or technologies that enable it to fulfill the business vision, goals and objectives you originally identified when deciding to expand or create a new digital business.

Digital businesses use technology as a tool for innovation not as an end goal

You may think so far we’ve somewhat played down the technology or platform component in the digital business development process. As counterintuitive as that may seem, the reason is simple. What separates digital businesses from platforms is the emphasis on the business, not the technology. Digital businesses use technology as a tool for innovation not as an end goal. The digital platform must drive real business value throughout the organization as one piece of the larger process.

The value of your digital business will ultimately be determined by how well your market insight, leadership team and platform development come together to realize and accomplish your initial business vision. Metrics for success will be tied closely to your digital business’ purpose, market and organizational needs.

There are the many intrinsic benefits for organizations that build successful digital businesses that include reduced overhead and time-to-market as well as increased productivity and improved customer service. However, the more important benefits derived from developing a digital business include the ability of your organization to rapidly develop and move into new markets; uncover and form partnerships; reach new customers and expand your brand with new and existing customers as an innovator, among many others.

Regardless of the type of business you are in or how global market predictions may eventually play out, building a successful digital business plan is no longer an option, it is an imperative for survival. Understanding what a digital business is and how it relates to your current operations is the first step to achieving success in the global digital marketplace.