Putting

digital strategies in action ITD Research #9 : Oct 7, 2011

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Introduction
Designing a digital strategy is not a straightforward task. It is also an area that varies widely from one company to the next, often making it hard to know where to start. In this report we sought to focus on the online interface between you and your customers. If you are, for example, a retailer, that might obviously be a website, but there are many other ways of interacting with your customers. In that case, a digital strategy would not just about online retail as all customers need to interact with you somehow be it to provide feedback about a product or service or even ask for help when things go wrong. It could be that you are involved in specifying web ecommerce, usability, social media, mobile tools, web design, information security, code design and development, or the integration to your internal systems. All these areas blend together in different ways, which ends up creating a great variety of digital strategies. The corporate website is, nowadays, an essential tool for every organization, but the way these other factors are integrated into your customer offering can make the different between a very poor, or great, service. With this in mind, this week we asked our research group to focus on their own digital strategy experiences.

The corporate website is, nowadays, an essential tool for every organization

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Participant Feedback
To explore the issue of designing a digital strategy in this weeks research survey we asked four questions three of which were multiple choice and one designed to promote an open discussion. We received answers from 21 executives from 18 industry sectors: Logistics, media, chemicals, retail, food and beverages, utilities, health, consumer services, shipbuilding, financial services, broadcasting, paper and forest products, consumer goods, education, insurance, food production, automotive and manufacturing. Question 1: Does the information that you present on the web make a direct contribution to the business bottomline?

Partially

28.6%

No

23.8%

Yes

47.6%

10

This is an interesting blend of answers, showing some disparity of opinions amongst the IT leaders in this collaborative cycle. It cannot be denied that a good half (47.6%) of them firmly believe that the information they publish on the web is directly linked to the bottom line of the company. However, the total of those who said it is only partially, or not linked at all, is 52.4% showing a fairly even split between IT leaders that feel the website information is critical and those who feel there is a weaker link between information presented online and profit.

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Question 2: With hackers targeting company web sites and disasters such as Sony losing all their customer data, security is a major issue for the CIO. Has your focus on web security increased in the past 3 years?

Not an area of focus

9.5%

No

0%

Yes

90.5%

10

12

14

16

18

20

In English you can use the expression better safe than sorry to imply that it is better to take the safe, rather than risky option. This expression is now commonly changed to better safe than Sony after Sony lost millions of customer files and had not even taken the trouble to encrypt the data. It seems that our IT leaders in Brazil are very aware of the increased security risk, with 90.5% saying that their focus on web security has dramatically increased in the last three years. Nobody replied in the opposite it was just the 9.5% of respondents saying that they are not really involved in security that prevented a 100% response.

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Question 3: Has the emergence of social technologies over the past five years created greater complexity in your digital strategy?

No focus on social

19%

No

0%

Yes

81%

10

12

14

16

18

As in the last question, not a single IT leader disagreed with the aim of the question to determine if social media has increased the complexity of their digital strategy. A full 81% of our IT leaders said that the onset of social networking and the need for interactivity through social media has made their strategy more complex. Only 19% did not agree, for the reason that they have no real focus on the changes brought on by social media. Question 4: Please outline your greatest challenge in implementing a digital strategy in your current role The most relevant responses received from our group of IT leaders are highlight below by industry vertical. Consumer goods Explaining risk around digital is a key challenge The biggest challenges around digital strategies have been the difficulty of explaining the risk related to a lack of strategy, as well as breaking the cultural barriers. ITD #9 Putting Digital Strategies in Action IT Decisions 7 October 2011 - All Rights Reserved

Logistics For B2B organizations, it is much harder to demonstrate the value of digital initiatives The biggest challenge is to demonstrate to senior management the real value of digital initiatives. It is very difficult to show managers that use traditional methods for many years that we are in an era of "dematerialization" of business, where reputation and information are the most valuable assets that a company owns. Finally, the less B2C the company's business is, the more difficult it is to convince senior management about the importance of digital initiatives for maintaining and growing the business. Financial services Putting innovations together and keep the show on the road is the biggest difficulty For every technological innovation we tend to add layers of complexity in the areas of security, management, governance and so on. Remember when mobile phones were used only for talking? The biggest challenge is to put it all together and continue to provide IT services with high availability, integrity and confidentiality. Shipbuilding Information security is always a concern The issues around information security will always be challenging and will require extra care when implementing web projects. Manufacturing Alignment of cost and benefit is a core challenge The biggest challenge is to align expectations around savings, returns and costs. Then, based on that alignment, design plans for the implementation and the project. Insurance Technology complexity around digital is creating huge losses for organizations Given the various channels that have been created in recent years, the digital strategy has become one of the most important in comparison to the other corporate strategies. Currently, it is unthinkable to develop any campaign that does not include, or even is directed exclusively to the digital channel (including social networks, email marketing, and so on). Thus, the security issue is the most expressive and challenging point for IT. The specialized [technology] services and products do not "support" the complexity and vulnerability of processes and applications required for these campaigns. In my view, the technology is moving much faster than the processes and this has generated huge losses for organizations. As an example, I can mention cloud (computing/hosting), which isnt even available at a service level, or price, that is well structured. It has become increasingly important that IT managers decide, along with other corporate decision-makers, to opt or not for this or that technology, because the end must justify the means.

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Consumer Services Data must be clean in order to progress digital strategies The main challenge is related to data quality of the systems utilized by the company, which considerably increases the risk of problems when this information is presented to customers. It is essential that data cleansing occurs before moving forward with web services. In the same vein, another IT executive from the same industry sector added I believe the biggest challenge is not in structure, but the information. How do you disclose information without letting it become a weapon? Chemicals The dilemma is to strike a balance between corporate requirements and the new realities of the web The dilemma between centralization and decentralization is eternal. Centralizing guarantees the application of standards, consistency and safety. Decentralizing prioritizes agility and customer proximity. The challenge is to distribute content generation, as well as the animation and action of social networks on the web, while retaining a certain formality. It is not easy! As always, technology helps, but governance comes first. That is, the harder it is to define who does what, the responsibilities of each team member and who is involved. Then, you look at the tools. Broadcasting Finding the right partners is a crucial aspect of implementing digital strategies The main challenges are getting to know the habits of its customers, finding partners able to help you create the strategy, finding manpower or capable partners to execute the plan at an appropriate cost for the initiative. Education It is important for market leaders to be also leading in the web space Maintaining a strong presence in social networks is a challenge, given that competitors have also been increasingly active in that space. For leaders in specific markets, it is very important to be leading also in terms of web presence. Media Information security is the most critical aspect of digital initiatives Undoubtedly, the biggest challenge is security. From ensuring reliability and confidentiality of internal data to ensuring mobility to executives accessing corporate information remotely, along with all aspects of security in the corporate IT environment.

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Food Production IT needs to be flexible to deal with new needs brought by digital strategies Once safety aspects and usage policies were implemented, management approaches were brought in line with corporate communications, which demonstrated the need for IT to be able to address customization issues. Automotive Balancing global and local needs if the biggest difficulty Our challenge is to be able to create a sales digital tool for global use, without losing the local characteristics. Consumer Goods Knowing how to take full advantage of the web in a corporate way is the key challenge Knowing how best to exploit social networking in a corporate way - which is aimed at businesses - is a challenge. Web presence is fundamental and the basics are being done, but defining what is the best way to explore this new channel is something that is not yet well established.

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Conclusion & Executive Summary

The IT leaders that have taken part in this weeks collaborative cycle believe that planning a good digital strategy is essential for success. Out of the various channels supported by technology that have been created in recent years, the digital strategy has become the front office for many companies. One of our respondents summarized this new state of affairs, by saying that it is now unthinkable to contact customers in a way that does not include some form of digital connectivity, whether that is via social media or a more traditional mailing list. A few recurring themes came up frequently in the responses: Security. Many of our IT leaders mentioned security as one of the key issues they need to focus on as a component of their digital strategy mistakes gain the public domain faster than ever today, as Sony has found. Social media. These tools can no longer be avoided and this has moved far beyond just networking alone, embracing user-generated content and a complete dialogue between the organization and its customers. Cost justification. The budget is a perennial problem in these do more with less times, often causing compromise as the ideal security or strategy just cannot be achieved at a reasonable price, or for the kind of money the organization is ready to spend. With regard to the complexity of client relationships today, you just need to look at your phone. There was a time when a phone was designed for making phone calls, now the average smartphone is a web browser, GPS-enabled map, and messaging device before it is a phone. What is often scary for many IT executives is that all this additional complexity has been created over a remarkably short period of time. Social networking tools have only been with us for half a decade and this is what has really led to the widespread consumerization of IT. It is only recently that the need to formulate strategies around consumerization presented itself as a priority. The first IT Decisions Research Network report dealt with the issues around consumerization and found that 36% of CIOs in Brazil are in the process of creating a policy for the governance of consumer hardware and software use and 23% dont have one at all.

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On the issue of developing digital strategies for their organizations, the IT leaders taking part in this weeks study told us that: It is crucial to go global, but act local. An important issue raised is around how to ensure the same level of service and security all over the world, but also allowing for the flexibility needed by local teams. The consumerization of IT has led to many additional demands from consumers, while also creating the problem of making internal systems more complex. The question of centralized data and systems compared to a federated technical system with cloud-based tools it makes sense to go more central, but for years we have been delegating systems and power to individual users. Data quality is also a major problem: in many organizations it is hard to progress with further opening of the systems to consumers because the data on the inside is still so poor. Through all these issues, it remained clear that a coherent digital strategy is now essential, whether that means essential for making money, surviving, or just to protect your information. Value in organizations is now held in data, not in objects. A company does not greatly increase in value by owning more cars or offices, but owning high quality information on your customers can dramatically increase value. Old-school executives may not believe this yet, but paradigms are shifting. Look at the business- networking site LinkedIn for a good example. It is just data on people and their careers. Now the site is about to radically shake up the entire recruitment industry with nobody knowing what their head office looks like, but certainly having a great respect for the information they have. The main challenge for the modern CIO is to manage expectations of users related to how a digital strategy can be implemented. Great things can be achieved with free tools, but if a quick fix causes a loss of customer data then immense damage can be caused to the company. This is the digital challenge ahead for each and every CIO in our research group and beyond.

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IT Decisions Research
IT Decisions produces a report like this every Friday, based on what CIOs told us that same week. It is fast and relevant knowledge from your peers, it is only available to the CIOs in the research network, and it is free. What is the catch? You pay by participating. Every week, we will send you four simple questions that will take no more than five minutes to answer. The more participants, the better the quality of the research. So please do invite your colleagues to join! Do you want to direct the research and define the topics alongside our board of founder members? We also offer Platinum memberships that allow you to steer the process, as well as other benefits including comprehensive reports, face-to-face focus sessions and more. Get in touch for more details at contact@itdecs.com. The IT Decisions FutureSkills fund is a charitable, transparent fund focused on improving IT education and training in Brazil. If you recommend a Platinum member to the network, we will donate R$500 to the fund in your name and Platinum members will get to choose which organization gets the money at the end of the year. Please contact us for more details.

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About IT Decisions
IT Decisions is the premier source of insight into the technology and high-tech service industry in Brazil. The company creates English-language news and insight for a CIO audience with regular features and analysis that cannot be found elsewhere. We focus on decision-makers and influencers the buy-side. Reproducing the sales pitch or adverts of suppliers is not our thing; we focus on those buying the systems. IT Decisions was founded in 2011 by Mark Hillary and Angelica Mari, two of the most respected business and technology writers in Europe - with a collection of best-selling books and industry awards between them. The IT Decisions research network is an invitation-only group of CIOs in Brazil who work together to produce a new research report every week. Take a moment to connect with the IT Decisions management on LinkedIn and take a look at some of their books, other media, blogs, and publications:

Mark Hillary, Chief Executive Officer http://j.mp/markhillary Angelica Mari, Publishing Director http://j.mp/angelicamari

Photo Credits: Chaval Brasil http://www.flickr.com/photos/chavals/3045853162/ Doug Wheller http://www.flickr.com/photos/doug88888/4555453710/

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