1/12/2020 What is Digital Business?

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DEFINING DIGITAL: CONCEPTS

What is Digital Business?

Digital businesses use technology to create new value in business models, customer experiences and the
internal capabilities that support its core operations. The term includes both digital-only brands and
traditional players that are transforming their businesses with digital technologies.

Growth of the Digital Economy

Today, people are spending more money online, which has shi ed business emphasis to digital sources of revenue and digital
channels. The growth of the digital economy has made people more familiar with digital products and services, which has driven
companies to seek new competitive advantages in the digital space.

But digital business has evolved into more than selling online; according to Accenture, “Digital businesses create competitive
edges based on unique combinations of digital and physical resources. They do things that others cannot and in ways that build
comparative advantage.”

See Also: Liferay DXP Business Overview: Customer Experience

Common Elements of a Digital Business

There are several views on the exact de nition of digital business from industry experts. Gartner says that digital business is the
creation of new value chains and business opportunities that traditional businesses cannot offer. McKinsey emphasizes that
“digital should be seen less as a thing and more a way of doing things.”

Most digital businesses t one or both of these points; they focus on creating value at new frontiers for their core business, or they
use digital technology to drive growth, revenue and performance in ways that were impossible with traditional models.

It may be helpful for companies to review common elements of digital business and compare them against their own business
models. These are some of the trends that differentiate digital from traditional processes.

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Use existing technologies to cut costs, gather data and provide a better customer experience. Digital businesses focus onMenu
CONCEPTS
the
competitive advantages that technology gains them, whether that’s reducing overhead or providing new
Digital value to their
Business
customers.
Digital Transformation

Embrace the concept of digital transformation and the cultural shi s that requires. The implementation and management of
Digital Strategy
digital services can necessitate organizational restructuring, especially as new roles are created and IT is given greater input
Digital Customer Experience
into strategic decisions.
Digital Experience
Explore new business models that put customer experience at the center of digital strategy. People are o en willing to spend
Digital Workplace
more for an exceptional customer experience, making it a key differentiator in the digital economy. Business models that
align with this hyper focus on customer satisfaction will eventually center on digital services, since
Userdigital is increasingly the
Experience

experience that people prefer. PLATFORMS

Content Management System

Digital Experience Platform

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User Experience Platform

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“
Digital business is changing the way organizations use and think
about technology, moving technology from a supporting player to
a leading player in innovation, revenue and market growth.

Gartner Identifies Six Key Steps to Build a Successful Digital Business

Digital Business vs. E-Business

Digital business focuses more on

how technology allows companies
to create new value and
experiences that di erentiate
companies and give them a
competitive edge over their peers.

Digital business is distinct from e-business in that e-business typically leaves existing business models intact, merely using
technology to gain ef ciency or eliminate redundancies. Having customers ll out a credit card application form online reduces
the inef ciencies of a paper application process, but it doesn’t provide an experience that is new or different. Digital business
focuses more on how technology allows companies to create new value and experiences that differentiate companies and give
them a competitive edge over their peers.
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CONCEPTS Menu
Examples of Digital Business Digital Business

Uber capitalizes on the widespread adoption of smartphones and utilizes a business model that allowsDigital
them to maintain relatively
Transformation
low capital assets. A traditional taxi company must own and maintain vehicles, as well as contribute overhead to recruiting and
Digital Strategy
managing employees; an e-business version would allow customers to schedule a taxi online and perhaps view past trips, but the
Digital Customer Experience
essential experience would remain the same.
Digital Experience
Uber cements its place as a digital business because it is, at its core, a platform that connects people and drivers at a massive scale
Digital Workplace
through the internet, while creating an experience that improves on what was previously available to people.
User Experience
Net ix is a good example of a company that switched from e-business to digital business. Originally, Net ix used technology to
PLATFORMS
manage an inventory system and mail people DVDs, providing an experience that was more convenient, but ultimately fairly
similar to movie rental stores. Content Management System

Digital Experience Platform

However, once it gave customers the option to stream video on demand, it disrupted itself and transformed the way that people
Web Portal without the
view lm and television media. The ability to consume movies and TV shows at any time or place is impossible
widespread internet access that most consumers have today. User Experience Platform

Disney is one traditional business that has embraced digital technology in order to enhance experiences in its theme parks. The
DXP TRIAL

goal of its MagicBand, a wristband that uses RFID and radio to connect with sensors in the park, is to improve vefree
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that are part of every Park experience: going to an attraction, staying in a hotel, dining at a restaurant, taking a photo and sending
it to friends or family, and buying merchandise as a souvenir.

Guests receive the MagicBand a few weeks before the visit and can use it to enter the park, buy food or merchandise, reserve
attractions, and watch real time data on wait times. At the end of the day, guests have an experience that moves uidly between
digital and physical.

Where to Start
Many characteristics of digital business overlap with the concept of digital transformation, which uses a customer-centric focus to
guide the implementation of digital technologies in operational systems and business models. Digital business is the end goal, and
digital transformation is the process that companies undergo in order to get there.

Gartner has also identi ed six key steps to building a digital business. Because digital business requires deep organizational
change, the work that needs to be done can quickly become unwieldy. Clearly identifying priorities and milestones will help
businesses make the most of the advice and best practices available online today.

Compete as a Real Digital Business

Related Resources
Liferay DXP Business Overview: Customer Experience
What 'Digital' Really Means by McKinsey & Company
Loyalty in the Digital Age - 4 Strategies to Engage Existing Customers

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