Businesses have digitized, but not transformed

The average lifespan of the traditional enterprise is plummeting rapidly, largely due to inability to adapt to today's fast changing technologies.
Written by Dion Hinchcliffe, Contributor

After nearly a half-century of digital technology advancement -- fueled by years of steady exponential gains from potent digital growth factors like Moore's Law and Gilder's Law -- businesses are still at the crossroads when it comes to applying technology to their business. Despite decades of largely automating existing processes instead of fundamentally rethinking what they do in digital terms, our organizations are now facing a horde of native digital 'gazelles' -- and now a growing bow wave of collaborative economy startups -- that are threatening not just disruption, but even potential elimination altogether.

In short, we may be ready to ask if rapid digital progress has finally led us to the proverbial 'extinction level event' for the traditional enterprise.

Incautious words some might say, but hard data from sober sources continues to show the average lifespan of the traditional enterprise is plummeting rapidly, largely due to inability to adapt to today's fast changing technologies. Will capturing sufficient digital relevance ward off obsolescence and build a new future for organizations willing to make the commitment? Certainly, some think so.

To explore this topic and the intersection of business and IT in general, I was at the vast CeBIT 2014 conference and expo in Hanover, Germany earlier this month to talk about this very subject. My industry colleague and good friend Sameer Patel, General Manager & SVP of SAP's Enterprise Social and Collaborative Software, was there to keynote at Social Business Arena, a confab within CeBIT to explore the ongoing changes social media is imposing on our businesses.

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SAP's Sameer Patel at Social Business Arena 2014

For his part, Sameer is the key force behind's SAP's take on social business, their leading-edge Jam platform, and so has been tracking these trends very closely. In his talk he brought his latest hypothesis to bear, namely the following key points about the genuine transformation of business to digital/social:

  • Balance between the major IT models works best. Sameer said that instead of looking just at improving systems of record, or process, or just at social, "we must ask ourselves, in a very objective way, to get my job done: How much social do I need, how much transaction do I need, how much data do I need?"
  • We've digitized but not genuinely transformed. We've not gone to the core of our businesses and really rethought them in modern digital terms. We must put the future of our organizations at higher priority.
  • Despite over four decades of IT investment, our enterprise information is still disorganized and siloed. "Our real brains are on the factory floor and in the customer service center. Yet 43% of companies still don't have complete information on suppliers", said Sameer.
  • We need repeatable processes that wrap around us like the modern Web does -- and which today's enterprise still very much does not. Sameet noted, "We must find and institutionalize repeatable patterns. We must find patterns that accelerate performance. Enterprise IT needs to wrap around us. The Web is designed around me, unlike our standard enterprise experiences."
  • When it comes to social business, function and process must be the focus, with social providing the context and boost to them. "We should holistically understanding the right balance between social, people process, and data. Function first, social second. Just the right dose of social that is required."

But the real issue of course is that we're still in the middle of the next major transition in business and tech, which is moving from the static data-focused world of the early information age, to a much more connected, engaged, and integrated model today, I'll call the networked era (see visual above.) Sameer's vision for collaboration and the future of the workforce has always been to bridge those two worlds, which I believe is the only real way that we'll start reconciling our organizations for a deeply digital and social future.

However, one unfortunate aspect of the power deeply latent in digital -- and especially networked -- technologies is that they confer a tremendous force multiplier compared to the tools that have come before them. This has had the effect of dramatically pushing the leaders and the laggards in business apart in recent years. This is bringing change highly unevenly to the business world, adding further turbulence to the marketplace.

As a result of all this, some organizations still look much like they did in the 1990s. On the other hand, you can also find forward-looking firms -- usually in highly competitive industries -- that look like something right out of the future, with advanced usage of enterprise social networks, customer communities, custom mobile apps, cloud computing platforms, and employee-led IT and bring-your-own-technology (BYOD, BYOA, BYOT.)

So, the conversation these days continues to revolve the inadequate way companies are modernizing for tech change; to rethink the workplace and update how they engage with the world. However, far too often the conversation also fails to capture how organizations can do this. While there are 1) some good models emerging for adapting traditional organizations to a more digital mindset, and 2) you can certainly ensure your IT portfolio captures leading-edge and progressive concepts such as Sameer is promulgating, the end result is that organizations still ultimately responsible for their own disruption, before the market does it to them. And that is a major obstacle indeed that only the most disciplined organizations will overcome.

Additional Reading:

SaaS as strategic enabler: Four CEOs hold forth

CMOs: Analytics, social media key to business strategy, but we're too swamped

Does technology improve employee engagement?

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