Digital Capabilities are defined as the key skills and capabilities a company requires to transform itself into a sustainable and successful business by considering digital technology as the enabling component.
Digital Capability is essentially a digital transformation framework designed to help companies innovate and plan digitally enabled business transformation. It helps companies analyze their current situation and identify new business cases, which are enabled by technology trends. Addressing both the technical and people side of transformation, this digital transformation framework enables transformation leaders to obtain clarity about what maturity level their organization has in terms of five digital capabilities, what maturity level they wish to achieve, and how they plan to do that. Digital use cases help them develop a clear picture of the processes to be optimized and the technologies that should be used, and a tailored plan to transform the organization into a digital enterprise can then be established and implemented. We have found it effective to focus on building five essential digital business capabilities digital engagement, digital workforce and organization, digital service optimization, digital ecosystem, and analytics-driven business insight.
Digital engagement
There is a rush of technology innovations that has transformed the way companies and business services functions engage with customers, suppliers, partners, and other stakeholders – and the field is still rapidly evolving. These technologies can optimize stakeholder experiences by digitizing and integrating interactions across channels and leveraging data.
Development of digital engagement capabilities should focus on knowing customers – external customers, as well as business leaders, other functional teams, employees, and third-party partners – across the journey, customizing interactions, enabling customers to access services or information in different ways i.e., web, phone, app, email, etc., ensuring consistent interaction across channels, and providing analytics and insight in real-time.
Examples of the digital engagement capabilities:
- Seamless multichannel engagement
- Customer persona mapping
- Customer data privacy and security
- Intelligent agent-assisted self-service
Digital ecological community
Traditional organization structures and value chains are evolving into networks of digitally connected resources, service providers, and consumers. The business-to-business networks, knowledge networks, and internet of things (IoT) are examples of emerging digital ecosystems. Within a knowledge network, companies may, for example, crowdsource innovation, collaborate with strategic suppliers to innovate or incorporate customer feedback into product development. An ecosystem-based on the IoT may enable entirely new business models, products, or service offerings.
Digital pathways that connect the business with suppliers, customers, and other partners enhance value through greater process efficiency and effectiveness, as well as a better user experience.
Examples of the digital ecosystem capabilities
- Third-party partnering programs and governance
- Operational and information integration for supply and demand networks
- Automated value network processes
- Collaboration and innovation fuelled by extended knowledge networks
Business insight & Analytics-driven
The pressure to deliver on enterprise strategic goals is driving the adoption of more sophisticated tools for analyzing rich datasets. Modernizing data management platforms, managing data as a strategic asset, and applying new analytics solutions will accelerate speed to value.
Examples of the analytics-driven business insight capabilities
- Data models and visualization strategies
- Data governance
- Security
- Performance measurement and analysis
Digital workforce and organization
Technology has changed the nature of work by automating routine tasks, digitizing workflows, connecting co-workers in virtual teams, and untethering and empowering knowledge workers with personal productivity tools. These capabilities use digital tools and platforms to maximize productivity, intellectual property creation, and the valuable contribution of both individual workers and the teams in which they work. Most of today’s digital capabilities enable workers through remote access to applications and self-service provisioning: knowledge management tools; workforce collaboration platforms such as Microsoft Teams, Zoom, and Slack; and other means of communication and engagement.
The next wave of digital transformation will have an even more profound impact on the workforce than traditional automation and, for many roles, will change the nature of work beyond recognition. This will be the result of a perfect storm: the entry of a digitally native generation into the workforce, the mass adoption of traditional technologies that eliminate most repetitive tasks, and the rapid maturation of cognitive technologies.
Examples of the digital workforce and organization capabilities
- Secure user-centric interfaces
- Mobile enablement
- Enterprise content management
- Online on-demand training
- Multichannel employee access
Digital service optimization
Historically, business process automation has never fully lived up to its promise due to the inherently dynamic nature of business processes and operating models, and the inability of business applications to adapt to changes at the speed at which business operates. Without a major overhaul of technology platforms and upgrade of the technology organization’s capabilities, this agility gap will only widen. Digital service capabilities center around the use of content and process digitization, business process management, automated workflows and approvals, robotic process, and cognitive automation to maximize the efficiency and effectiveness of business services, and the execution of underlying processes.
Examples of the digital service optimization capabilities
- Virtualization of all technology service delivery
- End-to-end process design and intelligent automation
- AI-based autonomous decision-making in technology process automation
- Automated systems management monitoring and controlling
The role of IT and capabilities execution
While the five digital business capabilities determine how effectively organizations will operate, enabling information technology (IT) and execution capabilities that facilitate transformation is just as important. And the digital IT capabilities – including technology innovation, modern digital architecture, agile service delivery, data super visioning and provisioning, and cybersecurity – are typically the responsibility of the technology organization. The effectiveness in developing and applying these capabilities will largely determine how quickly, efficiently, and effectively the business transitions to digital operations.
In addition, all business functions must hone adequate capabilities to execute their digital business strategies. This includes capabilities for identifying and prioritizing opportunities, implementing new solutions at speed, and optimizing digital functionality following deployment.
Some steps can help to mobilize quickly yet intelligently for digital transformation:
- Segment digital capabilities into the five categories described above.
- Determine the baseline maturity of these capabilities using an established maturity framework.
- Identify the key gaps and opportunities within your processes.
- Develop a heat map that prioritizes areas for digital innovation.
