Digital disruption, business models and workforce gaps
We are beginning to experience the ripple effects of digital disruption. Companies are changing the way they conduct business. Business models and human capital strategy are simultaneously being impacted. Ultimately, the ripples of digital disruption will be paradigm-shifting. Where we are today, however, has more than a few gaps.
Digital disruption radically impacts the way business will be conducted.
The 2015 IBM Institute for Business Value (IBM IBV) Report: Analytics: The upside of disruption takes a deep dive into how businesses and industries are reinventing themselves in the wake of digital disruption. There are three key factors impacting future data-driven business processes and organizational culture.
- The creation of a digitized business ecosystem, which IBM IBV terms accelerated digitization, is critical-to-success for organizational sustainability. This digital business ecosystem is fueled by a continuously expanding need for access to mission-critical information when creating and executing strategy.
- The changing structure and function of an organization’s data ecosystem, which IBM IBV terms radical technology changes, will continue to be catalyzed by the increased utilization of big data and analytics technologies, thus improving predictive interpretation of mission-critical information.
- A changing organizational cultural ecosystem, leveraging shared knowledge and analytics, will catalyze collaborative decision-making based on what is known, rather than what is speculative.
These three factors: 1) how data is collected and accessed, 2) how data is aggregated and analyzed, and 3) how data is interpreted and leveraged, impact the future of how we use information and how we work. Information will no longer be siloed in data kingdoms. Instead data becomes a tool leveraged and interpreted as it flows throughout an organization.
Digital disruption moves with tsunami speed and force. Companies struggle with strategy and execution.
Digital disruption is ubiquitous across all types of industries and all sizes of organizations. However, the rate and pace of this change is larger and quicker than the ability of organizations to transition and transform their business, IT and workforce models.
The (IoT), Cloud-based data and analytics services, streaming real-time data and big data platforms such as Hadoop and Spark, self-service analytics and cognitive computing are challenging organizations who have data-base driven analytics, legacy IT infrastructure, and yesterday’s standards of data management, processing and analysis.
The impact of digital disruption on business models and enterprise transformation creates a conundrum. Digital disruption involves more than moving IT infrastructure to the Cloud. Decision makers are uncertain about first steps and evaluating the total cost of the transition.
The majority of organizations creating, piloting and executing a digital disruption strategy still focus on low risk areas.
The majority of companies in the manufacturing sector implement digital strategies by focusing on stabilizing operational efficiency. These are traditional, low-risk areas. They are considered “less radically disruptive” on existing IT infrastructure, organizational culture and workforce skill sets. A Rockwell Industries study reported that while organizations and industries want to digitally disrupt themselves, they limit themselves to efficiency. Business insights still remain largely anecdotal.
The IBM IBV report found that there was an increase of 285% percent among organizations polled in the area of analytics utilization for risk and financial management. (p4) Stabilization of financial operational efficiency through predictive risk analytics is an important factor for security strategy. Data shared, and understood, across the organization increases the ability of business units to detect security anomalies.
There’s a gap between digitally disruptive pilot projects and process execution.
The true test of creating and implementing a digital disruption strategy happens when strategy moves out of operational efficiency into higher risk areas of the company. Business value is enhanced when data is shared and analytics and predictive insights are leveraged throughout customer-facing business units.
The IBM IBV report found that “having the ability to ingest data will not create value unless it is put into action to solve business challenges.” (p16) The largest number of respondents in their study got stuck when they moved out of theeducation phase (learning about digital disruption) into the exploration phase (feasibility studies) and hit the wall at the moment of digital disruption truth: beta testing/pilot projects. (p9)
Between 35 – 46% of the organizations polled in the IBM IBV study stated they lacked the workforce competencies (big data and analytics skills gap) to move from the pilot phase into the full production/implementation phase. (p10) These findings parallel what Gartner predicted about the same stuck-in-pilot-phase scenario. Sixty percent of big data projects will never make it beyond beta test.
There’s a gap in workforce skills to extract business value through predictive analytics. The Millennials are being dismissed or ignored.
So who is going to “crunch” the data, apply predictive analytics and collaborate and leverage business insights? While millennials are logical choices, in terms of sheer workforce numbers, very few of them want to become the CIO (Chief Information Officer) or work in IT, as IT currently “looks” to them. This scenario means that a large part of digital disruption of the workforce depends on how IT evolves to attract a digitally savvy millennial workforce.
Epicor Software Corporation reported that “while millennials are expected to account for 75% of the global workforce by 2025, business executives are not thinking too much about recruiting millennials.” 19% of respondents said they currently do not have the right mix of skilled or experienced staff to deal with digital disruption and 23% are having difficulties recruiting. However, only 39% of the 1,824 executives polled in the Epicor study stated that recruiting millennials was a major human capital strategy.
Digital disruption and transformation consists of people interacting with corporate culture, information, processes, systems and models. Until human capital strategy is incorporated into digital business model creation, organizations will be stuck spinning their wheels somewhere between learning, exploring and testing new ways of acquiring and interpreting data.