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Business and IT must align digital strategies for digital transformation

EIU report says most organizations have a digital strategies gap; Forrester report shows online communities can enhance purchasing experience if they stay close to customers.

Digital transformation is an imperative for many companies across all industries today, but there are big gaps...

in the ways they are planning and implementing digital strategies.

Companies lack coordination for digital transformation and very few have implemented or even defined their digital strategies, according to the new report, "Digitizing IT," from The Economist Intelligence Unit (EIU).

For the report, which was sponsored by SAP, EIU surveyed more than 800 senior executives at multinational organizations about the opportunities and challenges that their IT departments face in developing and executing digital strategies. The respondents were almost evenly divided among IT executives and line-of-business executives from sales, marketing, human resources and finance departments. This was because one of the goals of the report was to examine the digital transformation from the perspectives of both IT and business leaders, according to Rob Glickman, SAP vice president of marketing.

Results show that the IT and line of business are generally not aligned on digital strategies, Glickman said.

"It's one thing just to say companies aren't aligned, we know that most companies aren't aligned and it's very difficult for large organizations to get alignment, so that's nothing new," he said. "But what the research points to is that there's a connection between those organizations that do have alignment between business and IT and the success of those digital transformation initiatives, so that's the core learning from the survey."

The report identifies a few key issues in digital transformation efforts:

  • Digital transformation lacks strategic coordination, with barely more than one in five respondents (21%) saying they have defined and implemented organization-wide digital strategies. A further 21% say they have defined such a strategy but not implemented it yet.
  • Digital transformation implementation varies considerably between firms and even between departments. However, the survey indicates that organizations whose digital transformation efforts are directed by an organization-wide strategy are more effective, with 93% of respondents from companies that have implemented organization-wide digital strategies describing their digital initiatives as highly effective, compared with 63% of those that have not. Respondents from high tech (38%), retail (32%) and energy (28%) sectors are most inclined to say their efforts so far have been highly effective.

Digital transformation is similar to companies' efforts to move to the cloud, Glickman explained, where those who have the most mature cloud strategies are the ones with the most coordination between IT and business organizations. Companies can innovate in pockets -- such as marketing, sales or procurement organizations -- and achieve some gains, but they won't get the full benefit of digital transformation if business and IT strategies are not aligned.

CIOs must lead the way in driving the transformation and ensuring organizational continuity, Glickman said. IT leaders need to change their ways of thinking from the old model of "keeping the lights on" and look at the transformation through the business lens and customer lens.

"CIOs and IT need to understand it from procurement, from sales, from HR, and they need to be that enabler for the business strategy to actually happen as opposed to in the past being the manager of assets and resources," Glickman said. "This is a living, breathing thing that we're going to be talking about for years and it's the CIOs and the leaders in technology that actively do something about it that are the ones who will win."

Branded communities enhance consumer shopping experiences

Consumer shopping experiences are greatly improved by branded online communities, which can help consumers evaluate products, strengthen purchasing decisions and enhance brand loyalty post-purchase.

Current adoption rates of online communities is around 50%, but companies that use communities effectively can improve customer experiences and satisfaction, according to a new report from Forrester Research.

For the "Supporting the Online Customer Journey Through Communities" report, sponsored by SAP, Forrester Consulting surveyed 788 business professionals involved with online customer interaction, focusing on customer service, marketing and e-commerce. The survey was global, with respondents from North America, South America, Europe and Asia.

The report indicates that online communities can play a large role in supporting customers at all phases of their purchasing journey. If customer needs are met before, during and after purchasing, it can create a virtuous circle of customer loyalty.

Communities can be a real value to a company, but they have to be used effectively, according to Steve Hamrick, SAP vice president of product management for collaboration software. In 2015, SAP launched SAP Jam Communities, an outgrowth of its SAP Jam Collaboration platform, designed to help businesses blend together business process data with collaboration capabilities intended to enhance the customer experience. SAP Jam Communities allows businesses to create collaborative environments that can connect customers with peer reviews, recommendations, and Q&A's on commerce sites.

The report highlighted that communities are a way to bring customers together at various stages of the purchasing lifecycle but that the communities are not always incorporated at all levels where the customers may be, Hamrick said.

"If you are just in the early phase of deciding if this product is right, you may need to have access to experts and have the ability to ask questions; it's not something that can wait until after you've made the decision to purchase and find that it's the wrong thing," he said. "Now you have to return it, but if you had been presented with that community from the beginning and had it integrated seamlessly into your buying experience, then you could have asked the right questions from the beginning."

Communities can play an important role in three phases of online purchasing, according to the report:

  • For the pre-purchase phase, 69% of respondents depend on access to community content when evaluating a product. There are two primary ways that communities can help companies connect customers to the information they need when evaluating products: making common troubleshooting information available so customers can find answers to common questions; and by engaging with communities so they can get a better understanding of customer preferences and opinions, enabling more meaningful and targeted marketing messages.
  • For the purchasing phase, communities play a key part in providing content that ensures customer confidence and 70% of respondents that use communities say their customers have a high purchasing confidence, compared with 48% of companies that don't use communities. Also, 75% said that communities accelerated buying decisions.
  • For the post-purchase phase, 66% of respondents expect to increase purchase satisfaction by using communities to continue to learn about their products. Also, 86% of respondents said that buyers with higher purchase satisfaction levels are more likely to make further purchases. Further, satisfied customers are more willing to share their experiences and knowledge in the communities, providing user-generated content that helps future purchasers.

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