What is a ‘Digital Strategy’?

After a steady stream of new IT buzzwords such as Virtualization, Big Data, BYOD, Analytics and Cloud many people probably didn’t pay much attention to one new term that has recently been added. ‘Digital’ is possibly the most significant thing to hit IT in many years. This blog provides a very brief overview on what is a very large and important topic.

More than 50% of business executives from companies with a turnover of more than $250M apparently state that they have a Digital Strategy in place. Interestingly, If you do a Google search on either Digital Strategy or Digital Transformation you will get back many different definitions and approaches so we need to bear in mind that we’re not yet all exactly on the same page and the stats need to be read with caution. That aside Digital is probably the one topic that you need to give some attention to as it will drive benefits for all organisations.

For many years it could be argued that IT has pretty much focused on the technology part of ‘Information Technology’. In sharp contrast a Digital Strategy is a comprehensive plan covering all of your online and overarching business objectives along with the activities to achieve these goals. An effective digital strategy will be based on thorough research into your competitive marketplace, audiences and current online offering, and will evolve based on your defined key performance indicators (KPI’s).

Digital is a whole new paradigm and requires a very different skillset to that traditionally found with your CIO and CTO. As noted earlier there are many ways to build a digital strategy and transformation plan but essentially they all broadly apply the following four steps:

Opportunities – Identify the opportunities and challenges where online assets can provide benefit
Goals – Conduct a gap analysis of both your and your client’s needs and goals where they closely align with the key business opportunities and challenges
Strategy – Build and agree a vision for how online assets could fulfill those needs, goals, opportunities and challenges
Plan – Prioritise a set of online initiatives to deliver on this vision.

Most organisations will need considerable support to drive a Digital strategy and transformation program and a number of techniques and analyses may be employed within the above stages as outlined below:

1. Opportunities

1.1. Interviews

Interviews, group interviews and workshops with a company’s senior management, marketing and sales, operations and service stakeholders with the objective of understanding the strategy, challenges and opportunities, products, organization, processes, supply chain and vendors, distributors, customers, and competitive landscape, as well as the potential role of their online assets.

1.2 Strengths, Weaknesses, Opportunities and Threats (SWOT)

Evaluations of a company’s main competitors and potential substitutes with the goal of understanding a company’s strengths and weaknesses relative to their competitors and potential substitutes.

1.3 Financial analysis

An analysis of a company’s financial data, which may include everything from public financial statements to private ERP data, with the goal of understanding the financial impact that any changes would have on the company.

2. Goals

2.1 Workshops

Interviews and workshops with a company’s customers with the purpose of understanding their behaviours, needs, goals and perceptions of the company along with that of the industry in the broadest context, and specifically online. In addition to standard marketing strategy methodologies and questions, customer interviews for Digital Strategy may includes usability testing, an analysis of how effective customers are at using the online assets developed by a company for their intended purposes.

2.2. Behaviour

An analysis of customer in their environment including field observations. This may include videoing a customer using their computers, specific computer applications or web sites.

2.3 Analytics

An analysis of the usage patterns with the goal of better understanding customer behavior as well as identifying strengths and weakness of the current online offerings. This may include understanding how many people are visiting a web site, what are the most popular pages, what are the most popular access paths etc.

2.4 Performance

Review of the effectiveness of existing digital technologies, constraints and client needs.

2.5 Sales

The company’s online assets are modelled E2E as a sales funnel, with a visit or impression representing a new lead, a certain page or action in the web site considered a conversion and specific pages in the web site representing specific stages of the sales funnel. The goal of the analysis is to provide insight into the overall conversion rate as well as the key weak points of the funnel including the stages in which the largest numbers of users drop out.

2.6 Relationship

An analysis of a company’s customer information stores with the goal of grouping customers into behaviour, demographics, value, product or marketing message affinity, etc. In digital strategy this also includes the online customer registration database, which companies use to provide access to their customer specific and protected areas.

2.7 Channel

An analysis of a customers behaviour that looks across all the different ways in which customers interact with a company’s products, services or information. The analysis looks at which channels a customer uses at which stage of the purchase process. It also looks at why each channel is used and evaluates the company’s strengths or weaknesses in that channel for that particular stage of the process.

2.8 Statistics

Surveys are often conducted online using web intercepts, e-mail lists, or 3rd party panels, although phone surveys or other offline means may sometimes be used when they are questions as to the online competency of a target population.

3. Vision

3.1 Business plan

A spreadsheet can be used to help quantify the investments and returns over time that will result from the execution of the online strategy. The Business plan also defines the KPI’s that will be used to measure and evaluate the success of the executed strategy.

3.2 Design

The technical architecture which will meet the needs of the business, vision and align to the business plan and roadmap. This is often conducted as a gap analysis where the current technical architecture is reviewed. A future technical architecture, which meets the needs of the online vision, is designed. The gaps between the current state and future state are identified, and a series of initiatives or projects to bridge those gaps are developed and sequenced.

3.3 Organisation

Similar to a technical assessment, organizational and process assessments look at the changes that need to be made to an organization and its processes in order to achieve the online vision. They may involve a series of business process re-engineering (BPR) projects focused on the areas of an organization most affected by the online initiatives.

3.4 Portfolio

A way of prioritising projects by comparing the cost of their implementation to their expected business benefits. This can be done by creating a comparison matrix with cost along one axis and projected benefit the other. Projects are plotted on the matrix in terms of their estimated costs and benefits and the priorities are determined according to which projects will provide the greatest benefit for the least amount of cost, often referred to as ‘Biggest bang for buck!’

3.5 Media

A plan detailing the allocation of media spending across online media usually as part of the customer acquisition or retention.

3.6 Proof of concept (POC)

Simple operational models to illustrate the key ideas that comprise a digital strategy. These are often created in order to better communicate a key concept or to build interest among stakeholders to develop a consensus, or to socialise the proposed digital strategy.

3.7 Governance

The organizational structure, roles, and process description to manage the initiatives in a digital strategy. The governance model describes who is responsible for what, how decisions are made, how issues are escalated, and how information on the performance of the projects is communicated.

4. Plan

Digital strategy is usually delivered through an iterative approach. This leverages a series of smaller ‘tests’, which are measured and reviewed and used to modify or optimize the digital strategy. An example of this approach is that a company might take some key pages on their site and test a number of versions of those pages with different marketing messages, design approaches, user experience optimizations, navigation optimisations, and even new features and functions. The company would then identify the page, which had the best feedback.

Conclusion

Although Digital can still mean many things to many people its is increasingly be used to refer to the strategy a company takes to create an integrated information strategy, where digital helps to drive deeper interactions with customers, more customized and personalized offerings, data driven decision making, and an organizational models and processes which are more agile and reactive to changes in the company’s environment.

With the constraints of this blog we can only scratch the surface with this topic but we will come back in subsequent entries to explain how Digital Strategy and Transformation are also affecting organizational roles and responsibilities.

If you would like more information on any of the areas covered in this blog or any other please contact us at Korolit.