The Secrets to Scaling Digital Leveraging the experience of digital front-runners
The Secrets to Scaling DigitalLeveraging the experienceof digital front-runners
Organizations are now making substantial
digital investments and exploring technology
strategies to differentiate themselves from
competitors. Overwhelming numbers of
enterprises claim that digital is having a
radical impact on their visioning and strategy.
Few companies would deny that they are
exploring or embracing digital. Indeed, a
“digital strategy” is now just another essential
aspect of any general business strategy.
Companies are taking the opportunity of
using advanced digital technologies to
be more radical with their operations and
business models to increase operational
efficiencies, protect against disruption, or use
disruption to their advantage. The ultimate
goal is to develop the capability to scale
digital innovations at speed across the entire
enterprise footprint, but that is a considerable
challenge.
One of the early hurdles is that there isn’t a
clear and accepted definition of “digital” in the
industry, nor within companies themselves—
and definitions range from the simplistic (not
helpful) to the incomprehensible (not useful).
So, if you’re talking about scaling, what
exactly are you scaling?
Scaling digital in complex business environments
Executive summary
2The Secrets to Scaling Digital
Digital is not just about one thing—a technology,
an architecture (e.g., SOA), or a methodology
(e.g., Agile). Nor is it only about different
mindsets and skill sets, new business models
or different ways to engage with consumers.
From Hitachi’s perspective, digital is all of these
things. It is ubiquitous technology—along with
the accompanying changes in processes and
behaviors—embedded in almost everything we
have or do, at both a corporate and personal
level. Digital is inherently focused on business
outcomes, innovation and business value, and
on requisite changes to IT systems, business
models, leadership and culture.
How can any digital initiative tick all those
boxes? In fact, many organizations struggle
to fully operationalize digital innovations or
realize value beyond limited-scale initiatives.
Companies can often believe they’re digitally
transforming in one way or another, when
actually they are just doing old things slightly
more efficiently. When actual changes or
improvements are measured, the results can
be disappointing. Difficulties in predicting and
scaling digital results have meant that some
companies stall in the early phases of ambition
and design, and struggle to transition to
implementation and scaling.
Digital is focused on business outcomes, innovation and value
Digital is embedded in everything we have and do, at both a corporate and personal level.
3The Secrets to Scaling Digital
Delays or hindrances to digital initiatives mean that many organizations have
yet to extend their digital achievements to a grander stage and at a larger scale.
Decision-makers are frequently uncertain about which digital, technology or
market bets to make for the future. This is often because, having made a choice,
an enterprise then needs to operate at a more dynamic rate of change than it is
used to—for example, more platform interoperability with a wider ecosystem or a
greater ability to meet the demands of tech-savvy customers or consumers.
Many organizations find that their technologies and applications don’t
deliver what’s needed, can’t provide the right insights quickly enough, or that
conflict with other systems. Additionally, people and organizational structures
may impede necessary change. Understandably, therefore, companies find it
difficult to break through the barrier to achieve substantial or transformational
value from their digital investments.
According to Frost & Sullivan, “In the case of industries, it is quite clear that
the digital topic has only matured in theory. There is a universal acceptance
that digital transformation is a strategic necessity to be future proof. But this is
only half the battle. The real challenge is to make the transition from strategic
acceptance to strategic implementation. Although almost 100% of companies
are perceiving a digital future, we find that only 60% of them have formal digital
teams working on a new digital strategy. And, more importantly, less than 10
percent are taking steps towards realization (or implementation).”¹
It is important to bear in mind that “scaling digital” is not simply about the
scalability of technology though that is, of course, part of it. More accurately, it’s
about embedding necessary cultural, business, operational and tooling changes;
adding any new capabilities; and developing new ways of engaging with new and
existing customers in new and existing markets.
Companies need to extend digital achievements at a larger scale
4The Secrets to Scaling Digital
60%10%
of companies have digital teams working on a new digital strategy, but just
are taking steps towards realization.²
Fundamentally, digital is an enterprise-wide change program. Although
the technology advances of the last few years offer some shortcuts and
certainly lower the barrier to success, a company has to have a crystal-clear
vision for how a digital initiative will serve the enduring needs of customers
while improving the performance of the entire organization. Start-ups
typically find this easier than larger organizations, often because they have a
sharp vision, clarity about their goals and little legacy to encumber them.
For digital transformation to succeed in the long term—and, therefore,
for scaling to work—adaptive qualities like flexibility, agility, diversity,
responsiveness and collaboration need to be part of the daily life of people,
culture, organization, leaders and teams. A recent Hitachi study on the
human and organizational dimensions of digital transformation identified
five keys to successful change: flexible and responsive leadership; agile
execution; a culture of curiosity; collaborative IT; and diverse teams.³
Digital is an enterprise-wide change program
5The Secrets to Scaling Digital
What does it mean to “scale” a digital initiative? It means moving beyond
one-off projects or a proof of concept (PoC) to fully operationalize digital
solutions and then embed digital mindsets and processes across the
organization so that the solutions (and their offspring) are sustainable
and growth-creating. Scaling is about the business change journey from
incubation to benefits realization, and PoCs are just one stage of that
journey.
Digital transformation can be understood as a continuum (see Figure 1).
At one end is operational effectiveness—which primarily focuses on doing
existing things better (e.g., increasing operational efficiency, employee
productivity or improving the customer experience). At the other end are
more transformational activities such as:
• Delivering entirely new, digitally enabled products and services.
• Creating new business models (or enhancing existing ones) in
innovative ways or creating different operating or service models
to deliver revenue uplift.
• Extending the customer relationship in new ways to generate
longer-term monetization potential.
Figure 1 Digital business ambitions⁵
©2018 Gartner, Inc.
Q: What are your organization’s digital initiative objectives?
Scaling digital: Beyond the proof of concept
6The Secrets to Scaling Digital
0%
20%
40%
60%
80%
58% 55% 49% 49%
66% Transformation85% Optimization
45%
Improve employee
productivity
Create better customer/
constituent or citizen
experience
Increase existing
revenue/ value
Deliver entirely new, digitally
enabled products and
services
Create new business models
that make money in new ways/ create
new operating or service models to
deliver value in new ways
51%Both
34% Optimization
Only
15% Transformation
Only
Base: All respondents, n = 372Q. Please answer the following questions pertaining to your orgaizatoin’s digitalbsuiness actions. My organization is focused on digital business in order to...Multiple Responses AllowedID: 363802
7The Secrets to Scaling Digital
Consider the transition of Amazon Web Services from satisfying Amazon’s
own IT needs to becoming a cloud infrastructure provider to others, providing
hardware, compute and services to become what is essentially the operating
system for about a third of the Internet. Ocado, in the UK, is another
example—a company that pivoted from a seller of groceries to a tech company
offering their warehouse technology as a service.
Or, take a common, hypothetical example of a manufacturer that has been
working for years within an existing business model (basically, manufacture and
sell products). One obvious digital enhancement to their products might be the
addition of sensors and communications, to unlock the data that could open
up new methods of commercialization, different charging models, different
customer relationships and partnerships, transformation of the services model,
increases in the efficiency of an asset, and so on.
Or they may look to enhance their processes with smart factory initiatives,
embracing digital to enable Industry 4.0, improving quality, and reducing
waste, improving throughput through better uptime and optimized scheduling.
Digital can help you change or enhance your business model
It’s important to conduct “proof of value” tests
Digital enhancements could improve the value of a company’s products. These types
of ideas can be tested by a proof of value. Then, with the right execution, driven by
visionary leaders and solid change management efforts, scaling the new business
model could make significant differences to not only product adoption but potentially
to customer retention customer retention and additional opportunities to generate
revenue. The process of assessing and proving the value of any transformation must
not be limited just to the area of technology, but also needs to validate operations,
customer and business model hypotheses before scaling is considered.
Another example could be a manufacturer of sensors designed to operate in harsh
underground environments where radio wave penetration is difficult. Such a company
could potentially scale the solution to adjacent markets with similar challenges, or
leverage partnerships and a broader ecosystem to expand their innovation and reach.
Looking at adjacent markets for scaling requires careful consideration to find the
instances where there are clear differentiators through technology, ecosystems or
service capability.
This kind of thinking about evolving business models is critical to the concept of
scaling digital. If successful, these models can be a significant opportunity for
market extension.
8The Secrets to Scaling Digital
9The Secrets to Scaling Digital
A recent Gartner survey (see Figure 2) found that many companies (38
percent) are still at the “desire or ambition” phase of digital transformation.
Another 45 percent have moved to the design and delivery phases. But
only 17 percent have scaled their digital initiatives—12 percent scaling plus
5 percent harvesting / refining.⁵
Challenges to scaling digital
Q: Which of these best describes the stage of your organization’s digital initiative?
Figure 2
Businesses are struggling to scale their digital aspirations
©2018 Gartner, Inc.
38%
40%
31%
27%
24%
44%
16%
17%
16%
13%
12%
9%
5%
Digital Initiative - Progress
Dig
ital
Init
iati
ve -
A
mb
itio
n
6%
-
38%Total
Transformation- Only
Optimization- Only
Base: All respondents, n = varies by segmentQ. Please answer the following questions pertaining to your orgaizatoin’s digitalbsuiness actions. My organization is focused on digital business in order to...Multiple Responses AllowedID: 363802
Desire/Ambition
BusinessOptimization
BusinessTransformation
Design Delivery Scale
Both
28% 17% 12% 5%
16%
11%
The inability to consistently scale digital is one of the most common
challenges facing enterprises today. Many organizations that are “doing
digital” by successfully experimenting with technology are not always able
to grapple with the broader impacts that make a transformational difference
to the business.
Some of the most challenging factors for scaling digital ambitions
center around organizational culture and skills, as well as leadership
transformation. Resistance to digital change happens at all levels of
organizations. Employees and middle managers are often heavily invested
in the status quo and are understandably protective of their current roles.
Leaders, too, may not be fully committed. Many are hesitant to change
something that is apparently working and yielding a reasonable return. Even
where there is an effective digital leader, many parts of the company need
to be inspired to help scale digital initiatives.
Ownership and participation of the workforce on the digital
journey happen through a process of communication, vision
and re-skilling through collaboration between digital leaders
and employees. That process might occur through involvement
in experience design for internal transformation projects, or by
building a common understanding of the customer as a means
to embed support for the transformation across all levels of the
organization.
One concern: The commitment of senior leadership to re-
skilling the workforce for digital is often uncertain. One report found that
fewer than half of survey respondents (43 percent) indicated that their
organization currently has up-skilling or re-skilling initiatives designed to
equip their workforces with the digital skills needed to support a digital
transformation program.⁶
Re-skilling is a key issue for many companies. Digitally experienced and
knowledgeable people are in high demand, costly to employ, and often
difficult to retain. In addition, many organizations find it difficult to source
key skills in certain geographies. Lastly, organizations with a federated
structure can struggle to establish whether these skills and resources should
be centralized or distributed. Each option has its own advantages and
disadvantages.
Organization, people and culture must be managed carefully
The commitment
of senior leadership
to re-skilling the
workforce is crucial.
10The Secrets to Scaling Digital
The authors of a working paper from the University of St. Gallen on navigating
business models list 55 different patterns of model innovation by which
a company could reinvent part of its business to scale a new business
approach—from auction to digitization to mass customization and beyond.⁹
There are too many types of scaling strategies to list all of them, particularly in the
area of business model innovation. Three areas we have focused on with success are:
Types of scaling: Examples
Enhancing products or operational systems and changing or
optimizing business models through data insights. This involves
creating actionable insights by adding a data insight layer to an
existing product set, or aggregating and better utilizing data already
collected that is not currently being properly leveraged. Examples
might be using real-time load levels on goods-collection vehicles to
prioritize and re-route, providing better service; or using utilization
data of plant hire machinery to offer a new model for asset utilization
and commercialization. These approaches enable the transition from
delivering a product to delivering an outcome.
Moving from product to service relationships with customers. For
example, for the UK Intercity Express Programme, Hitachi Rail offers
a “trains-as-a-service” model that converts the capital cost of trains
into an operational expense. This also allows for new charging models
such as services by asset class. An example is moving products from
purchase or license, to price per asset—e.g., telemetry and preventive
maintenance charged per truck, or providing machine delivery as a
service based on their output.
Leveraging ecosystems. This means embedding products into an
ecosystem or other companies’ solutions. For example, Hitachi has
added real-time medical location sensors from CenTrak (a medical
sensor provider) into its Healthcare Command Centre—a hospital
solution designed to reduce time to serve through clinical pathways,
and also improve patient care.
11The Secrets to Scaling Digital
Being successful at scaling digital depends
on more than having the right technology.
12The Secrets to Scaling Digital
Who’s successful at scaling digital?Let’s look at some examples of companies successfully responding to the
challenge of scaling digital.
Smiths Detection’s advanced threat analysis
solutions use X-ray inspection systems and
sensors to help detect security threats for
customers in the company’s three security
operations markets—Ports & Borders; Aviation;
and Urban Security. Smiths faced the challenge
of low-cost competitors moving into their
global markets at a much lower price point.
As the dominant player in threat detection,
Smiths was concerned about this increased
competitive intensity within their core markets.
However, the company’s long heritage in the
global security operations industry put them in
a position where they could continue to drive
innovative change into that market.
Smiths established a digital ecosystem of
themselves, Hitachi and Microsoft. Together,
based on the company’s vision, the companies
built a digital security operations platform with
a heavy play of cognitive, artificial-intelligence-
based technology. The platform provided the
capabilities to design a market-leading digital
solution, called “CORSYS,” which combines
aspects of both the physical and digital worlds.
CORSYS supports security operations
authorities who target containers, parcels,
passengers or post/mail to prioritize threats
so they can focus their valuable resources
in the right places—on targets that are more
likely to be harboring anomalies of interest.
Smiths can take aggregated data from a
variety of sources, fuse it using advanced
algorithmic processing, and predict which
targets to inspect.
When the AI capability is applied to a given
target, the result is an anonymized risk
assessment score that defines the next
actions for each target inspected based on a
variety of algorithms. As a result, inspection
resources and assets are better utilized, and
unnecessary inspections are less frequent.
The question for Smiths then became,
“How can we scale and blend those analytic
capabilities into the digital core of our
organization, rather than treating it like
building a separate train on a different
track?” Smiths Detection and Hitachi, along
13The Secrets to Scaling Digital
Halma is a global group of more than 40
technology companies whose strategy is to
acquire and grow businesses in global niche
markets in the company’s chosen areas of
safety, health and the environment. Part of
their new growth strategy is focused on scaling
digital opportunities for their companies that
take advantage of a range of new technologies.
The company’s Chief Innovation & Data Officer,
Inken Braunschmidt, was tasked with unlocking
each company’s potential to exponentially
scale digital solutions. As Dr. Braunschmidt
explained, “Many of Halma’s companies were
already on the digital playing field, but they
needed clearer direction about where and how
to play. I wanted to understand how best to
develop the right digital strategic framework,
support and capabilities that would sustain
them long-term and then embed these in every
company.”
The goal was to define a process that could be
used across the group—one that could make
the assessment effective on every level, ranging
from leadership, capability, assets, structure,
people and technology. This would enable
them to continue to grow in existing markets
while also seeking out new ways to exploit
their technologies in-market as well as in
adjacent markets. The key question, however,
was: How could they move up the stack and
transform their business through digital?
Halma and one of its operating companies,
CenTrak, worked with Hitachi to identify 10
potential models for scaling digital. They used
this framework to prioritize investments for
the next phase of their evolution by defining
how to more effectively use digital / IoT to
drive efficiency and maximize resources,
identify new customers and create a strategic
business roadmap. This built on CenTrak’s
existing technical superiority of medical
sensors that provide real-time location
services, and extended their thinking on
markets, partnerships, ecosystems and the
value-stack.
with Microsoft, have worked together to deliver
this solution as a cloud platform, working with
a variety of different stakeholders as well as
security operations authorities and industry
bodies—in the latter case, helping to pioneer
new, open industry standards.
14The Secrets to Scaling Digital
15The Secrets to Scaling Digital
Digital leadership and business change management. Leadership is critical to
driving digital transformation and scaling. Each executive in the boardroom—
and leadership more broadly—needs to energetically support the organization’s
most promising digital initiatives. Effective support requires governance
structures, new business processes, potentially different financial management
and measures, and methods to validate and scale. In turn, keeping the scaling
process together for the benefit of the business, employees, customers and
society at large demands a control framework that takes ownership of the
transformation process and brings fluid innovation back into core IT systems
and processes.
Focus on the customer/end-user. “Digital” provides a means to address internal
or external customer needs through a variety of interfaces, experiences and
back-end optimizations. Success in digital transformation stems from building
an understanding of customer desires and then constantly reviewing, revising
and validating that understanding as the digital initiative evolves. Too many
digital projects have a great initial understanding of their customers’ needs but
slip away from success as they lose sight of the end user or fail to understand
that, as their project evolves, the needs of the customer can also evolve.
Constant validation of the core customer hypotheses that underpin the project
is key to bringing the customer with you on your journey to scale.
Creating a foundation for scaling digitalThough there are many elements of success at scaling digital, the
following five principles provide a strong foundation:
1
2
4
An Adaptive Business Engine. The ability to drive new levels of adaptivity and
innovation while renovating core approaches requires the structured, deliberate
approach to transformation and scaling that we call an “Adaptive Business
Engine.” As we introduced in our Hitachi study, “Engineering the New Reality,”⁸
an Adaptive Business Engine is a model for bringing relevant digital ideas into
the center of the business and ensuring they can be qualified and measured on
their potential benefit to the organization.
An Adaptive Business Engine is designed to empower organizations to find, test
and prioritize the most promising investments that will allow the enterprise to
continuously raise its game, while also enabling the control, implementation
and scaling of successful initiatives. With this approach, companies can
select the concepts to trial, continuously measure progress and outcomes,
determine whether further work should continue or stop, and loop learnings
and experiences back to the engine itself. It also includes a central core which
drives the proven innovation deep into the heart of the business—whether
based on customer, employee, process or technology. At Hitachi we have built
on the idea of a strong central core by creating Digital Centers of Excellence
which enable flexible and elastic teams to scale digital initiatives.
A strong digital core. For many established organizations, legacy back-end
technology can become a major hindrance to scaling digital, and can be a
significant stumbling block to embedding the type of corporate agility needed
to respond to customer and market demands. This systems environment needs
to evolve into a strong-core (typically) cloud, service-oriented architecture
that can help the business become more agile and ensure that digital channels
are fully connected with back-end systems. Elements of the digital core
include:
• Digital governance: At a corporate level, companies need a governance
and funding structure that accepts the value of rapid piloting as well as
trial and error in creating innovative business models and solutions.
• Advanced analytics: Digital enterprises capture and derive insights from
ever-increasing volumes of unstructured and real-time data.
• Microservices architectures: By structuring applications as a collection
of loosely coupled services, microservices enable continuous delivery
and deployment.
• Public APIs: Building simple yet powerful public APIs means an
organization can leverage third-party innovation, as well as provide a
more direct way for customers and partners to interact.
• DevOps: A DevOps culture enables rapid development/ test/ production
cycles.
3
16The Secrets to Scaling Digital
5
Projects selected from the prioritized list can then be rapidly pursued by specifically nominated
teams from business units, IT and partners. This prioritization helps ensure business and
technology test projects are considered and tested in light of how they might ultimately be
embedded across the organization by the people who understand the projects the best.
(See “Value Mapping.”)
The capability to prove value and prioritize. Many successful scalers construct
a wider innovation steering group to rank all concepts and strategies,
maintaining a prioritized list enabling them to select the most exciting and
relevant projects to be tested. Projects will require varying levels of effort,
and developing an accurate proof of value is critical. Establishing how the
innovation is done, and how that innovation gets embedded into the wider firm
(in advance), is critically important to be able to scale digital aspirations.
Proving value through PoCs prior to scaling is key—and many organizations
now have in place innovation funds or teams. Taking an “experiment-led”
approach to validating the underlying hypotheses around operations, customer,
business model and technology for the specific project is vital to proving or
disproving key value criteria. These experiments can range from desk-based
research, “smoke testing” (build verification testing), and customer co-creation
sessions, to technical feature development as a means to test the value-driving
hypotheses associated with the concept as early as possible. This approach
enables the direction of the initiative to be adjusted early and often as a clearer
understanding of the customer, marketplace and technology challenges is
developed. Fundamentally, there may also be learnings from these experiments
that disprove initial value hypotheses and force the project to halt early, saving
unnecessary spend.
17The Secrets to Scaling Digital
A number of excellent tools and approaches are now available for establishing the potential
of scaling digital. Value mapping is a good example of a method to provide rapid clarity on
where initiatives can make the most impact, and the potential value that could be delivered if
successfully scaled. It looks across the spectrum of how the business addresses trends and needs
in the market and the value those can create for customers and stakeholders.
Focusing on outcomes when scaling digital
Value mapping:
Trends
Impacts, pains and imperatives
Opportunities
Enabling projects
Measures of success
18The Secrets to Scaling Digital
19The Secrets to Scaling Digital
External and internal forces, business unit or corporate strategic themes,
customer needs and market trends.
Workshops are conducted so decision-makers can agree on what’s important
and to create the links. These decisions will influence the prioritization and
alignment of ideas and ensure companies address market/ client needs.
Trends
Impacts to current and future business opportunities, and the market
imperatives that need to be addressed.
Scored impacts, which give weighting to downstream opportunities and
projects and identify pains of stakeholders.
Impacts, pains and imperatives
Investment opportunities that can address trends and take advantage of
market gaps, better address unmet pains/ needs, or improve performance.
Investment objectives weighted to highest impact.
Formation of hypotheses and validation.
Opportunities
Projects to implement the new or changed capabilities which deliver the
opportunities that meet the customer pains/needs in line with the trends, in
order to realize the measures of success.
Enabling projects
The expected business improvement that will be returned to the enterprise and
its customers/ stakeholders.
Measures of success
The early stages of identifying and evolving digital initiatives must be
tightly and effectively managed. Companies must be rigorous about triage
and selection of PoCs based on likely value, weighed against the difficulty
and cost. As noted during the discussion of Hitachi’s Adaptive Business
Engine, it’s important to take the learnings from PoCs—the successful, the
unsuccessful, and those that were changed or refined—to educate leaders
on the triage and selection process.
In addition, all PoCs must have sponsors in the business who own the
targeted benefits of the digital initiative from day one. Sponsors are all the
better if they actively free up resources to support the design and shaping
of the proof of concept.
A guiding principle about digital experimentation is that, if an initiative is
not ultimately scalable, the proof-of-concept stage is the right time to
figure that out. If you have experienced no failures with PoCs, then either
you are saving failure for later or perhaps not being ambitious enough.
Conversely, being overly ambitious without a plan for scaling and proof of
value is risky. One thing is certain, though: You do not want to
fail at scale.
Why does scaling sometimes fail?
As noted earlier, scaling digital aspirations has many challenges, not least
in the areas of management, leadership, culture and talent.
Getting off on the right foot
At many organizations, culture, talent and leadership commitment are often
the primary sources of struggling initiatives to scale digital (see Figure 3.)
Culture, talent and leadership commitment
One thing is
certain: You
do not want
to fail at scale.
20The Secrets to Scaling Digital
Figure 3 Barriers to scaling digital
Source: Gartner, The 2018 CIO Agenda: Mastering the New Job of the
CIO, Figure 8, Refreshed 4 January 2019, Published 29 September 2017
With culture, resistance is sometimes rooted in management attitudes
such as, “This the way we’ve always done things, and we’re still making a
profit, so why mess with success?” As the authors of the St. Gallen paper
write, “thinking outside the box is hard to do”: “Mental barriers block the
road towards innovative ideas. Managers struggle to turn around the
predominant logic of ‘their’ industry, which they have spent their entire
careers understanding.”⁹
In the area of talent, digital skills are in short supply, so
the pool of those experienced with scaling digital will be
smaller even than that. In addition, the ways of working
and the pace of a digital world are different. There is
less of a divide between IT and the business, so the skills
required will change.
It’s never too soon to ask the scaling question. Innovative
ideas arise all the time, and they could cover any area
(customer engagement, manufacturing effectiveness, new
service models, etc.). But even at this point, it’s important
to ask scaling-related questions, such as: How would we
deploy that across our entire organization? Would it make
a return? If it made a return in one factory in one area, could we duplicate
those results elsewhere? Do the costs and benefits stack up? How do we
change our working practices? There are many questions that must be
asked, and the ability to address them at scale increases the chances of
success at scaling digital.
At many
organizations, culture,
talent and leadership
commitment are often
the primary sources of
struggling initiatives to
scale digital.
21The Secrets to Scaling Digital
Base: Respondents in the desire, designing and delivering stages.
30%
25%
20%
15%
10%
5%
0%
50%
40%
30%
20%
10%
0%
No dig
ital in
itiat
ive
Desire
/am
bition
Desig
ning
Delive
ring
9%
20%
28%26%
Culture46%
Talent13%
Boardcommitment
4%
Resources23%
CEOcommitment
5%
ITorganization
2%
Stage of digital maturity
(percentage of respondents)
Biggest barriers to scale play
Initiation play Barriers
(percentage of respondents)
What do you think is your organization’s biggestbarrier to move from the initial phases of digitalbusiness transformation to scale? (n=2,208)
Consider the operational
challenges. Technology challenges
are often readily identifiable, but
operational challenges less so. Address the
operations required to take the initiative
to scale, involving controllers from legal,
compliance and HR, as well as expert
individuals without whose knowledge the idea
cannot scale. Do you have the resources?
Have you considered the legal implications of
scale? How will you manage support services?
Test early and often for scalability.
Non-functional testing is often left
to the end when it is hard to make
needed changes. From the early stages, have
a “walking skeleton” of the solution that you
continuously test for scalability.
Build a strong digital core.
Use a capability review or other
methods to understand the
business needs and applications, as well as the
underlying data and technology platforms.
Use cloud-first thinking. Thinking
from a cloud foundation enables
you to start small with a digital
initiative and then scale up quickly in terms of
data storage and compute. Cloud architecture
patterns such as serverless / PaaS can help
you think and plan in terms of microservices
that can be rapidly scaled.
Keys to successMany considerations and strategies go into being successful at scaling
digital, but here are a few to especially bear in mind:
Focus on outcomes. Be laser-
focused on the outcome you want
to achieve from the digital initiative.
Look at the particular process or function
affected by the program, then baseline where
you are today so you can own the delivered
benefits later.
Effectively manage change for
people at all levels and parts of the
organization. Digital generally has
a broader impact across customers, talent,
leadership and business / operating models
than a traditional IT project. Run the initiative
as a business change project, not only an IT
project. Success with scaling digital heavily
relies on effective people change.
Make your corporate structure
work for you rather than against
you. Incubate ideas and protect
them from corporate inertia in the early
phases. Structure is sometimes seen as a
barrier to change—and it often is—but once
your digital idea is proven and generally
accepted, you’ll need that structure to achieve
scale.
1
2
3
4
5
6
7Companies successful
at scaling digital share a
number of characteristics.
22The Secrets to Scaling Digital
23The Secrets to Scaling Digital
A new era of innovation
Too many digital initiatives fail to reach the point at which their
impact is felt across an entire organization. This inability to scale
is undermining companies’ entire digital strategies and leadership
promises.
Companies successful at scaling digital share a number
of characteristics. First, they plan early to manage people
and organizational change. They understand that digital
transformation cannot take place without simultaneous culture
and process transformation. By acknowledging that it is a change
program, they establish governance to prioritize and manage
concepts and strategies. Second, they are able to run “proof
of value” analyses, with stage-gates, to assess and prioritize
innovation. Finally, they maintain a relentless focus on the
evolving needs of their customers as a digital initiative proceeds.
Few would suggest that scaling digital is easy. Companies must
balance their need to maximize the remaining value of their
current business model against their need to “jump the S-curve”
to begin a new era of innovation and growth. It is virtually certain,
however, that companies able to become more agile businesses at
their core will be best placed for the future.
Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, is focusing on Social Innovation
Business combining its operational technology, information technology and products. The
company’s consolidated revenues for fiscal 2018 (ended March 31, 2019) totaled 9,480.6 billion
yen ($85.4 billion), and the company has approximately 296,000 employees worldwide. Hitachi
delivers digital solutions utilizing Lumada in five sectors including Mobility, Smart Life, Industry,
Energy and IT, to increase our customer’s social, environmental and economic value. For more
information on Hitachi, please visit the company’s website at http://www.hitachi.com.
About Hitachi
Chris Saul is Vice President, Global Strategy, Hitachi Consulting, working for
the CEO to drive the global evolution of the company, advising the Board as
well as Hitachi Digital Holdings and Social Innovation Business. Frequently
published in thought-leadership papers and by analysts, he also leads the
EMEA Strategy & Advisory Practice, helping clients and Hitachi firms to drive
digital transformation, innovation and growth.
Prior to joining Hitachi, he held various Board / leadership roles spanning
strategy, delivery, sales & marketing, operations and finance in three Fortune
Global 500 companies and four mid-sized services firms, and additionally
served in a number of Board advisory positions.
About Chris Saul
24The Secrets to Scaling Digital
References in Gartner Research
Publications
• “CIOs Need to Lead the Way to Adaptive Strategy,” September 2019
• “Winning in a World of Digital Dragons,” November 2018.
• “Hitachi Consulting’s Path to Ecosystems Draws on Unique Market Strengths,” October 31, 2016.
• “The 2017 CIO Agenda: Seize the Digital Ecosystem Opportunity,” October 2016.
• “Building the Digital Platform: The 2016 CIO Agenda,” October 2015
• “The Secrets to Scaling Digital,” Hitachi, White Paper, 2019
• “Engineering the New Reality” (ISBN 978-1-5262-0074-7), Hitachi, 2017
• “The New Reality of a Truly Digital Enterprise,” Hitachi, White Paper, November 2015
• “Becoming a Digital Enterprise: How to Address the Digital Imperative,” Hitachi, White Paper, July 2015
25The Secrets to Scaling Digital
References1 Karthik Sundaram, Program Manager - Industrial IoT, Frost & Sullivan
2 Karthik Sundaram, Program Manager - Industrial IoT, Frost & Sullivan
3 “Making Change Stick,” Hitachi Consulting, 2018.
https://www.hitachiconsulting.com/documents/industries/industrials-and-manufacturing/making-change-stick.pdf
4 “Digital Business Transformation: Closing the Gap Between Ambition and Reality,” Gartner, June 2018.
5 “Digital Business Transformation: Closing the Gap Between Ambition and Reality,” Gartner, June 2018.
6 https://www.i4cp.com/productivity-blog/how-to-bridge-the-digital-divide
7 The St. Gallen Business Model Navigator, University of St. Gallen.
8 Chris Saul et al, “Engineering the New Reality,” Hitachi Consulting, 2015.
9 The St. Gallen Business Model Navigator, University of St. Gallen.
© 2019 Hitachi Consulting Corporation.
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