Senior Director and Technology Research Advisor Rick Pastore and Principal and Technology Transformation Practice Leader Mike Spires discuss key findings from our 2022 Digital World Class Technology research.
Welcome to The Hackett Group’s Business Excelleration Podcast, where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. Today’s episode is hosted by Rick Pastore, senior director and tech research advisor for The Hackett Group. He is joined by Michael Spires, principal and leader of The Hackett Group Technology Transformation practice. The discussion today is centered around the differentiators of Digital World Class performance in 2022.
To begin, Michael shares The Hackett Group’s definition of Digital World Class organizations, focusing more on digital outcomes and the business value driven by them. This includes things like stakeholder experience, digital enablement and more customer engagement metrics. The second part of it is operational excellence, which focuses on things like cost, business process, automation and the ability to execute your technology area. Compared to the standard world-class performance monitored by The Hackett Group, Digital World Class has more weight put on the impact of digital. It also includes things regarding the cloud and the percentage of infrastructure and data within the cloud. Things which drive business outcomes from a technology perspective ended up being the focus, rather than the performance of the technology itself. It all comes back to customer outcomes, which is what we are ultimately trying to drive with digital. The effectiveness of a technology organization sets up a ripple effect flowing through every level of experience – from employee to customers themselves. This became more of an issue in light of the pandemic.
There are two distinct metric categories for Digital World Class performance: business value and operational excellence. The true Digital World Class organization is in the top percentile for both of these factors. In Michael’s experience with customers, it is often a challenge for organizations to optimize in both areas. Some organizations that optimize in one area over the other may still be able to achieve digital outward business value more quickly. The challenge for operationally focused organizations, however, is that they often don’t have all of the necessary technologies to drive outcomes. As they go through this journey toward Digital World Class, The Hackett Group’s data shows that organizations don’t achieve either overnight, but over time.
The Hackett Group introduced the Digital World Class concept for its benchmarking program last year, when we were still in the throes of the pandemic. This year, we have a potentially escalating war in Europe, unemployment, record-setting inflation and a very possible recession. Considering all of these disruptions, Michael shares that Digital World Class is even more important now compared to this time last year. This is because it enables us to continue building, responding and adapting to the changing environment. Digital World Class organizations actually automate roughly twice the amount of their business processes, which reduces cost and the dependency on staff. Thus, they are able to better invest in the staff they already have. Similarly, they are investing up to 59% higher in the cloud, further enabling remote work. Lastly, Digital World Class organizations have much better data insights and are able to make faster decisions, get to market faster, and create an agile workforce.
Then, Michael offers advice for clients in the face of so many disruptions to elevate their own digital performance. First off, it’s important to have a plan envisioning where you want to go and how to get there. Having buy-in from stakeholders across the organization can help align you for getting to that valued business partner role. Really, he says it is about looking at your organization’s technology in six core areas: technology enablement, modern digital architecture, customer-centric design, having a clear view of how data and analytics will drive insights needed to manage the business, operating models driving multiple views on how to serve your customers, and thinking through how to create an organization with the right talent. All of these elements provide a holistic view of driving toward Digital World Class.
In closing, it is reiterated that the six factors previously mentioned are a good starting place, and it’s best to start now rather than later. Organizations that struggle to make decisions generally struggle overall. Having a clear accountability for delivering against these targets is extremely important. Think through the business imperatives that you are trying to drive value in and focus on them in a digital way This does require some vision, but ultimately not starting is not an option unless you want to end up behind.
- 00:44 – Welcome to this episode hosted by Rick Pastore.
- 01:26 – What is Digital World Class and how is it different from regular world-class performance?
- 04:51 – The two distinct metric categories for Digital World Class performance explained.
- 09:22 – How important is Digital World Class now compared to this time last year?
- 15:50 – Advice for clients in the face of these disruptions for achieving Digital World Class.
- 19:12 – The pressing talent issue.
- 20:05 – Closing thoughts.
- 21:40 – Thank you to Michael for joining us today!