Digital Disruption: A Business & Technology Transformation ImperativeJames L. McQuivey, Ph.D., Vice President, Principal Analyst26 February 2015Developing Your Digital Intelligence - Sydney

© 2013 Forrester Research, Inc. Reproduction Prohibited 2© 2013 Forrester Research, Inc. Reproduction Prohibited

How disruption is being disrupted

© 2013 Forrester Research, Inc. Reproduction Prohibited 3© 2013 Forrester Research, Inc. Reproduction Prohibited

Old objections to digital disruption

2 It will cost too much to do

1 People will never do that

1 We don’t know how to disrupt ourselves

© 2013 Forrester Research, Inc. Reproduction Prohibited 4

How digital disruption economics work

Old disruption Digital disruption

10 xthe innovators

1/10ththe cost

100Xthe power

Source: October 27, 2011, “The Disruptor’s Handbook” Forrester report

© 2013 Forrester Research, Inc. Reproduction Prohibited 5

Airbnb Melbourne & Sydney screen grab

© 2013 Forrester Research, Inc. Reproduction Prohibited 6

Digital services build digital relationships

90+ million

260+ million

42+ million

Apple took two years to sell 1 million iPods.

© 2013 Forrester Research, Inc. Reproduction Prohibited 7

Digital relationship opportunities exist in even very complicated industries

Digital disruption

What infrastructure do you need to build this relationship?

› Create a cloud-based architecture that can serve a customer anywhere, anytime

› Prepare to serve customers in their mobile moments of need

› Build a big data solution that:• creates a single view of the customer• analyzes it as close to real time as possible• and adapts to meet the customer’s evolving needs

This will get more complicated very swiftly

© 2013 Forrester Research, Inc. Reproduction Prohibited 10

How hard is this to do?

Energy Skills PoliciesWe conducted a global survey ofexecutives to see if they are ready.

To win, companies must have a disruptor’s:

© 2013 Forrester Research, Inc. Reproduction Prohibited 11

People see it coming but aren’t ready for it PERCENTAGE THAT AGREE WITH EACH STATEMENT (TOP 2 BOX)

89%

65%

38%

32%

There is significant opportunity for digitaltools and experiences to change the

industry we serve

People in our company are excited aboutthe changes that digital will bring to our

company

People in our company have the skillsneeded to adapt to the changes that digital

will bring to our company

Our company has policies and businesspractices that will enable us to adapt to the

changes that digital will bring to our…49%

24%

ESP

Source: March 5, 2013, “Assess Your Digital Disruption Readiness Now” Forrester reportBase: 285 global executives

Senior managers have to lead disruption

› Only a third of CEOs believe they own digital strategy› CIOs do not typically have the digital strategy, but they

own the technology budget› More CMOs are stepping up to own the customer

relationship, but don’t have the technology skills› 2015 will be a challenging year as the senior team

figures out who should own digital

Meanwhile, the customer waits for better experiences

© 2013 Forrester Research, Inc. Reproduction Prohibited 13

How Marketing and IT can do this together

1. Put the customer at the center of your strategy and ask what they want next

2. Let the CMO lead in identifying and responding to customer needs, even if it flexes the business model and the technology

3. Respect the CIO’s need to determine how to add the technical capabilities that will be required to please the customer

It’s not about the CMO or CIO – it’s about the customer

Thank youJames L. McQuivey, Ph.D.forrester.com/disruptionTwitter: @jmcquivey