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Business strategy first, digital strategy second, says expert
Wed, 6th Apr 2016
FYI, this story is more than a year old

Organisations need to ensure they have strong business strategy in place before they start thinking about their digital strategy, according to experts at Fronde.

The company says that while technology is playing an ever-expanding role in how businesses operate, it is increasingly underpinning their ability to be competitive in a rapidly evolving industry landscape.

Many businesses are implementing a digital strategy to keep pace with the changing world. However, Fronde insists a sound business strategy is needed first.

By the end of 2017, 60% of New Zealand enterprises will have digital transformation at the centre of their corporate strategy, according to research firm, IDC. However, without first investing time and resources into developing a business strategy that calls for such a focus on digital transformation, Fronde says it may be difficult for organisations to measure the value of their digital investment.

“There's no point racing to create a digital strategy when your business strategy isn't right. In most cases, the digital strategy needs to flow from the business strategy, rather than the other way around,” explains James Valentine, chief technology officer, Fronde.

“For example, companies can't just copy what others are doing. Just because your competitors have a mobile app does not mandate you have one. You only invest in building an app if it delivers business and customer benefits,” he says.

“This example highlights the need for a seamless flow from business strategy to digital strategy, and a reminder that the foundations for such strategies have to be right before implementation.”

While IT infrastructure plays a central role for most businesses, organisations should focus on digital initiatives only as a key strategic action to fulfil an existing business strategy, Valentine says.

For this approach to be successful, it is also essential that businesses follow through with the internal consensus and alignment to make such a change happen. If companies don't do this, other organisations may take over the market by using technology to power ahead.

“The Internet of Things is an interesting example,” says Valentine.

“The technology is very exciting and offers incredible potential. But it still needs to benefit the business if it is included in an organisation's digital strategy. There needs to be a reason to incorporate such technology. If there isn't, it may not be worth the investment,” he explains.

“While there is an enormous need for organisations to embark on digital transformations, so they can survive in the modern market, it is important that they first know where they want to go as a business, and how they want to achieve that goal.

Valentine says that IDC is predicting that by 2018, 35% of IT resources will be spent to support the creation of new digital revenue streams. “But regardless of what innovative technology organisations may end up implementing, such as cloud, mobility, or the Internet of Things, it should first be identified as the best solution to an existing problem,” he says.

“Business strategy leads to digital strategy, it can't sit in isolation,” Valentine adds.

“This isn't just about technology, it's about organisational change that will let the businesses become more agile culturally and technologically.”