How is digital today different from how you thought about digital pre-pandemic and, say, five years ago?

The good thing about ISG is that we don't curate, we observe. What we saw five or six years ago was the birthplace of digital in digital marketing. Now, five or six years later, we're seeing digital is nearly ubiquitous. It is much more mainstream. At the moment, we look at digital in two ways. First, what are the technologies it is enabling? Last year, it was reinventing ERP; now it is infiltrating cloud analytics, automation engineering. Tomorrow it's going to be Web 3.0. Thinking of digital as a technology enabler is a much more interesting way to think of digital.  Secondly, we look at digital in terms of trying to answer why are our clients doing what they're doing? Is it to increase revenue, create new revenue streams, increase customer-lifetime values? Most often it is about optimizing operations. We're trying to bring these two forces together and, with this, we get a kind of magical thing – where digital transformation is bigger than the sum of its parts.

Not every digital idea has the luxury of starting with a clean slate. Most stories, scenarios, start with an existing and ongoing business. What does that mean to the way companies are thinking about digital?

That's a very good question. Unfortunately, a lot of digital ideas start as proofs of concept, and these proofs of concept often happen in a lab or a competence center, which is very far from the main operations of an enterprise. The best case environment is a greenfield environment, but when the idea has to be brought back into the mothership, reality is, it has to fit into the rest of what the enterprise is already doing and how it operates, which might depend on what we call legacy technology, but it's really just all the mainstream technology. When existing IT is not taken into account, we see a huge difference between nailing it and scaling it. The more that existing business can be taken into consideration while building the idea or building the business case for an idea, the better because that's the only way to know the digital idea is going to somehow work with mainstream adoption.

What are the biggest opportunities and challenges associated with scaling digital initiatives?

What enterprises often forget is this is not just about technology. These kinds of changes have everything to do with people. I purposely avoid the word culture because culture is just a collection of habits and habits can be changed in an organization. If you change the habits in an organization, you change the culture. If you design with people, process structure and technology in mind as you're designing the return on investment, it gets much easier to embed the digital initiative in existing operations. That's how you go from nailing it to scaling it.

Digital solutions are not off-the-shelf products. They are not just one project. It usually is a coming together of a lot of different things. When you're working with clients on their digital programs, what do you see as the role of partnerships and collaboration? And who has to come together for the most successful digital case studies out there?

It's good if an organization can come out of the “not invented here” mode and do things collaboratively, not just with its partners but with its entire supplier ecosystem. It's not just about what a supplier can do with one client. Think about what the supplier can bring to your organization because of the work it’s doing with other clients.

There is, of course, the flip side to this. As we say, a baker can only bake and a surgeon can only cut. Each supplier will come in with his or her angle. It’s up to the enterprise organization to say, okay, I will co-create, and I will take the lead on structuring things so I can bring together each player’s capabilities – and know when it’s the right time for a baker and when it’s the right time for a surgeon and how to orchestrate them? That's the new muscle that you have to exercise.

Partnerships and collaborations are easy to talk about but difficult to pull off. What makes this even more difficult is that a few years ago we used to design digital transformation programs that were four to five years long. Today, companies need continuous transformation. So now you’re not thinking this way just once every five years, you’re collaborating continuously, quarter to quarter. That means building endurance in those muscles.

I’ve heard you talking about something you’re calling SmartX. Can you explain that more and why it's important to ISG clients and their providers?

ISG has always been a pioneer in helping enterprises source their managed services. This is where our history has been, it's how the market has seen us over the last decades. And we've been watching as digital transformation has gained speed over the last year. Five years ago, there were pockets of excellence. Now that it's mainstream, we want to play the same role in the transformation space as we played in the managed services space. That is to take the mystery out of it. Take the mystery out of structuring sourcing deals so that they bring real and lasting value. If you look at digital transformation, you see a lot of it is described with words like cloud-first, mobile-first, AI-first. We have to go beyond the shiny objects into what it means for each industry segment. For example, manufacturing might look at lifecycle value through connected parts and services. In this way, digital transformation takes a business transformation angle. ISG is looking at each industry segment and looking at the smart and intelligent aspects of it: smart manufacturing, smart utilities, smart banking, smart healthcare, smart life sciences.

Could that be smart HR and smart marketing? Are there other dimensions to making a sector “smart?” 

There are me areas I call horizontal verticals. One of them is engineering because it cuts across discrete processes. Manufacturing gets into life sciences and starts getting into media tech, media and high tech. Digital engineering is the one click deeper, where you have niche offerings and niche providers. Marketing is something we're looking at closely because marketing brand collaboration and customer engagement are coming together.

What do you say to clients about the value of providers and provider partnerships for digital success?

We think most people know that ISG is a place that values time with our clients. We equally value time with our providers. We also believe a lot of value is created in the interaction between the enterprise, the provider and the technology platform segment. When we look at what a provider has done for client X, Y and Z, we can see where the market is moving and how providers should move. And the same holds true for technology platforms. 

When we talk to clients about the sourcing decisions they are making, we are hearing about the value providers bring. How was that value actually recorded? What was the business case? How was the business case realized and what was the ROI? This helps us understand the market today and make new markets for enterprises and providers.