Accelerated during the pandemic, enterprises are moving beyond their initial digital transformation initiatives and are now transitioning to the next step of running viable digital businesses that rely on software applications to help generate new revenue streams, improve customer experiences, and improve internal processes.
Success will require businesses to create digital innovation value engines that comprise the practices, technology, and culture required to execute on digital innovation strategies and objectives that are aligned with strategic business outcomes.
IDC projects that 750 million cloud-native applications will be created globally by 2025, as businesses work toward building these sustainable digital value engines. However, building the internal capacity to create differentiated or disruptive digital deliverables can be difficult and requires a repeatable process that makes it possible to create and sustain innovation.
IDC’s Future of Digital Innovation framework illustrates the interdependencies of three core components:
Innovation foundation: The innovation foundation defines three required elements for a successful digital innovation initiative. Without the right vision, strategy, and culture — which, combined, form a solid foundation for innovation — an organisation is unlikely to be able to generate value, invention, differentiation, or disruption.
Flywheel of innovation: The flywheel includes five key activities: ideate, design, build, distribute, and measure. With the right foundation in place, this development cycle generates the sustainable momentum necessary for the continued development of digital products and services that drive new deliverables and create additional business value.
Business outcomes: A successful digital innovation value engine generates value, invention, differentiation, and/or disruption. Determining one or more of these outcomes should be part of the company's vision for its digital innovation investment.
Critical to building sustainable digital innovation
IDC says partnerships with vendors will be critical to building sustainable innovation. Many enterprises are undertaking software development at scale for the first time – working through new concepts and trying to identify new technologies to support their digital innovation initiatives.
Because this is new for most organisations, the top requirement they're looking for in a strategic partner is the ability to introduce them to new ideas, followed by expertise in each technology. Technology suppliers are well-positioned to introduce their enterprise customers to the technologies and use cases that can help them execute on their digital deliverables.
Where IT budgets are headed
IDC's research indicates that enterprises worldwide expect to spend more than half of their technology budgets on innovation through 2024, with a decreasing percentage spent on keeping the lights on.
With a higher percentage of enterprise budgets allocated to digital innovation, technology suppliers that can support and empower these initiatives will be more valuable to enterprises.
Ultimately, success will require technology suppliers to extend their traditional relationships with customers' line of business practitioners to reach out to the C-suite, which is increasingly invested in the success of these digital initiatives.
More than half of respondents to a recent worldwide survey described their CEOs as "enthusiastic champions" of digital innovation. Technology suppliers will need insight into the C-suite perspective to ensure their products can support the C-suite's digital business aspirations.
