Professional Documents
Culture Documents
Accelerating Digital Transformation Understanding and Setting Up A Digital Services Unit
Accelerating Digital Transformation Understanding and Setting Up A Digital Services Unit
45% 52%
65% Have a digital unit
55% 48%
35%
2
DSU as a Pathway to Accelerated
Digital Transformation
DSUs play a critical role in formulating unit sub-group that drives digital
and implementing digital strategies, strategy, sales, innovation and revenue
developing digital services for business management. By establishing clear
A DSU establishes a units, brands or countries, facilitating guidelines on responsibilities, the DSU
company-wide digital innovation, and monetizing digital can help minimize overlapping work
assets, by creating new avenues for areas, and thereby accountabilities.
strategy, ensuring a digital businesses (see Figure 2). Our research showed that over 80%
consistent experience of firms agreed that establishment of
for customers across Driving Digital Strategy strategies and policies ranked high
among the roles of a digital unit7.
A DSU establishes a company-wide
digital channels. digital strategy to ensure a consistent
experience for customers across digital
Enabling a Digital Factory
channels. It defines a clear roadmap by A DSU drives collaboration by
A DSU, as a control unit, interacts with analyzing customer requirements, the facilitating a dialogue between the
all functions within an organization companys strategy, the competition, digital units and internal clients.
and coordinates efforts across and operational competencies. Once a The DSU also helps in maximizing
various units. For instance, Nestls roadmap has been designed, the DSU resources by creating a service
centralized DSU is responsible for coordinates alignment between local catalog. For instance, Philips has a
a wide catalog of digital services and global digital strategies to achieve digital competence center that provides
including e-commerce platforms, digital optimal results. For instance, Spanish services to both Philips business units
marketing, social media, consumer media major Prisas digital unit has a and countries, with the marketing
relationships, m-commerce, Search clear mandate to lead and coordinate service desk acting as a single point of
Engine Optimization (SEO), analytics all online activities and businesses contact for marketing.
and R&D. across the firm with a digital strategy
3
Fostering Innovation them expand their business reach. scores, and process automationto
Some of these avenues range from the organization and the consumer.
A DSU enables the organization selling digital content to leveraging It improves the quality of digital
to offer a wider product range and paid advertisements, entering into services through the execution of
reduce innovation cycle times. In its e-commerce agreements with third consistent and repeatable processes.
centralized role, a DSU encourages parties, to community management. It enables decision making at the
innovation through the usage of digital For example, Starbucks offers its free right level, optimizes budgets by
technologies and platforms such as WiFi users access to an exclusive sharing resources, and provides more
crowd sourcing, open-source platforms in-store premium content network control over the tools and services
and social media networks. These called Starbucks Digital Network. This development. It also provides business
digital platforms and technologies help exclusive network is the result of a units with a fair amount of autonomy
drive innovation and ideation even in partnership with Yahoo that aims at in order to enable them to design their
large distributed organizations. enhancing customer experience at own relevant KPIs for digital services.
Starbucks stores, by providing free and A DSU also improves efficiency through
For instance, at Starbucks, the interesting content from a variety of well-defined roles and responsibilities,
company launched several innovative partners9. and improved partnership between IT
initiatives under a team headed by and business functions. This enhances
a chief digital officer. One of these Creating New Digital internal communication across the
includes a mobile payments solution organization.
that, till April 2012, had processed over
Businesses
45 million mobile payments8. A DSU can also help create new digital In the rest of the paper, we expand on
businesses. Technologies such as how to select and implement the right
Building Digital Skills virtual prototyping, 3-D renditions and governance model for a DSU.
modeling, business intelligence and Big
A DSU drives digital skills and Data analytics, provide opportunities for
competencies across the organization organizations to develop new business
by conducting organization-wide offerings. All these offerings have the
trainings and knowledge-sharing potential to become business ventures, 80% of firms believe
sessions. Since the DSU is also the which can then be autonomously that establishment of
umbrella unit when it comes to digital managed by the DSU. These ventures
development across all functions in the can either be developed in-house or standards and policies
organization, it can consequently play a through collaboration with external is a key role of a
critical role in collating and developing third-party organizations.
relevant digital skills. This avoids skill Digital Services Unit.
build-up in silos. Implementing a DSU not only
accelerates the journey toward
Monetizing Opportunities digital transformation, but also
delivers tangible benefitsprocess
The role of a DSU is also to coordinate transparency, improved inter-
local business units and offer them divisional collaboration within the
advice on asset monetization avenues organization, accelerated time to
within the digital space to help market, improved customer satisfaction
4
Setting a DSU in Motion
IT-Centric DSU Model regions. For instance, an investment
products and services company closely
This model involves setting up a integrated its global IT and operations,
The choice of distinct entity around digital a global which enabled a more integrated
governance model is DSU hosted in IT. The Digital IT unit definition of global processes, and
interacts with the IT and other internal transformed multiple IT systems of the
determined by the departments to determine the IT company into a unified global platform.
resources shared and service catalog for internal clients (see Recently, the company extended
Figure 3). governance to include new digital
levels of coordination initiatives such as social reputation
required for Once a list of services is defined, monitoring, micro-blogging and mobile
the Digital IT unit draws up a service selling10.
implementation. catalog, which consists of currently
active services, and those that need The IT-centric model allows for local
development. Inputs are then taken control on the developed services,
DSU effectiveness is both a function from internal clients. These inputs allow including aspects of technical choices,
of how it is designed and how it is the creation of a broad dimension that roadmap, and pace of execution.
implemented. Before implementing enables the organization to depict the The model also offers autonomy
a DSU, it is important to decide on interdependencies of IT with other to individual BUs and helps foster
the governance model that would functions. This allows the organization motivation, and increase creativity and
administer the DSU upon set-up. A to determine the optimal level of control innovation.
DSU governance model establishes the the Digital IT unit will have.
roles and responsibilities of a DSU. The main challenge with this model
The IT-Centric DSU model unifies is the connection with brands and
Selecting an Appropriate technology initiatives across business marketing since this remains, primarily,
units and fosters collaboration across an IT-led initiative.
DSU Governance Model
employees in headquarters and global
In order to establish a robust DSU
governance model, it is important to
Figure 3: IT-Centric DSU Governance Models
consider the department to which
the shared resources are aligned and
the level of internal coordination that
is required within the organization. Digital Board
These two factors will determine the
most favourable model an organization Demand Digital
Management Service
can implement. There are two broad Catalog
approaches to creating an effective
Digital IT
DSU Governance Model. First is a
IT-Operation
Two-Halves-in-One model that Digital Factory
can be further categorized by who is
leading it, IT or Marketing. The other
approach is an integrated model. Each
model has its own sets of pros and Digital Services Delivery
cons. Organizations can choose any Direct to end-users via local units (countries, etc.)
model depending on their vision and
digital maturity.
5
Marketing-Centric DSU continue to be a part of their respective others. This agreement enables both
Model parent groups. companies to implement best practices
of digital services and consumer
Digital services in this model are A service catalog is developed with experience11. Similarly, a European
delivered by a separate business a collective definition of services, airline integrated part of the sales team
unit Digital Marketing. This new which consists of current services with a part of their marketing team.
entity provides digital services to two offered, and services needing Here the digital IT team is hierarchically
separate existing unitstraditional development. A digital board overlooks linked to the IT department and the
marketing and salesto define a digital the coordination of actions (scope, web support team is linked to the
service catalog for all the services budgets, and roadmaps) across various sales department12. A key challenge in
provided to external clients (see Figure business units. setting up a marketing-centric DSU is
4). Similar to the IT-centric DSU, in engaging and creating partnerships
resources attached to this DSU model A marketing-centric DSU setup acts with multiple external parties, such as
as a common platform that creates Web-based agencies.
new digital businesses, and therefore,
generates new revenues. It also The biggest advantage to the
helps enhance portfolio and improve marketing-centric DSU model is that
A marketing-centric customer experience. For instance it affords autonomy to individual BUs
DSU setup acts as a Telefonica and Etisalat established and enables dedicated service to
new DSUs to drive growth across new respective clients.
common platform to lines of businesses. Further, DSUs of
develop new revenue both companies recently signed an However, the model does have its
agreement to jointly develop business challenges. The main challenge is to
streams while driving opportunities, license products and connect with IT in order to optimize
customer experience. share knowledge across a range the investments on digital capabilities
of digital services such as cloud since it is IT that has the lead on digital
computing, m-commerce solutions, capabilities such as analytics and
video services, digital advertising and solution delivery.
6
to a common core principle, which Figure 5: Integrated DSU Governance Model
drives business value. In the integrated
business models, all functions share
P&L responsibility, thus motivating each
function to cooperate and coordinate Service
Demand management
for best results (see Figure 5). Catalog
Portfolio management
In the integrated model, the marketing
function is the business driver, while IT Architecture
operations enable business processes. Marketing &
Design
The integrated model manages and IT Operations
PMO
enhances service catalogs based
on shared resource pools between
functions. For instance, a Spanish
Digital Services Delivery
media player created a digital unit
Direct to end-users of via local units (countries, etc.)
made up of two clearly differentiated
organizations, one focused on
Services for Services for
managing the IT infrastructure and the external internal
other on driving the digital strategy end-users end-users
of the overall group. The digital unit
reports in to the Chief Digital Officer13. Source: Capgemini Consulting Analysis
The integrated model allows for setup Our research indicated that standalone IT department diminishes
of clear objectives and responsibilities management of the governance model with only 28% companies having them
for the DSU, which facilitates differs according to an organizations in the drivers seat. Similar results can
decision making and communication digital maturity. For instance, we found be seen in the role of the marketing
with local units. It is also easier to that IT departments in over 51% of all department and its extent of control on
holistically drive and monitor digital beginners are responsible for driving the DSU across the beginners and the
transformation, consistently grow digital governance. On the other digirati (see Figure 6).
skills, and mitigate risks of redundant hand, in the digirati, the sway of the
initiatives. These are possible due to
the fact that the DSU is a separate Figure 6: Who is Driving Digital Governance?
unit that interacts with both marketing
and IT. Implementing an integrated Fashionistas Digirati
model reduces operational costs due
Primary driver of Digital Governance Primary driver of Digital Governance
to reduction of skill duplication, drives
innovation, and reduces time to market, Marketing
given its independent standing within Marketing 15%
22%
an organization. It is easier to govern
Both Both
and align measureable KPIs to each 52% IT
IT 28% 57%
function, as all functions are driven by 26%
common objectives.
7
In summary, each model has its specific pros and cons that organizations need to bear in mind before they chose the model that
is apt for them (see Figure 7). However, as our research shows, it appears digital leaders prefer the integrated model. The ability to
set clear objectives and responsibilities for the DSU, with both marketing and IT playing distinct, yet crucial roles, is a key attraction
for digital leaders.
This model splits responsibility of More consistency and density in each x There is no common governance (between
providing digital services between two offering: Internal offer on the one hand, and each half) and it cab be challenging to take
separate existing units. It utilizes a the offer intended to clients on the other common decisions regarding digital services
pushpull system, which delegates
movement of digital service between a More innovation: On both sides, teams are x Risk of redundancy in the developed
GENERAL Digital Marketing unit and a less slowed down by projects prioritizations functionalities
Digital IT unit.
x Slower time to market because of the
TWO-HALVES-IN-ONE MODEL
This model involves setting up a distinct Local control on the developed services: x Main challenge for an IT-Centric DSU model
entity around digital a global DSU technical choices, roadmap, pace of is to connect with brand and marketing as
IT-CENTRIC hosted in IT that interacts with internal execution this is an IT-lead initiative
MODEL clients and IT to determine IT service
catalogue for internal clients. A better employee-focused service offering
This model provides digital services to Dedicated service to respective clients x Main challenge is to connect with IT in order
MARKETING traditional marketing and sales to define to optimize the investments on digital
-CENTRIC a digital service catalogue for all the A better client-focused service offering: the capabilities
services delivered by each unit are dedicated to
MODEL services provided to external clients.
a type of client
8
After deciding on a governance model, Phase 2: Organizing and Phase 3: Implementing the
the next step for the organization is to Designing the Governance DSU
embark on a structured implementation
Model Once the strategy has been formulated,
plan (see Figure 8).
Once the scope and model of DSU it needs to be converted into an
have been defined, the second phase operationally effective and actionable
Phase 1: Deciding the should focus on sketching the strategic roadmap. To drive transformation,
Organization Principles details into the specific dimensions major stakeholders affected by the
and requirements associated with process should be identified. Once the
Conceptualization is crucial in the
a governance model. In this phase, stakeholders are identified, a matrix
initial phase of the implementation.
design principles, restricting and needs to be set up that will lay out a
This phase involves chalking out the
collaboration policies are defined in clear roadmap according to priority
need to implement a DSU. An overall
a more concrete manner. This phase and accessibility levels. This avoids
approach is defined, based on the
will define the standard of operations, confusion and ensures that the digital
broader context of a DSUs purpose.
optimization of resources, potential transformation does not affect any
The chosen governance model should
shortcomings, the elements of change major stakeholder commitments.
create a framework that facilitates
decision making, and provides more and challenges in implementation. This
clarity about the activities, their phase will also re-examine all the roles,
direction and scope. service catalogs and funding models to
ensure relevance.
Phase 2
Phase 1 Phase 3
Organizational and
Organizational Principles Implementation
Governance Design
WHAT GOVERNANCE MECHANISMS WHAT ARE THE ROLES AND HOW TO OPERATE AND IMPLEMENT
ARE TO BE IMPLEMENTED? RESPONSIBILITIES? DSU ACROSS THE ORGANIZATION?
WHAT IS THE SCOPE FOR THE DSU? WHAT IS THE SIZE OF THE DSU? WHAT IS THE UPDATE AND FOLLOW
UP ON INVESTMENTS?
WHAT DIGITAL SERVICES ARE WHAT IS THE SOURCING STRATEGY?
OFFERED BY THE DSU? HOW TO DRIVE CHANGE?
WHAT IS THE INVESTMENT CASE?
Typical Duration: 2-4 Weeks Typical Duration: 4-8 Weeks Typical Duration: 8-12 Weeks
9
Key Considerations for DSU
Implementation
Implementing a DSU, even for the term, part of assets (physical and A poorly implemented DSU will lead
most agile organizations, is a challenge intellectual) are sold to the supplier to inconsistent customer experience,
that will have a multi-faceted impact. and the proceeds from such sale are incoherent brand image, intellectual
Unlike other business unit setups, the used to fund new projects. property infringement, and increased
peculiarity with DSU is that, by design, implementation costs, resulting in IT
We believe that no funding model
it impacts all parts of the organization. security issues, making it difficult to
clearly outperforms the others from
Hence, there will be significant measure the actual performance of
a DSU perspective. However, our
challenges that surface from various these initiatives.
experience shows that DSUs are
functions across the organization.
typically initially funded by reallocating
Key considerations for organizations In summary, a DSU is a catalyst to an
budget from existing IT legacy budgets
include evaluation of budget organizations digital growth. A DSU
to digital initiatives. The services are
impacts, management of people and can lower digital transformation costs
then proposed for free for a short
communication, and setup of the actual by sharing costs and resources, and
period so that local business units
DSU operation. proactively driving adoption of new
get used to such operating model
digital services. An effective DSU
(the funding model of the DSU may
Funding Model - a Critical model helps organizations coordinate
evolve over time from pilot to scaled
various digital initiatives, increase
Facet to Adoption services).
customer growth, drive employee
Implementing a DSU affects P&L of Managing People and connect, and create an overall positive
various functions in organizations brand experience to accelerate an
Communications
since certain services maybe shared organizations digital transformation.
or demerged from existing service The promised benefits of a DSU cannot
catalogs. Various funding models and be realized unless it contains the right It is also pertinent to note that
mechanisms can be applied for the skills and competencies. Therefore, governance models are not static.
initial set up cost of a new service. it is necessary to closely manage They need to be constantly evolved as
competencies both within and outside an organization climbs higher levels
Local investments funding
the DSU, and decide on investment of maturity in its digital transformation
model: The major role of the DSU areas. One of the major challenges journey. Organizations need to
in this case is providing services organizations face while defining a constantly revisit their governance
delivered locally to all BUs. Here, no governance model is in maintaining model and ensure it is tweaked in order
central funding is provided and one
the balance of power amongst various to stay relevant with changing priorities
or many local entities decide to invest
entities. Organizations need to ensure and implementation challenges. It is
in their own systems. These systems
can then be made available to the that internal politics do not adversely only when such dynamic and tailored
rest of the company by adding them affect the working environment or approaches are taken that a DSU
to the service catalog (central App internal relationships during the various can show its true value and be the
Store). stages of transformation. accelerator that it is designed to be.
10
References
1 Refer to Governance: A Central Component of Successful Digital Transformation
4 Refer to The Digital Advantage: How digital leaders outperform their peers in every industry
5 Beginners: Category of companies doing very little with advanced digital capabilities, although they possess traditional skills around
ERP, Internet or E-mail
6 Digirati: Category of companies that have an overarching digital vision, coupled with good governance models that imbibe a digital
culture in the organization
8 VentureBeat, How Starbucks is turning itself into a tech company, Jun 2012
9 VentureBeat, How Starbucks is turning itself into a tech company, Jun 2012
11 Telefonica, Telefonica and Etisalat join forces in digital services, Jul 2012
The authors would like to extend a special thanks to Charbel Lahoud and Mael Tannou from CC France and Steffen Elsaesser
from CC Germany for their inputs in developing this whitepaper.
The authors would also like to acknowledge the contributions of Jerome Buvat, Sayali Thokle and Subrahmanyam KVJ from the
Digital Transformation Research Institute of Capgemini Consulting.
Germany Norway UK
Guido Kamann Gunnar Deinboll Stephen Pumphrey
guido.kamann@capgemini.com gunnar.deinboll@capgemini.com stephen.pumphrey@capgemini.com
Steffen Elsaesser
steffen.elsaesser@capgemini.com
About Capgemini
Capgemini Consulting is the global strategy and transformation With around 120,000 people in 40 countries, Capgemini is one
consulting organization of the Capgemini Group, specializing of the worlds foremost providers of consulting, technology
in advising and supporting enterprises in significant and outsourcing services. The Group reported 2011 global
transformation, from innovative strategy to execution and with revenues of EUR 9.7 billion. Together with its clients, Capgemini
an unstinting focus on results. With the new digital economy creates and delivers business and technology solutions that
creating significant disruptions and opportunities, our global fit their needs and drive the results they want. A deeply
team of over 3,600 talented individuals work with leading multicultural organization, Capgemini has developed its own
companies and governments to master Digital Transformation, way of working, the Collaborative Business ExperienceTM, and
drawing on our understanding of the digital economy and draws on Rightshore, its worldwide delivery model.
our leadership in business transformation and organizational
change. Learn more about us
at www.capgemini.com.
Find out more at:
http://www.capgemini-consulting.com/
Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group. The information contained in this document is proprietary.
2012 Capgemini. All rights reserved.