Digital Enterprise Architecture for Digital Business

Published on 09 Jan 2023

enterprise digital transformation

During the first two decades of the 21st century, the global economy has been pushed by a digital transformation trend. In only two years, from 2019 to 2020, the rate of this shift practically surged by a factor of 10.

The forces driving this acceleration span a broad spectrum of technological and societal changes that are unlikely to slow down for decades, which includes:

  • Wireless access for billions of people
  • Using smartphones as an app platform
  • Increased speed and size of cloud-based applications
  • Limited number of engineers and developers
  • Customer demand for better, simpler experiences that empower them.

All of these factors have one thing in common: an increasing need and desire for innovation.

This path towards digital transformation is beginning to take shape. Emerging is a transformation to fully digital and automated businesses, resulting in the adaptability required to respond to changes in the ecosystem, society, technology, and customer needs with a laser focus on customer experience, new ways of creating value, and a reshaping of the businesses' technical foundation. The need to optimize business and technology for innovation is at the core of this shift.

Creating An Innovative Forumla For Growth

Today, the majority of businesses have a continuous theme of stability at their center and innovation at their periphery. If a company has a lucrative product line or service, it will not haphazardly risk with the essential competencies necessary to maintain it.

However, corporate executives may test new ideas on a limited group of clients to see whether the new product or service has momentum without jeopardizing the whole enterprise.

This is often reflected in the proportion of business IT spending devoted to sustaining core capabilities, which has been the case for decades. Even despite the rapid acceleration of digital transformation caused by the global pandemic, firms still spend much more in their core than in innovation, allocating on average just 15% of funds to business innovation projects and 59% to day-to-day company operations. 

In a typical setting, this is not always negative. However, we are not in a typical setting. The business cycle has transformed to one in which firms must innovate and rethink their networking strategy.

Budget Does Not Fully Convey An Organization's Adaptability

A superior metric is based on the ability for invention, and this metric ultimately depends on people. The good news is that, despite the extra pressures imposed on IT by recent shifts to a mostly hybrid (remote/office) workforce, almost half of firms (40%) expect to increase IT workers to meet demand. The bad news is that additional workers maintaining the core—keeping the lights on—do not always enhance the company's capacity for innovation. To do this, technology must be used to empower employees to concentrate on generating value via innovation, as opposed to retaining value by maintaining the status quo.

Consider the following: A firm has been in operation for forty years. It has numerous successful product lines and can introduce one or two new items or services every year. The majority of the business's resources are devoted to maintaining its core, while just a tiny portion of the workforce and resources are dedicated to producing new goods or services. The majority of its personnel and funding are devoted to maintaining operations.

This indicates the company's limited adaptability. The company's inability to capitalize on market movements puts it at a major competitive disadvantage. With the introduction of the public cloud and subsequent acceptance of its operating model, a significant portion of the basic infrastructure necessary to manufacture goods or manage services became operationally accessible at little people cost.

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