Published on November 16, 2023, 9:23 pm

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 in this endeavor 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.

According to IDC, 750 million cloud-native applications will be created globally by 2025 as businesses work toward building these sustainable digital value engines. This emphasizes the importance of building the internal capacity to create differentiated or disruptive digital deliverables. However, achieving this can be challenging 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:

1. Innovation foundation: This component defines three essential elements for a successful digital innovation initiative – vision, strategy, and culture. Without these foundational elements in place, an organization is unlikely to generate value, invention, differentiation, or disruption.

2. 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 sustainable momentum for the continued development of digital products and services that drive new deliverables and create additional business value.

3. Business outcomes: A successful digital innovation value engine generates value, invention, differentiation, and/or disruption. It is essential for companies to determine one or more of these outcomes as part of their vision for digital innovation investment.

Building sustainable innovation relies heavily on partnerships with vendors. Many enterprises are undertaking software development at scale for the first time and are working through new concepts while trying to identify new technologies to support their digital innovation initiatives. Strategic partners who can introduce organizations to new ideas followed by expertise in each technology become critical in this scenario. Technology suppliers are well-positioned to introduce enterprise customers to the technologies and use cases that can help them execute on their digital deliverables.

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 who can support and empower these initiatives will be more valuable.

To ensure success, technology suppliers need to extend their relationships beyond line of business practitioners and reach out to the C-suite. It is becoming increasingly important for the C-suite to be invested in the success of these digital initiatives, as more than half of respondents in a recent survey described their CEOs as “enthusiastic champions” of digital innovation. Technology suppliers must understand the perspective of the C-suite to ensure their products can support the C-suite’s digital business aspirations.

In conclusion, enterprises are progressing from digital transformation efforts towards running successful digital businesses driven by software applications. To achieve this, they must create digital innovation value engines encompassing practices, technology, and culture. IDC forecasts a significant rise in cloud-native applications globally by 2025, emphasizing the need for differentiated or disruptive digital deliverables. Building sustainable innovation depends on partnerships with vendors who can introduce new ideas and provide expertise in relevant technologies. Enterprises are expected to allocate more budget towards technology-driven innovation, making technology suppliers that support such initiatives highly valuable. Lastly, engaging with the C-suite is crucial as CEOs increasingly champion digital innovation efforts within organizations

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