This document discusses the increasing importance and adoption of digital business strategies by companies. It notes that digital is now a core priority beyond the initial board room debates. Survey results show that more companies are appointing chief digital officers and finding that digital offerings are contributing more to growth than traditional products. However, the document also notes that implementing digital strategies successfully remains a significant challenge, especially around issues like organizational culture and willingness to change. It identifies areas where companies need to focus to close gaps between priorities and success, such as launching new digital products and engaging partners digitally.

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2. © 2016 Information Services Group, Inc. All Rights Reserved.
William S. McNee
October 27, 2016
Berlin, Germany
The Digital Journey
Keys to Success

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 Pace of Digital Business adoption is quickening, shifting from a
Board Room debate just a couple of years ago – to a core
operational mandate at many firms today
 This suggests that as a “strategic priority” – Digital is beyond
the inflection point. With mainstream adoption, we shift to the
hard work of making it a reality in the business
 In this sense, there is a growing recognition that Digital
Business is just the future of business
 With greater experience / maturity comes a richer appreciation
of what it takes to succeed and win in the new era
Taking the Pulse

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Digital Business:
Key Signposts
68% 73%
Digital Business is a strategic /
corporate priority at my
company, with defined business
goals.
2015 2016
46%
54%
Data Science is at the heart of
our Digital Business Strategy.
2015 2016
76%
68%
My company has budget set
aside specifically for Digital
Business initiatives.
2015 2016
Source: Saugatuck Technology, an ISG business
“Digital Business” Survey, Nov. 2015, N=129 & Sept. 2016, N=141 “C-level” Bus/IT Leaders

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Digital Business:
Key Signposts
52%
58%
We are having difficulty finding
the right talent to support our
emerging Digital Business
initiatives.
2015 2016
24%
55%
My company has, or is currently
evaluating the need for a Chief
Digital Officer or Chief Digital
Strategist.
2015 2016
34%
55%
Our digital offerings are
contributing more to our growth
than our traditional products
and services.
2015 2016
Source: Saugatuck Technology, an ISG business
“Digital Business” Survey, Nov. 2015, N=129 & Sept. 2016, N=141 “C-level” Bus/IT Leaders
Big Jump
Big Jump

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Key Trends
 Recognition for and emergence of the CDO / CDS reflects strategic importance of Digital
 Much deeper understanding that unlocking insights from myriad internal and external
data sources through the use of Data Science is central to Digital Business success
 Budgets for Digital initiatives are increasingly being consolidated into ongoing
operations – as firms get beyond the early stages and are fully engaged and committed
 Recognition that Digital Business demands new skills and resources, and a fundamental
rethinking of critical business processes / workflows (internally and externally)
 Evidence that Digital is now beginning to truly contribute to the top and bottom line . . .

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Digital Business – Five Key Stages
The Train Has Left The Station
Source: Saugatuck Technology, an ISG business
“Digital Business” Survey, Sept. 2016, N=141 “C-level” Bus/IT Leaders
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2016 2018 2020
No Digital
Footprint
Experimental
/ Learning
Committed /
In Process
Engaged /
Ongoing
Established /
Improving
54%
79%
Europe
(UK + DACH)
US
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2016 2018 2020
60%
88%

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Top Business Drivers / Pressures
Causing Digital Business Adoption
Top Business Drivers / Pressures UK DACH US Global
Need for greater operational agility and flexibility 56% 42% 55% 52%
Increased competition – from existing competitors within my Industry 59% 42% 35% 43%
Expand share of wallet from existing customers 32% 61% 34% 40%
Grow profits / EBITDA, Return on Assets or Return on Equity 41% 18% 45% 38%
Expand share of market from new business 35% 36% 34% 35%
Increased competition - from new competitors outside my industry 29% 33% 31% 31%
Need to introduce new operating model (s) 24% 30% 31% 29%
Respond to segment disintermediation 21% 36% 16% 22%
Changing expectations in the workplace 3% 0% 19% 11%
Source: Saugatuck Technology, an ISG business
“Digital Business” Survey, Sept. 2016, N=141 “C-level” Bus/IT Leaders

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In 2000 our company's revenue was $1.3B and we distributed 8 million printed classifieds
magazines per week. We will print our last magazine this year. Our entire business model
will then be digitally based. – CIO, Publishing, Large (US)
Our commitment to growth is driving our digital agenda – EVP, FinSvcs, Very Large (Global)
Projects take a long time at large companies like ours. Things are implemented by region.
Nationwide rollouts are too risky. – COO, Media, Very Large (UK)
We have implemented many of the early digital technologies to make us more competitive.
Now we need to focus on some key process changes. – CTO, Pharma, Very Large (Germany)
This year we are totally re-platforming for deployment in 2017. We are very committed to
digital strategies as a brand. – CMO, Retail, Very Large (US)
What Large Enterprise Leaders
Have to Day: Stages of Digitization

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Success and the Fast Growers
 Digital now seen as the growth engine for the future of business across many industries
 Firms furthest along in their Digital journey are the fast growers (5% +), followed by
firms experiencing contracting revenue growth (-2% +)
 For the fast growers, Digital Business is all about being nimble, agile and flexible to
changing market demands. No other business driver comes close
 With markets moving rapidly, firms with flat to modest revenue growth may be the most
challenged and exposed as they take up the Digital Business mandate
 Organizational willingness to change, along with cultural transformation issues, remain
among the most difficult challenges to overcome for most of the Global 2000

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Mind the Gaps: Europe
Importance & Success of Factors Driving Digital Business Growth
(Very + Extremely Important / Successful responses only)
Europe Importance Success Gap
Launching innovative new digital products / services / apps 75% 41% -34%
Digital engagement of suppliers / business partners 64% 35% -29%
Deploying new monetization platforms for Digital Business 61% 37% -24%
Launching digital add-ons to traditional products / services 58% 41% -17%
Deploying innovative business / operating models 65% 49% -16%
Proactive customer engagement through social media channels 52% 39% -13%
Channel expansion 55% 42% -13%
Advanced customer targeting (using analytics/big data/location-based svcs) 54% 42% -12%
Enhanced user experience 59% 52% -6%
Establishing a “Mobile First” solutions policy 49% 43% -6%
Source: Saugatuck Technology, an ISG business
“Digital Business” Survey, Sept. 2016, N=141 “C-level” Bus/IT Leaders

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Mind the Gaps: US
Importance and Success of Factors Driving Digital Business Growth
(Very + Extremely Important / Successful responses only)
Source: Saugatuck Technology, an ISG business
“Digital Business” Survey, Sept. 2016, N=141 “C-level” Bus/IT Leaders
US Importance Success Gap
Enhanced user experience 75% 33% -42%
Digital engagement of suppliers / business partners 71% 30% -41%
Launching digital add-ons to traditional products / services 66% 30% -37%
Deploying innovative business / operating models 62% 26% -36%
Advanced customer targeting (using analytics/big data) 70% 34% -36%
Channel expansion 63% 35% -28%
Launching innovative new digital products / services / apps 68% 41% -27%
Establishing a “Mobile First” solutions policy 55% 30% -25%
Proactive customer engagement through social media channels 57% 35% -22%
Deploying new monetization platforms for Digital Business 50% 35% -15%

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 Overall, the research reinforces the fact that Digital Business is really
hard to do
 Earlier-generation digital marketing initiatives are giving way to newer
models of customer and partner engagement, and a fundamental
rethinking of business models, value chains, and operating principals
 Success demands strong executive leadership, organizational alignment
and a culture willing to evolve / change
 Launching innovative new digital products and services, and
implementing technologies and strategies to effectively monetize them,
remain the most illusive thus far
Where’s the Success?

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Top Challenges: Europe
(Question: Pick top 3)
0%
4%
7%
21%
21%
21%
24%
25%
28%
28%
30%
42%
Partner Engagement
Functional staffing / talent
Client engagement
Organizational alignment /…
Budget
Technology - Tools / IT…
Data Quality
Business model evolution
IT staffing / talent
Organizational willingness to…
Company Culture
Senior Exec Leadership
0% 10% 20% 30% 40% 50%
 As with prior global CXO studies we
have conducted, the top challenges in
Europe are all non-IT issues
 The top three challenges in the US:
1) Organizational willingness to change
2) Budget
3) Company Culture
 While Senior Executive Leadership
ranked as the top challenge is Europe, it
ranked 6th in the USSource: Saugatuck Technology, an ISG business
“Digital Business” Survey, Sept. 2016, N=141 “C-level” Bus/IT Leaders

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Digital engagement. Customers expect a seamless,
personalized experience that spans across physical
and virtual worlds
Digital insights. Data is at the heart of Digital
Business; building strong data science skills will
be critical for next-generation insights
Digital backbone. A platform that can
continuously and flexibly adapt will be
a critical for Digital Business success
Three Key Imperatives to
Invest Around and Focus On
Processes
Cloud
Customer
Analytics
Collaborative
Product
Innovation
Business
Insights
Customer
Experience
Product
Analytics
IoT
Automation
Platforms
Access Channels
Social Media
Collaboration
@ @
Partners
Customers
Enterprise

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