It is time to make a distinction between Digital and IT

Author: Cato Rasmussen

Determining a company’s worth has changed over the years. Innovative and inside-out business model designs continue to disrupt markets. New business models focus on customer desirability, followed by the prototyping and the testing of value propositions. Companies have become more reliant on emerging technologies and a business-driven coherent digital approach to realise the feasibility of its value propositions. Digital is a leading source for the shift to intangible assets making up the bulk of your company’s worth. (see chart below: Tangible Assets vs Intangible Assets for S&P 500 Companies, 1975 – 2018 / Ponemon Institute).

Going forward and as a consequence of the above, your company’s senior leadership perspectives on what generates value must make sure initiatives impacting intangible asset values, are being driven from the top. Today, becoming part of, and extending your company’s reach into digital ecosystems is essential to increase your company’s intangible asset mass.

Digital versus IT

The below intend to clarify the distinction between Digital and Information Technology (IT).

IT is your traditional system domains, e.g. Financial systems, CRM system, Invoicing systems, Inventory systems and more.

IT’s approach is project-driven and operationally focused on:

  • Identifying the functional areas
  • Building an understanding of the tasks that need to be supported
  • Visualising the operational processes
  • Optimising the interaction with other systems

These are “business architecturally” oriented. The approaches, methods and tools are fit for designing high level and low-level system architectures and designs. Success is finite and measured from a company’s operational cost view. Incremental improvements and functional compliance become the results but seldom the desired changes to cost structures.

Your company’s Digital initiatives are strategic and more comprehensive than IT; as such, to fit with digital ecosystems, a “big picture” contextual understanding of desired business outcome is necessary.

Your company’s direction is paramount and has to provide a thorough view of the assets that contribute to generate value and impact the assessment of your company’s worth, including:

  •  Intellectual property
  •  B2B rights
  •  Brand
  •  Hard Intangibles, e.g. Goodwill
  •  Data
  •  Non-Revenue Rights
  •  Relationships
  • Public right, e.g. planning permissions

The distinction between IT operational measures and Digital strategic measures are; That IT measures are FINITE (project), and digital initiatives measures are INFINITE (vital) and much harder to measure. 

Identifying business capability goals and proving business direction is paramount to your company’s intangible asset valuation growth. Most companies today fall into one of two camps, those dependent on technological evolution (optimisation) and those developing or joining digital ecosystems focussed on technological business enablement (exploration). To grow intangible value, Senior leaders from across your organisation will need to commit to and play an active role in your companies digital initiatives. 

Our suggestions

We at DigitalDexteritas suggest; The very top of your company’s organisation drives and are accountable for your company’s digital initiatives. 

“95% of senior investment decision-makers agree that intangible assets contain essential information about the future strength of its business models”. (source: visualcapitalis.com)

Another critical success factor of Digital initiatives is to include your staff and instead of traditional consulting, bringing in facilitators like DigitalDexteritas who provide approaches, methods and tools fit for purpose to work with your company’s teams.

Your staff bring more knowledge, a better understanding of your company and your industry than any external source. Furthermore, new and fresh ideas exist amongst your team that will generate value to your digital initiatives and generate value for your company. DigitalDexteritas provide a format in which ideas will be captured, prioritised, visualised and contextually business modelled.

People do not like change, and it tends to create fear, uncertainty and doubts amongst your staff.

Would it not be better if your company were to including your staff, inviting them to participate?

As a result, your company will:

  • Show inclusiveness.
  • Build trust.
  • Increase staff confidence.
  • Unify understanding of company direction; and why the company do what it does.
  • A common understanding of the company’s contribution to helping Clients (consumers, B2B, Entrepreneurs…etc.) generate value (incl. intangibles).
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