My colleague, Dan Montgomery, introduced the digital business cycle in his column entitled, "Digital Business and Digital Intelligence" (DM Review, October 2000). The digital business cycle describes the core components or capabilities a corporation needs to be successful performing as a digital business. Integration of the capabilities, which include digital intelligence, digital channels, digital relationships and ecosystem integration, offers a way for an organization to optimize its role in its ecosystem.

The integration path of the capabilities can take an evolutionary approach or a revolutionary approach, and each of these will impact the organization. Either way, implementation of the full digital business cycle is a huge undertaking; and without the right approach, corporations risk losing sight of the total integration of the business.

Corporations can succeed by choosing a starting point in the digital business cycle. After that, each iteration through the cycle will involve more integration and add more value to the corporation. For example, data is often present in a number of different systems that support a company's business processes. Consequently, the digital intelligence capability is a logical starting point. Sometimes it is difficult to determine which data resides where, but often the elements necessary to create a digital business are present. To create an intelligent enterprise, information can be created from this data as the first step into digital business.

We call this first step digital intelligence. To begin, an organization must become familiar with its data in order to create information from it. The resulting information will reside in either a standalone minor data mart or a large-scale digital intelligence environment. The next step in the digital business cycle, digital relationships, refers to the management of relationships using this information. These include not only relationships with customers (CRM), but also those with suppliers, partners, employees or assets. All of these relationships have contact points that are accessed by channels, such as call centers, point-of-sale terminals and Internet/intranet sites. These contact points are the interface into digital channels. Digital channels lead to new data that is transformed into information which, in turn, feeds relationship management via the channels to create a continuous loop.

Figure 1: Ecosystem Integration

Digital intelligence, digital relationship and digital channel capabilities must also be integrated throughout the ecosystem (which may include customers, suppliers, partners, employees and even competitors) within which a company operates and resides. Integration with the supplier side of a corporation (existing back-office or a new fulfillment function) will complete the picture and enable an organization to deliver value to all participants within the ecosystem. We refer to this as ecosystem integration.

The following example shows how value is created for a corporation and its customers, beginning at a relatively simple starting point and following the digital business cycle.

Suppose a large international bank is offering a product to its customers which allows them to perform international cash management from centralized accounts. In order to be successful, the bank needs to link into the national payment systems of all the countries in which the bank operates. The underlying physical infrastructure is present, as the ability to perform international bank transfers has existed for quite some time. The next task is gathering local, international and national requirements for bank transfers and implementation of these requirements into the cash management product. It goes without saying that these requirements are highly volatile and quite complex (even with the arrival of the single currency in Europe). To provide a high number of successful automated bank transfers (a high "straight through processing rate"), the product needs the data management and integration of the local, international and national requirements to provide one point of perspective supporting the appropriate business rules. This will enable the bank to quickly make adaptations to the product when the requirements change. A key success factor will be the ownership and governance of the requirements. The next step could be the automated propagation of managed data through national modules of the cash management product.

When this initiative proves successful (and it will), the data from the bank transfers can be collected and analyzed to optimize the success rate of future transfers and customize services to customers (CRM). The solution will have an impact on the bank's cash management product and permit investigation of new channels offering this service to customers. Finally, the integration with the ecosystem is clear and will involve linking transactions between the different local financial institutions and the bank's back-office processes.

A digital intelligence perspective is the first step in the digital business cycle, allowing a corporation to know its data and create value through information. The next steps in the digital business cycle will follow logically.

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