Daily Archives: September 11, 2011

It’s Time for a Digital Strategy Audit

And it should be part of your annual planning process. Why do you need a digital strategy audit? Here are five compelling reasons from a recent Chief Executive article that presented what it thought were 11 Reasons Why It’s Time for a Digital Strategy Audit.

  • Digital Mistakes are for the World to See
    Most companies’ topline digital strategies are transparent to an experienced analyst, and readily available for analysis and scrutiny. As a result, mistakes are impossible to conceal and any attempt to do so will cause a media pile-on that makes the torch-bearning lynch mobs of old look like a Sunday picnic.
  • Digital is Cross-Function
    Even a simple e-mail marketing campaign involves sales, marketing, operations, and IT. Only supply chain is as far reaching, and if the digital supply chain strategy doesn’t complement the physical supply chain strategy, you have a disaster waiting to happen.
  • Numbers Tell a Story
    An organization’s spending on R&D tells a lot about its viability in the long term. Plus, digital strategy performance benchmarks can identify competitor strategies and threats and allow a company to make a proactive, rather than a reactive, response.
  • Digital Investments are Probably Higher Than You Think
    And probably generating less of a return than you think. In some enterprises, digital investments account for 5% of operating costs and 20% of marketing spend, and run in the eight digits in Fortunate 1000 companies. But without a coherent strategy, the returns in digital investments are often dismal to none. Consider the emerging mobile market with average click through rates on ads of 0.1%, for example.
  • Digital Affects Everything
    As the article says, no industry is unaffected by digital trends. But, few companies have formal, well-defined digital strategies that articulate the vision and govern investments and behavior. Typically, it’s an afterthought and pushed down to IT to figure out. But if IT is only a support organization in the company …

And, more importantly, unless you do a digital audit:

  • You Still Don’t Know How Unprepared You Are for the Digital Age
    Unless you are an IT company, chances are your infrastructure doesn’t have the scalablity, reliability, falut-tolerance, and, more importantly, the security to go all-out with a digital strategy. If even the Sony Playstation Network can be hacked and taken down for a week, and Sony has a very strong IT division operating a very large on-line service, how long do you think it would take a hacker or organized underground hacking group to your network down if you got in their cross-hairs. Assuming you could even scale up to support a superbowl size response. Online service leaders have experienced network overloads for years. AOL in its heyday had scalability problems and had to offer customers refunds to keep them in late 1996, Toys “R” Us was hit with a class action lawsuit in 2000 for taking orders for Christmas it could not deliver, Nintendo could not keep up with Wii orders in 2006 and Sony could not keep up with Playstation 3 orders in 2006, and the Playstation Network has hacked earlier this year.

Before you launch a digital initiative, you need to make sure that IT is ready to support it, and if you are selling something, that the supply chain is ready to supply any expected spikes in demand. Forget the meaningful opportunities for cost-savings, new revenue channels, and/or competitor vulnerabilities the Chief Executive author promotes. Chances are that you’re not even ready for that.