Peter Schooff: Hello. This is Peter Schooff, managing editor at BPM.com. I'm very pleased today to speak with Clay Richardson, principal analyst at Forrester where he is the leading expert in enterprise architecture as well as business process management where he focuses on software, services and methodologies. Clay has given many a keynote speech at BPM.com events, and they were always very well received. In this podcast, we are going to dive right into the coming revolution in digital business. Clay, first of all, thanks so much for joining me.
Clay Richardson: Hey. Thank you for having me Peter, and hello to everyone out there in virtual world.
Peter Schooff: Fantastic. Now, as I said in the intro, digital business so, first of all, how would you define the digital business?
Clay Richardson: There are a lot of different definitions. I think you ask five different people and you'll get five different definitions. At Forrester, we have a definition that we feel balances the focus on digital technology against the real driver of customer outcomes and customer engagement. Our official definition is digital businesses continuously exploit digital technologies to both create new sources of value for customers, while also increasing operational agility and service of customers. You can see with that definition, we believe that the customer is at the center of digital business and the drive around digital business. Our definition balances the digital piece around technology with the need to engage and create convenient experiences for customers.
Peter Schooff: Now let's drill into that definition a little bit. Do you see this impacting pretty much all businesses?
Clay Richardson: That's a really good question. The immediate answer is yes. Either you as an executive who, at Forrester we use the term Digital Predator, you see the digital opportunities, you're going out and acting proactively to capitalize on those digital opportunities. We see one group of businesses that are very aggressive about digital and shifting their business models to this new definition. Even we see, what we call, Digital Prey where it's companies that they maybe slow to move towards digital but, at the end of the day, they see these threats or they see some opportunities. They're trying to figure out, how do we take advantage of it?
How do we get onboard or ... In some cases, we used the term Digital Prey because they're not competitive. They don't invest to become competitive around digital, to develop this mindset, invest in the technology and focus on customers. Ultimately those companies aren't around anymore. I mean we know all the roadkill so far of companies that hadn't made the shift. We know it's real. Even in data that we have, one of the surveys that we conduct annually around, well last three or four years, around digital business and digital transformation, we ask executives, business leaders, how likely is it, do you feel, that your industry or your company will be disrupted by digital?
We ask them on a scale of one to ten, how likely is it that you will be disrupted? I think we had something like seventy percent, I can't remember the exact numbers, I don't have it in front of me, but a large number, overwhelming number, indicated somewhere between eight to ten their level of confidence that their industry will be disrupted. Or their business will be disrupted. We know this is on, I would say, ninety percent of the executives out there, it's on their radar. They're trying to wrap their minds around it. The real question is whether executives make the shift.
It's an interesting question. I think is it going to impact businesses, all businesses? I think what we have to look at is not just the business landscape, but the consumer landscape. I mean if we count up the number of digital devices we have in our homes that are connected to the web in some way, or connected to the internet in some cases, these devices think and do things on their own. I mean I can come into my house, I probably have ... I know I have digital light bulbs. I got the Philips light bulbs, I have a little bit of automation around my thermostat. I got all these different pieces and we can see, just from the consumer standpoint, that there's so much emphasis now on digital as a consumer that really businesses that don't see this coming, and don't adapt to this reality of digital business, will be the losers.
In a lot of ways, this is similar to if we go back to the first Industrial Revolution, Henry Ford and the assembly line. We look at that time, companies that said, "You know what? We're going to stick with the horse and carriage. We don't believe people want mode of transportation that doesn't involve a horse." Those businesses went out very quickly, so I think that's the type of inflection point we're at today is just a very different way of how we do business. Companies have to make the shift.
Peter Schooff: I think Digital Predator and Digital Prey says it perfectly. Now, as you know, we're speaking on BPM.com so what role will BPM be playing in all of this digitization?
Clay Richardson: That's another good question, because this is research that I started on last year. Started really looking more deeply at what is the role of BPM? How are companies adapting their BPM programs to digital? Is BPM really a fit for digital? I tend to take this view, a skeptical view, of, when I do research, where I say, "I assume that the false is true or assume that the general thinking is not what is the truth." I start from that place to challenge myself. When we did this research, we started with, this new research, we started with a hypothesis that the vast majority of BPM programs won't survive the shift to digital. That was a very hard hypothesis to start from.
Then we went and talked to companies, did surveys, interviews, and what we found is BPM, the discipline, won't survive but BPM technology will. We see a new discipline coming up that will replace BPM, but the technology is still fit for digital business and digital transformation. Just to give you an idea here, to go directly to the question, one of the questions we asked in the survey was we wanted to understand how the priorities for BPM were shifting. We started from that place, tell us what was the primary driver for BPM two years ago? What's the current drive for BPM today? Then what do you expect it will be two years from now? The data, a little bit surprising in that, two years ago, the primary driver for BPM was cost reduction.
You and I, we've been around, we know that was the primary driver. Top driver, yeah, cost reduction. When we ask today, the top driver is CX improvement. The customer at the center, again we know that's been the conversation. When we ask two years ahead, what's the top driver, what we heard was digital transformation. Fifty percent of respondents indicated that they expect digital transformation to be the primary driver for process improvement in their companies.
What that says to me is that BPM technology process improvement has a role to play. Then when we dug deeper, we did hear feedback from teams that the BPM practice, the discipline itself, is not suited to our goals around digital, what we're trying to do with digital and customer experience improvements. That's where the shift happens, right? BPM is still important technology-wise, but we do have to rethink the methodology itself and the discipline.