Many business executives know their businesses are in danger of being taken out by a digital disruptor -- much as Uber and Airbnb have seriously disrupted the taxi and hotel sectors -- but only about half of businesses globally have their own strategic plan for digital transformation that could avoid such a fate, according to a new study commissioned by CenturyLink.

As part of its own plan to be a strategic partner in the digital transformation process, CenturyLink unveiled the study, conducted by 451 Research, in a news release and webcast this week. Both also highlighted the critical role that the network plays in enabling businesses to move away from the traditional product pipeline method to engage with customers in new ways.

"Consumers are driving companies to be able to interact with that business at multiple points in the development of a product or service," says Bill Hurley, chief marketing officer for CenturyLink. Instead of waiting for a product to be built, marketed and sold in the traditional way, consumers in today's "platform economy" want to "interact with organizations throughout the development of a product and that customer interaction is critical to success."

Digital transformation is what gets companies ready for that kind of interaction, Hurley notes. The CenturyLink/451 Research survey shows 42% of executives surveyed globally expect major disruption of their business by digital technologies and 60% are investing more heavily in their own IT to prepare for digital disruption.

But only 51% have a formal digital transformation strategy compared to 23% who are working on siloed digital projects, 19% who are still in the planning stages and 7% who have no ongoing digital transformation strategy.

That represents an opportunity for CenturyLink to leverage the experience it has gained through its own internal transformation process, as well as other expertise, in helping its business customers plan and execute their own digital transformation strategies, Hurley says.

"Many of our customers are not born in the cloud, they have legacy businesses with legacy business processes not designed to be exposed to their customers for interaction to occur," he notes. "And digital transformation is really all about organizations recognizing there is more profit out there, there is more of a chance to deepen the relationship with the customer, if I give them the opportunity to help me build the product service or experience along the way."

Hurley cites an MIT study which shows a 26% improvement in profitability and a 90% improvement in revenue on assets compared to industry peers for companies that went through a digital transformation. "So, there are some demonstrable numbers out there that prove that if you can create that kind of digital experience I am talking about, you can make money," he notes.

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But the barriers are considerable: Like telecom network operators, businesses in general have legacy processes that have to be digitized and internal siloes that need to be broken down to enable a company-wide strategy. The survey identified four key areas where progress is needed, Hurley says. They include: agility, customer experience, operational efficiency and risk management or security.

"To achieve your goals, you need to be moving levers in all four of those dimensions from a technical and a leadership perspective," he comments. "Many companies are recognizing that, in order to digitize, they have to make everything web-enabled but they also need to understand leadership requirements which are critical to getting more of the organization aligned to achieve that goal."

CenturyLink's approach starts with the network and how it can embed communications, cloud, security/risk management and business logic into the network, so it can work with IT leaders within enterprises to help them achieve their transformation goals. That's different from consultants, who may work with IT leaders or chief marketing officers to develop a digital transformation strategy, he notes. CenturyLink will provide professional services to help companies who want to outsource some pieces of the process, but they don't see themselves as consultants.

The network operator is putting to work its networking expertise but also general cloud expertise and specifically multi-cloud management, in showing businesses it can be a strong strategic partner in this process. The Cloud Applications Manager, launched earlier this year and based on Elastic Box technology CenturyLink acquired, is a key part of that strategy. That new capability lets enterprises model their own applications and manage their deployment in the cloud, over their lifecycle. (See CenturyLink Ready to Roll on New Services.)

Transformation isn't quick -- the survey found the majority of businesses believe it will take three to five years. But Hurley stresses that it is important to fully digitize business operations, even if it is a lengthy process, and focus that process on changing the customer experience in the end, and not merely on operating more efficiently. In other words, this isn't about putting an FAQ on your website, hoping to drive down calls into the call center.

"Digital transformation is when you wake up and say, 'I am going to run my business differently in a way that is efficient for me to interact with customer base, and allow my customer to be part of delivering the solution and the experience,'" Hurley says. "And oh, by the way, not just allow customers to interact but bring other partners in to help with solving and delivering on that customer's need, in a cost-effective manner and operationally efficient manner by digitizing your processes."

The entire study is available to download here.

— Carol Wilson, Editor-at-Large, Light Reading

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