According to an IDC research report released in May 2019, businesses are expected to spend $1.18 Trillion on digital transformation in 2020. This represents a 17.9% increase in spending from 2018-19 and includes investments in both technology and professional services. Business continuity investments are large and growing as well. The global disaster recovery solutions market was valued at $1.7 billion in 2016, and Grand View Research projects that it will increase to $26.23 Billion by 2025.
The numbers provided are large and high level in both of these segments, but the trend is crystal clear; both digital transformation and business continuity are high priority areas for investment today and are expected to be increasingly critical moving forward. Being visionary in either can be the difference between market leadership and laggard status, but there is also indirect friction between digital disruption and business continuity.
Companies are spending enormous sums of money to transform themselves internally at the same time that they are making significant investments to minimize or mitigate the impact of unexpected events and external changes. This is why we must ask the question: can digital disruption and business continuity co-exist?
It is important to start by distinguishing digital disruption from supply chain disruption. Digital disruption is welcome, at least in theory, because it ushers in innovative practices and partnerships that make it hard or even impossible for the competition to keep up. This disruption is driven by the company carrying it out; it is deliberate and calculated. Digital disruption is led by one company and shakes up a market for the other players.
Supply chain disruption, on the other hand, is a force inflicted upon a company by events beyond their control. Common causes include natural disasters, labor strikes, cyber-attacks, regulatory compliance changes and geopolitical events. And while this disruption is likely to victimize all companies in a market, industry or supply chain, each of them has an equal advance opportunity to put mitigation plans in place – whether they chose to do so or not.
That choice, which includes decisions about whether to plan, how detailed to be and how much to invest, reflects the company’s attitude towards risk and uncertainty. A positive or opportunistic attitude towards risk says, “A bad event may happen, but if we can handle it better than the competition, we will emerge from the situation in a dominant position.” Interestingly, the same attitude is likely to be found in organizations with an active appetite to disrupt themselves through digital transformation.
As Jon Hansen points out in his article Securing Procurement at the Digital Edge, digital transformation and business continuity planning must go hand in hand. “Overcoming (the challenges of data security and supply chain security) comes down to two things. The first is a willingness on the part of executive leadership to change their way of thinking about how procurement “works.” The second is the development of a viable security strategy.”
While this sense of alignment is critical, digital transformation and business continuity also have a way of disrupting each other, especially when leadership teams don’t take an expansive view of the side effects of the initiatives they rely upon.
Traditional approaches to business continuity can actually prevent well-intentioned digital disruption from delivering meaningful results. John Gelinne, a Deloitte Risk and Financial Advisory managing director for Cyber Risk Services, provides an example of how legacy business continuity investments may stop digital transformation in its tracks, “Legacy disaster recovery programs are based on the principle of redundancy, which rely on a network of expensive backup systems as the primary solution. The challenge now is that there are many points of digital disruption to today’s business models, and redundancy alone addresses only one part of the needed solution.”
Surely, leading enterprises and global supply chains can not be forced to choose between leading digital disruption and ensuring business continuity. One resource that can bolster the effectiveness and sustainability of both is clean, actionable, quality data. Investing in data, especially for the sake of standardization and centralization, can support both digital transformation and business continuity.
Ardent Partners, a research and advisory firm focused on supply management, emphasizes the importance of data in the current business landscape, especially with regard to data visibility, “These kinds of solutions offer a single source of truth, with data commonality and standardization that is critical for business continuity in sourcing, procurement and accounts payable. They also enhance interoperability, data management, consistency, and overall user efficiency.” Since digital disruption can not take place without the kind of connectivity Ardent Partners describes, we may have finally found a common foundation that can allow transformation and business continuity to thrive in parallel.
Much has been made of digital disruption as a factor in procurement and supply chain, as has the cost and unpredictability of operating global supply chains. Having access to actionable, real-time data that accurately represents the activity of the supply chain is a good place to start, but the mindset of business leaders tasked with carrying out digital disruption and ensuring business continuity is a factor as well. If these leaders are too risk-averse, they will not have the appetite for the leap of faith required to spark productive disruption. If they are too brash in their embrace of disruption, business continuity is certain to suffer.
Despite the fact that both digital disruption and business continuity are driven by data and technology, the blending of their objectives and execution of relevant strategies remains a purely human challenge – one that is likely to become even more complex (and more exciting) as available data and technology continue to progress.