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RESEARCH REPORT

Building a reinvention-ready digital core

Chapter 2: How to mobilize technology for continuous reinvention

5-MINUTE READ

November 6, 2024

In brief

  • A digital core is the critical technology capability to driving continuous reinvention, enabling major performance boosts.
  • Using generative AI and new engineering principles can simplify and supercharge how companies build or evolve to this reinvention-ready digital core.
  • The 3 engineering principles for building a modern, adaptable digital core are: Architect with Intent, Connect the Dots, and Thrive with Ecosystems.

We’ve identified three actions to help companies balance their debt while building their tech in the age of generative AI.

The power of reinvention-readiness is undeniable, driven by a strong digital core.

In Chapter One of our report, we unveiled the three tenets that companies are following to achieve this coveted state of reinvention readiness: Build an industry-leading digital core; Boost investments in innovation; Balance technical debt. Companies who did all three saw massive performance boosts: 

60%

higher revenue growth rate

40%

increase in profitability

Now, in Chapter Two, we dive into how to build or evolve to a digital core that is flexible, resilient, and intelligent—all while being cost- and resource-efficient.

A digital core comprises a digital foundation (including cloud-first infrastructure, security, composable integration, security); a data & AI backbone, and digital platforms.
Let’s recap: What is a digital core?

We define the digital core as the critical technology capability that can create and empower an organization’s unique reinvention ambitions. It enables organizations to accelerate ahead of the competition and achieve their ambitions—using the right mix of cloud infrastructure and practices for agility and innovation; data and AI for differentiation; applications and platforms to accelerate growth, next-gen experiences and optimized operations—with security at every level.

What’s changed in how we build/evolve to new systems?

Gone are the days of rigid systems. To stay ahead in today’s fast-moving and ever-evolving business landscape, a digital core must be always on, always learning, and always adapting

The rise of AI and generative AI is reshaping everything, including how we build and activate a digital core.

Coding revolutionized

Generative AI is boosting developer productivity by 30%, making coding more accessible than ever.

AI agents in action

From post-trade settlements to end-to-end customer engagement, AI agents are taking on complex tasks and transforming processes.

Plug-and-play innovation

Organizations now have the power to access, fine-tune, and integrate AI innovations from trusted ecosystems, delivering true differentiation.

Your digital core needs to be in sync with the speed of change, constantly evolving and smart enough to meet your unique objectives—without the headache of overly customized, unwieldy systems. 

It’s like a Formula 1 race car—requiring split-second adjustments and high-tech engineering. In this world, only the most adaptable and intelligent systems thrive. Winning requires advanced engineering to reimagine business processes with technology.

ACT now to evolve your digital core

Our analysis has uncovered three key engineering principles that streamline and supercharge the evolution of a digital core. We call them the ACT principles, and leading companies adopt them 2x more than others.

01

Architect for Intent: Evolve architectures to allow dynamic adaptation with AI

Evolve business and technology architectures to a modern cognitive architecture that is always on, always learning and dynamically adapts to change—using AI as the central orchestrator of processes.

Leading companies apply cognitive elements like event data, telemetry and predictive analytics to make automation smarter twice as often as their peers.

Column chart shows top 25% companies automate continuously and move from manual efforts to autonomous optimization.
02

Connect the Dots: Connect systems of record and insights with platforms 

Seamlessly connect transaction platforms and analytical platforms to enable real-time insights to drive business outcomes. Maintain a continuous flow of data to enable ongoing optimization, self-reflection and better decision-making.

Top quartile companies score 2X as high in terms of integration and end-to-end visibility (CCP) capabilities.

Line graph explaining how the top 25% companies performing compared to bottom 25%.
03

Thrive with Ecosystems: Plug-and-play next-gen technologies and innovations faster with major partners

Create differentiation faster by accessing leading-edge innovations both from startups and bigger players via larger ecosystems. Benefit from the security, reliability and integration provided by these anchor partners. 

Leading companies are 2X more likely to access next-generation technologies early via large ecosystems.

Column chart shows that top 25% companies are 2X more likely to adopt new technologies.

How to get started: Leadership makes the difference

Building a modern digital core requires a series of intentional behaviors from the C-suite. Some of these include:

CIOs and CEOs must lead the charge in adopting AI-first, intent-driven architectures by integrating AI into core processes. Focus on real-time insights and automating decisions while aligning technology and teams to drive faster innovation.

60%

of C-level executives have started using AI to influence smarter products and services.

CIOs and CDOs must work together to connect AI-driven analytics with business systems, make operations easier and reduce manual processes. CEOs should align changes to business strategies, ensuring AI optimizes key operations.

34%

of companies say that their data model is largely standardized and aligned across core platforms/apps to meet operational and reporting needs.

CIOs, CEOs and CSOs must collaborate to develop a cross-ecosystem approach to integrate innovations from startups and major players, while minimizing risk and tech debt. This ensures choices align with both technical and business priorities.

50%

The average CIO still spends 50% of his time on tactical tasks like maintenance.

How to capitalize on a modern digital core

So, you’ve built or evolved to a modern digital core. What can you now do that you couldn’t do before? Here are a few tips for wielding the digital core to power reinvention across your organization:

Kickstart IT transformation

76% of IT executives identify IT as the primary area for gen-AI transformation over the next three years. To get the most value, apply automation thoughtfully and focus on no-regret moves while also investing in strategic, higher-value bets.

76% of IT executives identify IT as the primary area for gen-AI transformation over the next three years.
76% of IT executives identify IT as the primary area for gen-AI transformation over the next three years.

Primary areas for AI transformation and expected impact

Embrace agile work models

To truly harness the potential of new tech, companies must integrate innovative operating models, principles and processes. Embedding flexibility into organizational structures is key to remaining responsive and competitive.

68%

of companies report building strong capabilities around dynamic teams, where team members can rotate on and off based on project needs.

67%

report building strong multi-disciplinary teams that are cross-functional and integrate technology and other skills

Continuing the conversation

Build your digital core right, and the possibilities are endless: think AI agents negotiating deals, personalized medicine or predictive customer care. And it’s not just about new breakthroughs. It’s about unlocking value from even the simplest processes by applying today’s cutting-edge technology.

Companies can accelerate their digital core ambitions with new engineering principles and dedicated commitment from leadership. And there ways to apply new methods to other critical pieces of the puzzle: like embracing innovative operating models, ramping up security for the era of gen AI, managing infrastructure and applications and controlling technical debt—which we explore in separate pieces.

So don’t wait: Embark on this transformative journey today—the stakes are high, and the rewards will be great.

WRITTEN BY

Karthik Narain

Group Chief Executive – Technology and Chief Technology Officer

Lan Guan

Chief AI Officer

Ram Ramalingam

Global Lead – Software & Platform Engineering and Intelligent Edge

Koenraad Schelfaut

Lead – Technology Strategy & Advisory

David Wood

Global Technology Consulting Lead

Surya Mukherjee

Senior Principal – Global Technology Thought Leadership