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.
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.
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.
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.
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.
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.
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.