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DIGITAL TRANSFORMATION TRAILBLAZING:

A Data-Driven Approach
DIGITAL BUSINESS TRANSFORMATION (DBT)
has progressed rapidly from being a strategy pursued by a few
corporate pioneers to having become a foundational requirement
for almost all companies. With seemingly every organization today
executing a DBT plan, how can a company stand out from the
crowd? After all, many of the core technologies powering DBT—
including mobile devices, cloud computing, social networking, and
big data analytics, among others—have been widely adopted.

As it turns out, data of a particular kind is proving to be the

solution to many of the challenges organizations now face and In truth, they have little choice. Research and advisory firm IDC
is presenting organizations with the opportunity to get ahead. A states in its July 2016 “Digital Transformation: Phases, Challenges,
new survey of IT leaders by IDG Research Services reveals that and Initiatives” report that digital transformation “has become a
many of the companies leading the DBT pack have learned to business imperative.” IDC believes that “the organizations that have
take advantage of one type of data that is too often discounted: embarked on this digital journey would stay ahead of the curve
machine data. The ability to collect, analyze, and leverage machine not just in their technological pursuits but in delivering business
data is emerging as a potent competitive differentiator and will benefits as they would be sensitive to the levers of change.
continue to separate the DBT leaders from those merely moving These organizations would realize how digital transformation
forward with the masses. can positively affect all areas of business, from impact on
customer experience to enhanced productivity in operations and
improvement in the way people collaborate in an organization.”
The Current Digital Business
Transformation Scene This bullish perspective on DBT has become widely shared. It’s not
surprising that CIO Magazine’s “State of the CIO 2017” report found
It falls largely on CIOs and other IT professionals to put in place
that 50% of the 646 IT executives and managers surveyed consider
the digital components necessary to generate DBT’s business
their current roles to be primarily “transformational,” as opposed to
benefits and get enterprise-wide support. To succeed, DBT requires
“functional” or “strategic.” The core activities of transformational CIOs
involvement beyond IT and engineering practitioners. IT and
include aligning IT initiatives with business goals, implementing new
business leaders are increasingly stepping up to this challenge.
systems and architectures, cultivating the IT/business partnership,
leading change efforts, and redesigning business processes.

The new IDG Research Services study, conducted in early 2017,

MACHINE DATA: data that is produced
provides even more insight into the current DBT landscape, having
by nearly every software application and
surveyed the activities and objectives of more than 400 organiza-
electronic device across an organization. tions in the U.S., U.K., and Germany, including getting their perspec-
This data provides definitive time-stamped tives on the value of machine data. All of the respondents hold
records of various activities such as transactions, IT director-level or higher IT or business titles, and their companies
events, customer activities, and user activities as well have revenues of $500 million or more (or have at least 1,000
as data associated with security threats and infra- employees, in the case of public sector organizations).
structure abnormalities. Among the various types of
machine data are log data, web/clickstream data,
message queues, and sensor data.
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FIGURE 1. Progress with Digital Business Transformation Machine Data Tips the Digital
Business Transformation Scales
Clearly, having a mix of funding from both IT and the business
is one measure of a DBT strategy’s potential. An even more
potent variable, however, is how an organization is exploiting its
1% 8% 55% 36% machine data. Machine data is only one type of data available
Still getting Reactive, Moving Trailblazer;
off the trying to with the ahead of to organizations, but it is often one of the most undervalued
ground catch up masses the curve and the least leveraged.

Source: IDG Research 2017 As shown in Figure 2, most companies recognize the business
value of relational and transactional data. It’s not surprising that
As illustrated in Figure 1, the vast majority of companies perceive people are able to understand and value these types of data,
themselves as either “moving with the masses” or “ahead of the given that they are tailored for human consumption.
curve/trailblazer” when it comes to their DBT initiatives. Although
these self-assessments suggest that organizations are generally Machine data, by contrast, is complex and unstructured. Appli-
positive about their individual DBT status, many companies remain cation logs, event logs, packet/flow data, message queues, and
uncertain about how they can separate themselves from the other forms of machine data can be difficult to decipher. Even IT
masses to join—or remain in—the trailblazer ranks. professionals trained to interpret machine data can quickly become
overwhelmed by the sheer volume constantly generated by on-site
Most companies believe they have enough budget to meet their and cloud-based data centers, end user and Internet of Things (IoT)
DBT goals. Two-thirds (67%) rate their DBT budget levels as very devices, and the networks interconnecting all these elements.
good or good. The same percentage expect their DBT budgets to
increase in the coming year, with just 8% expecting a decrease. The challenges posed by machine data are reflected in the finding
that many organizations have yet to fully recognize its potential.
Beyond the basic budget directions, the IDG Research Services When asked which data types can provide the most business value
survey provides perspective on the sources of DBT funding. It for their organizations, only 38% of the survey respondents overall
defined DBT as being a “digital-first” approach that—in addition selected machine data.
to adopting technologies such as mobile, cloud, and big data
analytics—is redefining business processes, organizational struc-
tures, and engagement points with employees, customers, and
partners. Those organizations furthest along in pursuing digital-first The companies furthest along
strategies were more likely to indicate that they have fairly diverse
funding sources, including non-IT department contributors such as in their digital-first initiatives
the marketing and product development units. This funding breadth disproportionately appreciate the
indicates that leading-edge organizations understand that DBT is as
much a business initiative as an IT project and fund it accordingly. business value of machine data.

FIGURE 2. Data Types and Their Perceived Business Value

70%
Relational data (ex., 70%
customer, product, 77%
or weather data) 80%
76%
Status of “Digital First” strategy:
60% Information gathering
Transactional data (ex., 59%
62% In the process of creating strategy
OLTP, invoices, etc.)
59%
64% Starting to execute strategy

Department level changes

Machine data (ex., log, 30%
application, web logs 22% Enterprise-wide changes
47%
clickstream, firewall, 53%
or sensor data) 48% Source: IDG Research 2017
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As shown in Figure 2, however, the companies furthest along FIGURE 3. Benefits of Operational Intelligence
in their digital-first initiatives disproportionately appreciate the
In this survey, Operational Intelligence refers to the ability
business value of machine data. Approximately half of those that
to turn machine data into valuable insight.
have at least started to execute a digital-first strategy said they
believe that machine data can deliver significant business value.
Enhancing customer
41%
The IDG Research Services survey indicates that growing numbers experience
of organizations recognize the value of leveraging this data. When Improving decision-
asked to characterize the ability to derive real-time insights and making speed 40%
business value from machine data to achieve their digital business and accuracy
goals, more than two-thirds of the respondents said that that ability
Reducing costs
is a critical or very important priority. through automation and 40%
improved efficiency

Top Objectives for Leveraging Machine Data

Boosting productivity 37%
Survey respondents cited a variety of capabilities or outcomes
they hope to get from their data, regardless of its type. Far and
Improving security/
away the top goal is data security, which 44% of the respondents 36%
minimizing risk
identified as a critical capability and another 39% regard as a
very important capability, for a total of 83%. Improving customer
acquisition and retention
36%
Other top drivers for deriving business value from data (including
the percentages ranking them as either critical or very important Deriving actionable
insights from data
33%
capabilities):
n Analysis and visualization (72%)
Increasing revenue
n Powerful search capabilities (69%) opportunities
32%
n Ability to support individual as well as enterprise-wide use Increasing competitive
cases such as security, IT ops, and business analytics (69%) advantage/Staying 31%
n Intuitive tools that are easy to use and learn (66%) ahead of market trends

Reducing time to
Respondents also specifically ranked the biggest benefits that market for new 25%
machine-data-driven Operational Intelligence might deliver. products and services
Operational Intelligence refers to the ability to use machine data
Source: IDG Research 2017
to gain real-time understanding of what’s happening across an
organization’s IT systems and technology infrastructure. With
this understanding, executives and managers can make better-
informed and more rapid business decisions.
Machine data’s central role becomes clear in a comparison of the
benefits of Operational Intelligence with the main DBT drivers cited
As shown in Figure 3, survey respondents cited nine distinct
by the survey respondents. As shown in Figure 4, the top goal or
benefits that Operational Intelligence can deliver. Leading the
outcome organizations desire from their DBT efforts is improving
list is enhancing customer experience, followed by improving
security and minimizing risks. More than three-quarters of the
decision-making, reducing costs, and increasing productivity.
respondents characterized this goal as either critically important or
very important. Several other business drivers, including customer
Machine Data Powers Digital acquisition, cost reduction, and aiding decision-making, rank nearly
as high in combined critical/very important scores.
Business Transformation
We’re fast reaching a point at which organizations must regard A comparison of Figures 3 and 4 shows a strong correlation
machine data, and the Operational Intelligence it delivers, as a between the benefits of machine-data-driven Operational Intel-
DBT necessity, not as an optional luxury. For growing numbers ligence and the overarching goals of DBT initiatives. Many of the
of leading-edge organizations, machine data is already emerging top-level DBT objectives simply can’t be fully achieved if they’re
as the most critical engine powering their business transformation not built on a solid machine data foundation.
initiatives.
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FIGURE 4. Digital Business Transformation Drivers

n Critical n Very important n Somewhat important n Not very important n Not at all important

Improving security/minimizing risk 28% 49% 20% 3%

Improving customer acquisition

21% 51% 21% 5% 2%
and retention

Reducing costs through automation

18% 53% 23% 5%
and improved efficiency

Deriving actionable insights

14% 57% 24% 5%
from your organization’s data

Enhancing customer experience 19% 51% 24% 5% 1%

Improving decision-making
12% 57% 27% 3%
speed and accuracy

Increasing revenue opportunities 18% 51% 25% 5% 2%

Increasing competitive advantage/

Staying ahead of market trends
18% 49% 26% 6%

Reducing time to market for

11% 50% 28% 10% 1%
new products and services
Source: IDG Research 2017

Becoming Digital-First and analysis technologies—needed to capitalize on this rich source

of Operational Intelligence.
Understanding the potential value of machine data and actually
realizing that value are two separate things. Judging from the IDG Companies that hope to separate themselves from the DBT masses
Research Services survey, most organizations have at least reached will find it tough to do so if they ignore their valuable machine
the understanding stage. Those companies furthest along in their data resources. Many of those leading the DBT pack have already
digital-first programs are most likely to be leveraging machine figured this out and are leveraging the value of all their data. Those
data to inform real-time business decisions, not just acknowledging organizations that are able to collect, analyze, and leverage all their
its potential. data will gain an edge that propels them ahead of the competition.

There’s no doubt that, for all its attractions, machine data can pose
challenges to those wanting to tap into its promise. The sources of
this data are many, the data itself is voluminous and unstructured, For more information, visit www.splunk.com/
and companies may lack the internal expertise—or the collection digital-transformation-customer-success