Navigating the Digital Product Landscape: Unraveling the Transformation

In the fast-evolving realm of technology, the discourse surrounding digital products has become increasingly intricate. Will digital products transform our structure and operations? This inquiry serves as the guiding star for our exploration into the dynamic landscape of digital products and services.

Defining Digital Products

To embark on this journey, we first need to demystify the term “digital product.” Is it a tangible entity or a service seamlessly integrated into our daily lives? Throughout our investigation, we interchangeably use the terms digital product and digital service, acknowledging the nuanced distinctions that arise. Our approach involves engaging with clients, unraveling diverse perspectives that shape the contours of what can be deemed a digital product.

For some, a digital product manifests as a citizen-facing municipal portal, a gateway to civic engagement. Others perceive it as a vessel for selling assets, with the added allure of over-the-air upgrades—a characteristic epitomized by Tesla. There are those who stretch the boundaries, considering platforms like the Flex application, a marketplace where waiters and waitresses exchange shifts, as a digital product. This inclusive approach has prompted us to categorize digital products into a landscape—an intricate tapestry.

We find ourselves not only defining digital products but delving into a more intriguing question: What kind of digital product? Why does this categorization matter, and how does it impact the role of the product in the broader context of business, customers, and organizations?

The Digital Product Landscape:

The digital product landscape, a foundation built upon myriad examples, is not a rigid framework but rather a menu of product types fostering meaningful conversations about digital product portfolios. Beginning with the core mandate of traditional CIO organizations—internal services and capabilities—we traverse the landscape, navigating through customer-facing digital channels like ecommerce websites and mobile apps. Simultaneously, we explore digital enablers and features such as over-the-air updates, mirroring the evolving digital journey undertaken by many organizations.

In this intricate scenario, we encounter digital products that are not standalone commercial items but instead function as independent digital capabilities, enhancing existing products or services within an organization. The emphasis on digital optimization has made businesses more efficient and unlocked new capabilities, yet the call for a higher return on investment persists. The focus shifts to generating returns through the monetization of digital assets, such as data or media content, and the commercialization of internal capabilities.

Approximately a third of organizations actively pursue monetization mandates, marking a growing trend among non-digital native entities. The subsequent exploration takes us into the realm of truly new commercial digital products or platforms—software and digital native devices. Examples range from digital therapeutics to smartwatches, where the digital component constitutes the core product being sold. Platform products and solutions emerge as another category, combining digital capabilities with other services to create holistic platforms, as witnessed in the financial services sector.

The landscape wouldn’t be complete without acknowledging digital ventures—integral to understanding the interconnectedness of digital products and business models. Examples like Uber and Airbnb redefine how products are commercialized, reshaping revenue generation models and underscoring the symbiotic relationship between products and business ventures.

To provide a clearer categorization, we embellish the landscape, recognizing the ambiguity associated with the terms “digital” and “product.” The digital product landscape encompasses a broader definition, narrowed down to operational channels representing true products with revenue implications and ventures.

Our journey now takes us into the transformative aspect, where the evolving portfolio of digital products influences organizations in three significant ways. The financial impact,  redefines the positioning of digital products, alters collaboration dynamics between business and technology teams, influences delivery methods, and shapes the technology itself. Let’s delve into the financial aspect, where the intricate dance of revenue generation intertwines with various classes of digital products. 

As we continue our exploration into the intricate world of digital products, our focus shifts to the digital features and enablers. Picture a scenario where a backup generator is seamlessly linked to a digital app. While the digital aspect itself generates no direct revenue, its impact on product sales is profound. Some offer a free version, indirectly boosting sales, while premium subscriptions for advanced features become a source of revenue.

 Digital Commerce Insights and Technological Foundations

Clients frequently seek insights into industry standards, prompting North South Tech to simplify this into three primary categories, beginning with digital commerce. The benchmarks reveal that for leaders, approximately 5% of sales across various industries are transacted through digital commerce. The median, spanning over 1,000 surveyed companies, starts at 15%, with incremental revenue from digital products and services constituting around 2%. Leaders, however, boast an impressive 8% in this category.

Though these percentages may seem modest, the impact becomes significant when translated into the broader context of a company’s revenue. For those responsible for digital product or service teams, meeting an 8% revenue target poses a considerable challenge.

To illustrate this, we examine the example of MaRisk, a company simplistically engaged in moving containers from point A to B. While their operations involve building things for employees and customers, a significant portion involves digital commerce, even in a B2B context. They’ve ventured into the digital service realm, such as monitoring temperature changes for perishable goods like bananas in transit.

Switching gears to the technological aspect, the landscape reveals a spectrum of approaches. Many organizations support products from a basic infrastructure and ERP level, but silos often exist within product teams, especially in the realm of digital commerce. The question arises: Can we transition from this fragmented state to creating a cohesive digital foundation?

Seventy percent of surveyed organizations believe this is a possibility, envisioning a digital foundation akin to a universal Lego set. This foundation not only supports products but also allows organizations to break down and reconstruct digital products using Lego-like blocks. Nike serves as a case study, demonstrating their journey towards a digital foundation that supports a diverse range of products.

The convergence of technology and business has blurred traditional lines, demanding a new model of delivery for effective collaboration. Cross-functional teams, tailored to the product type, operate independently yet are connected by experts and communities of practice. Leadership becomes a pivotal element in this intricate system, requiring a mix of leaders from both IT and the business.

Leadership in the Digital Age:

CIOs play a crucial role in empowering diverse teams across the organization, adapting to the evolving landscape and fostering effective collaboration between technology and business-centric teams.

Сonclusion

In conclusion, as organizations grapple with the evolving landscape of digital products, CIOs must navigate the delicate balance between internal services and market-facing products. Decisions around resource allocation, delivery methods, and financial investment require thoughtful consideration to align with organizational goals. The North South Tech digital product landscape serves as a valuable tool, enabling CIOs to navigate complex conversations and chart a strategic course through the intricate world of digital product portfolios.