Is digital literacy the new financial literacy?

Legal decisions in the wake of corporate failures like Enron, WorldCom and, in Australia, Centro continue to reinforce financial literacy as imperative for business leaders.

But we are yet to demand the same of arguably the biggest game changer of all, technology.

The impact of emerging technologies, including social media platforms that allow instant global communication, is deeply disrupting the nature of business.

In some industries that spells opportunity; for others, such as traditional print media, displacement.

But given the speed and ubiquity of technology-driven change, businesses will need to become digitally literate, and fast.

Putting aside the life-changing impacts of technology on everything from the way we meet to the way we connect, collaborate and educate, the level of expenditure alone demands that decision-makers show strong technical and strategic capabilities.

Gartner Inc for example forecasts that this year worldwide IT spending will total $3.8 trillion, a 4.1% increase from last year.

According to IDC, Australians will spend $44.9 billion this year; that takes into account earlier downgrades to factor in the slower economy.

These are big numbers.

To date, globally around $34 billion has been spent on big data and $109 billion on cloud, with predictions these will grow to $232 and $207 billion by 2016 respectively.

Given that more of the business dollar is likely to be spent in technology, leaders need to ask questions like:

1. How will data translate into useful knowledge and be used for business outcomes?
2. How will cloud impact our risk and security strategy, or our traditional models of procurement?
3. What, if any, is the relationship between digital investment and productivity?
4. Can social media be used strategically and what is the ROI?

In some ways making decisions on big IT projects is easier because leaders demand businesses carry out rigorous risk analysis.

The emerging digital and social layers are not well understood, and this includes many IT professionals who ‘get’ hardware and software, but don’t understand the power of digital content or social platforms.

For example, while many social media platforms are free, engaging in them is time intense and requires a high level of investment in human resources.

While it’s possible to measure ROI on social media once a customer enters the company’s digital or social media ecosystem, as with traditional marketing, it remains difficult to quantify the benefits generated by online conversations around brand awareness or reputation.

But we know these conversations are happening and that they have an impact.

The decline of trust in leaders and institutions long documented by Edelman has been replaced by the growth in peer-to-peer trust, which means the recommendations of friends and peers (including in digital channels) influences their decisions.

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