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The Virtual Enterprise

The Cognitive Enterprise in a virtual world
Technology is transforming the business models of enterprises across the globe, creating new opportunities for growth and fresh benchmarks of cost and efficiency.


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Meet the authors

Mark Foster

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ChairmanIBM Consulting


John Granger

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Senior Vice PresidentIBM Consulting

The ability to apply AI, automation, blockchain, the Internet of Things, 5G, cloud, and quantum computing at scale has made the promise of Cognitive Enterprises real.

As we place this revolution in the context of an increasingly virtual world, we see even more power arising from the ecosystems, digital workflows, and networked organizations that are made possible. The Virtual Enterprise is emerging, supported by a “Golden Thread” of value that animates the enterprise and binds ecosystem participants.

Over the past few years, we have moved toward a tipping point where enterprises across the world have looked to leverage technology holistically to transform their business models. We have seen digital transformation move from the front or edge of the organization to deep into the core. At the same time, technologies such as AI, automation, Internet of Things (IoT), blockchain, and 5G have reached a level of maturity that can be leveraged at scale to drive real impact on business outcomes.

Organizations across all industries are seeking to become technology, platform, and experience companies. We have called this evolution the emergence of Cognitive Enterprises, which are brought to life by the imagining of market-making platforms, the shaping of Intelligent Workflows, and a deeper focus on experience and humanity.

We have seen that the three main building blocks of the Cognitive Enterprise have been stretched by the new reality.

The COVID crisis has had its impact on these Cognitive Enterprises. It has accelerated digital transformation journeys; reinforced the importance of applying exponential technologies to produce more efficient, effective, and flexible processes; and clarified the case for the leverage of hybrid cloud infrastructures to deliver adaptive consumption models and services. We have seen that the three main building blocks of the Cognitive Enterprise have been stretched by the new reality.

Market-making business platforms have had to digitize even more quickly and extend their remit wider into new ecosystems and partners; Intelligent Workflows have had to prioritize the use of extreme automation and AI to meet mass customer and employee connectivity and service needs; and new definitions of experience and humanity have emerged from the need to keep customers, employees, and citizens safe and healthy.

The Virtual
Enterprise arrives

The truth is that the virtualization which has been forced by the pandemic is actually a key transformational theme that has been becoming more and more important anyway. We see this recent experience as accelerating the emergence of the Virtual Enterprise as the next generation of organization and operating model. It builds upon the drivers that we have seen for a while and takes the potential to the next level. The Virtual Enterprise re-evaluates the need for physical assets, infrastructure and captive talent and opens the potential for extreme digitalization as well as extended value chains and new partnership approaches.

The Virtual
Enterprise arrives

The truth is that the virtualization which has been forced by the pandemic is actually a key transformational theme that has been becoming more and more important anyway. We see this recent experience as accelerating the emergence of the Virtual Enterprise as the next generation of organization and operating model. It builds upon the drivers that we have seen for a while and takes the potential to the next level. The Virtual Enterprise re-evaluates the need for physical assets, infrastructure and captive talent and opens the potential for extreme digitalization as well as extended value chains and new partnership approaches.

The single most important characteristic of the Virtual Enterprise is “openness.” This openness brings value at three levels:

Inside
Inside the enterprise—connecting divisions and functions in more collaborative and agile workflows
Outside
With partners outside the enterprise who become ever more critical to deliver core purpose of the business
Out there
With the wider ecosystem that allows true platform economics to play out and the enterprise to take advantage of all those who wish or need to connect with its intent
Inside
Inside the enterprise—connecting divisions and functions in more collaborative and agile workflows
Outside
With partners outside the enterprise who become ever more critical to deliver core purpose of the business
Out there
With the wider ecosystem that allows true platform economics to play out and the enterprise to take advantage of all those who wish or need to connect with its intent

The extremes of virtual access to customers and work colleagues over the past year have also accelerated a reset of the human-technology interface. New tools and ways of working have become commonplace overnight.

The digital channel has become a primary source of engagement, unleashing new potential for markets and access, as well as creating new challenges for recreating empathy, sense of belonging, and human connection. Working relationships and collaboration have also been tested and enabled by ever-advancing software and technology solutions.

The pandemic experience has also reinforced the degree to which everything is connected around the world and the impact humanity has on itself and the planet. The Virtual Enterprise therefore operates in an environment where purpose, intent, and wider societal impact have come to the fore.

The potential to align ecosystems as solutions to the big issues of climate, health, and equality is real. As sustainability and stakeholder capitalism become C-suite imperatives, the new technology-enabled business models that are emerging have a critical role to play.

Market-making Platforms and Ecosystems
The Virtual Enterprise makes open platforms and ecosystems the heart of its strategy, illuminating new potential for growth, efficiency, and innovation.
Science and Data-led Innovation
The Virtual Enterprise fundamentally looks forward and outward, leveraging new kinds of data and intelligence to drive decisions.
Extended Intelligent Workflows
Extended Intelligent Workflows are the Golden Thread of the Virtual Enterprise that integrate the end-user experience provided by the enterprise, its platforms, and its ecosystems.
Sustainability and Impact
The evolution toward the Virtual Enterprise reinforces global trends toward more virtual work models, less travel, less urban activity, and less physical trade.
Inclusive Human-technology Partnerships
The Virtual Enterprise can be a massive accelerator of inclusion as different divisions, organizations, geographies, and backgrounds get to engage in ext