Introduction
Digital transformation is the process of undergoing multiple internal and external changes by an organization leveraging digital technologies to become more agile, optimized and efficient in its business operations. Dynamic IT environment, the urge to leverage emerging technologies, and the unpreparedness to function at scale in throes of the global pandemic are driving increased spend on cloud-based applications and further pushing the case for digital transformation. MarketsandMarkets data suggests, digital transformation market is envisioned to witness a CAGR of 18.1% to reach $665 billion by 2023 from $290 billion in 2018[1]. IDC report forecasts, global spending on public cloud services and related infrastructure is anticipated to hit $500 billion in 2023, from $229 billion in 2019, a CAGR of 22.3%[2]. All these numbers indicate a strong surge in cloud and intelligent digital technology adoption as more and more companies embrace digital transformation to become agile and stay market relevant. This article provides a deep dive into what is ‘Digital Transformation’ and how it transcends to driving organizational growth.
Digital transformation is about being agile and responding to the current changes & preparing for future changes leveraging digital technologies and its potential to enhance human experience and capabilities in all spheres of business. It is about cultivating a mindset of continuous hustle, continuous optimization, holistic growth and focused efforts on what people need(Customers, partners, employees).Let’s try and break this definition of digital transformation and look at each of the parts individually to understand it better:
- Responding to Current Changes
- Preparing for Future changes and building innovative solutions
- Enhance Human Experience & capabilities in all spheres of business
Responding to current changes leveraging digital technologies
This part focusses on realizing that an organization needs to have digitally enhanced customer-driven business strategy. As a first step, IT and business goals need to align to channelize resources in creation of digital products and experiences which can drive growth in current markets and products. From an organization perspective, the focus is to transform to optimize operations, enhance customer-centricity, manage risk, find new use cases to deploy digital technology and increase revenues. Digitization and Digitalization are all part of this strategy.
The digital transformation wave is pervasive across industries & geographies . Digital technologies provide immense opportunities for organizations to evaluate possible use cases to optimize business operations and improve bottom line as part of their digital strategy. Now, the question arises-What can organizations do to attain Digital Transformation in responding to current changes?
As far as responding to current changes leveraging digital technology is concerned, the focus is to significantly improve the customer experience, act on insights derived from real-time and predictive analytics, increase productivity, cross- enterprise collaboration, automation of mundane tasks and unleash business value in a non-disruptive way. The organization needs to identify and re-define relevant business processes which can deliver following outcomes leveraging digital technologies:-
Deliver customer centricity and experience
Delivering Customer centricity & experience at every touch point by creating innovative solutions that deliver unique experiences by focusing on personalization, convenience, ease of doing transaction, value for money or privacy preserving practices to differentiate. For example, Netflix, Amazon & Spotify’s predictive hyper-personalized experience embedded in their recommendation systems is a classic case of delivering customer delight and unique experience customized to each individual customer.
Real time analytics
Gone are the days when business users waited for batch jobs to update numbers on predetermined frequency, today real time analytics has become norm as it provides immense potential to respond to changes, prepare for the unexpected, make smarter decisions, optimize operations and tasks in turn reducing cycle time, and innovate with agility & speed. IoT sensors and devices are driving the case further for real time actionable insights through streaming analytics. Grandviewresearch[3] states ”The global streaming analytics market size was valued at USD 6.32 billion in 2018 and is expected to grow at a compound annual growth rate (CAGR) of 28.9% from 2019 to 2025.” For example, Swiss Federal railway[4] replaced their old steam trains with technologically advanced fleet and started using proactive asset maintenance by using SAP HANA streaming analytics to determine which loads should be decreased and this information flows to other systems which automatically turn off heaters in train cars and railroad switches, helping the company in optimizing operations and reducing costs.
Predictive analytics
Embedding predictive analytics can help organizations focus on proactive business process management than reactive. The ability to predict future outcomes and prescribe what needs to be done in supply chain efficiency, cyber security and disaster management upfront can turn into game changing competitive advantage. For example, in oil and gas industry, predictive analytics is helping companies improve operational efficiency by proactive predictive maintenance, demand forecasting, energy trading, risk management and optimization.
Robotic process automation
Automating voluminous and repetitive tasks can help in decreasing manual effort on non-core activities which will help channel the saved time & human effort in more productive and innovative activities. Automated shared services, augmented intelligence and smart automation are great ways to put digital technologies to drive operational efficiency , cost reduction, revenue growth and competitiveness. Returns processing is a common use case for RPA that we have all seen. RPA helps companies manage returned products by automating manual tasks such as receipt of return confirmation, inventory update , billing system update and issuing payment adjustment to the customer.
Preparing for future changes and building innovative solutions leveraging digital technologies
Preempting and preparing for future market changes focusses on trying to aggressively decipher disruptive potential of digital initiatives, technologies, newer business models, new opportunities to extend or diversify into newer markets. Redefining existing marketplace and creating new market to tap into first mover advantage and innovate constantly to ensure they remain fast moving target for their competition. Here , the focus is to tap into entirely new revenue streams with new business models, markets revolving around information and services leaping far beyond optimization aspect.
Quest for creating newer innovative business models to thrive in today’s digital world is a major challenge for executives. The value proposition of newer business models, the required core competencies and skillsets, forging strategic partnerships , understanding market forces, generating shareholder value along with providing tangible benefits to target customers is easier said than done. So, how does an organization decide on which newer business models are promising for future revenue growth? Well, the answer is “it depends” and varies from company to company. However, reimagining business models can be done in following ways:
Venture into new markets and industry
Look at your products, core assets, technological capabilities, data , customers, Intellectual property that you have built over numerous years of existence. Explore options and decipher opportunities to leverage these assets to enter or disrupt other industries who may/may not be part of your existing value chain. Disrupt entire value chain by thinking out of the box and reshaping the way your products and services reach their target audience. UPS is a perfect example of leveraging intelligent technology for newer business solutions. UPS[5] is growing from delivery company to a niche player offering 3D printing of critical and quality auto spare parts to its customers and tapping into un-catered need of printing one of a kind items and prototypes.
Harness the power of your ecosystem
Collaborating and integrating with other businesses in your ecosystem to provide a seamless experience to common customer. Community based sharing of underutilized resources in peer network is another innovative way to redefine business models using digital platforms and technologies. The use case will differ from organization to organization but the potential to deliver newer innovative solutions without boundaries can surely disrupt the isolated players. For example, partnership between Concur, Nokia, Hertz and Mojio is taking connected vehicle to a different level by integrating car rental to parking and fueling location and payment, to integrated navigation and expense management for business travelers[6].
Power of your online community
Monetize the power of your online community of users and customers by mining their opinions, deriving insights, driving member engagement for research initiatives for third party organizations. As a bonus, you may also drive open innovation initiatives to find newer business models, use cases from the larger community. There is plethora of opportunities to unlock the potential of virtual communities and drive next disruptive product development by building on digital technologies. For example, Facebook uses hackathons to generate newer ideas and fosters a product innovation centered culture built on open innovation inside and outside the company. Another example is SAP Ariba network, where buyers and sellers collaborate and discuss new business opportunities.[7]
Outcome based business models
Create and repurpose your business model on the final tangible outcome that your organization delivers instead of mere products and services. Build capabilities to position your business as an enabler of the larger outcome and not just the product or service sold. For example, Zipcar provides on demand IoT enabled cars and trucks .Customers pay for subscription which includes gas, insurance and on demand access to cars and trucks. Their outcome-based business model uses IoT sensors to drive innovation in car rental business. Another classic example of outcome- based business model is Amazon web services which provide reliable, scalable , high availability cloud services.
Enhancing human experience & capabilities in all spheres of business
Enhancing human experience & capabilities in all spheres of business, is indeed the most important part of the digital transformation narrative, if a change isn’t enhancing customer experience or complementing employee expertise it may not be a transformative in true sense. It is not just these digital intelligent technologies alone that propel organizations to true transformation, but it is their interaction with humans which deem these emerging technologies game changing and revolutionary. As organizations deploy more digital technologies like Machine Learning, cloud, security, analytics and IoT ; the workforce will need re-skilling and retooling to bridge the skill gap and drive employee engagement.
So, now that we know how we can achieve digital transformation leveraging digital technologies in current business scenario and how to create newer business models , now the question arises- what can we do to ensure the digital technology enhances the human experience?
To answer this, we need to look at intelligent process automation, use of AI in automating mundane repetitive tasks and channel employees’ time and effort in more value adding, productive tasks. Not only automation, but intelligent technologies such as intelligent analytics, IoT, voice enabled devices, virtual reality , smart wearables, integrated workflows , collaboration platforms will enable faster decision making and more transparency. And in turn drive employee reskilling and which will enhance employee engagement and productivity.
Conclusion
In nutshell, the Digital transformation is an amalgamation of all these 3 parts and requires a digital transformation strategy that looks at goals, current situation, business context and chalks out a clear roadmap of how to move forward on all the three frontiers. The possibilities are endless, the opportunities are boundless and perils of lagging behind and failing to leverage these digital technologies are grave; the onus of acting on these key focus areas and making most out of the intelligent digital technologies and redefine markets and industries lies with the executives.
Hope this blog gave you some insight into understanding Digital transformation and how you can incorporate it in your organization to become a digitally transformed market leader.
References
[1] https://ift.tt/34nJkvo
[2]https://ift.tt/3l8xBX9
[3] https://ift.tt/31idfmH
[4] https://ift.tt/31idfTJ
[5]https://ift.tt/3j2Z9M2.
[6] https://ift.tt/2QfBmfq
[7] https://ift.tt/2rtSJf9
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