3 Things that Most Digital Transformation Initiatives Underestimate
Digital transformation is not a new trend. As a matter of fact, it has filtered into all industry sectors over the last years and as a result, related trends such as Blockchain, AI and the Internet of Things are rapidly changing the business and technology environment as we know it today. However, many organizations are still struggling to embark on this journey of pursuing the disruptive digital transformation approach. Most of them are familiar with the buzzwords and core aspects of business transformation, but don’t understand how they connect and relate to each other. It is therefore essential to bear in mind that digital transformation is not an independent project, but rather an on-going initiative, a part of the company’s strategy and the corporate culture.
The following list aims to serve as a guide on things to consider that may not always be obvious, when taking your organization through its digital transformation journey. The list helps give you a scope and trigger more detailed lists of activities, therefore it is by no means meant to be a finite check-list. Some of the points include real cases in an effort to make the explanations clearer. The main aspects that need to be taken into account, can be classified into three major domains in every organization, which are customer relationships and channels, product and service portfolio, and production.
Customer Relationships and Channels
1. Data Analysis (Big Data)
Big Data and Data Analysis imply the generation, processing, storage and evaluation of vast amounts of data. As a result of digital transformation, your organization will begin to generate a lot more data, therefore creating a need to define how you will manage it, so that it can be used across the whole organization to deliver timely, reliable and up-to-date insights. Organizations also need to keep an eye on the different data types and ensure that they are GDPR-compliant, especially in the case of organizations that are doing business in Europe or with European customers.
2. Cross-Channel Customer Relationship Management
Multi-channel CRM has become critical for marketers and sales teams working and communicating with their stakeholders through different channels. A good CRM system enables them to have all the customer data in one platform, save time and be more effective, when engaging with their contacts. A focus on a centralized and well-integrated CRM ensures that your organization is able to act in a customer-centric and data driven way.
3. Referral and Marketing Systems
A new world full of possibilities has been created in the marketing sector thanks to digital disruption. Market players who have large amounts of customer data (big data) and have been able to combine it with appropriate statistical models, are already building recommendation and marketing systems to get ahead of their competition. An example for this case is the Netflix series “House of Cards”, whose story-line and case were built based on data usage from over 29 million customers, in the form of favourite genre and favourite actors, user ratings of thousands of series and films, among others. This is the kind of competitive advantage that listening to your customer through data can deliver.
Product/Service Portfolio
1. Improvement of existing products and services
By using digital technologies organizations are able to improve existing products and provide a better service to their customers. For instance, nowadays we are all used to doing money transfers via our smartphones and banking apps, which was something inconceivable 10 years ago. As customers now demand similar experiences, they are accustomed to digital-native services like social media and gaming. And organizations need to play catch-up and begin rolling-out digital services that compete in their own market, but are perceived by their customers against best-in-class services of other industries.
2. New products and services
On the other hand, some digital strategies are also focusing on creating new products and services that break the mold and provide more convenience and service. A good example for this case is the entire mobile-app market. The number of apps available in the Google Play Store was most recently placed at 2.6 million apps in December 2018, after surpassing 1 million apps in July 2013. This highlights the potential but also the competitive environment in which organizations have to play in nowadays. The graphic below also brings to light a challenge all new-comers to these digital marketplaces have to deal with, and that is the uncertainty that comes with the changes to rules and policies that regulators/owners of these marketplaces may apply. In 2017 Google began to crack-down on “bad-apps” in the Google Play Store and therefore removed hundreds of thousands of apps from the store and updated their usage policy.
3. Changed business models
Another possibility that disruptive business technologies allow, is to completely change the business model in a certain industry. In the past, some of these new models were born following big inventions or leaps in innovation. Just to mention a few examples of changed business models, Facebook consisted entirely of college students in its early years before it was opened for everyone and Google switched from been just a search tool to an advertising giant with the launch of its AdWords program. Nowadays the buzzword “Smart Products” is very much related to this concept. This new term is used when physical products and digital services merge, creating a completely new business model. Car2Go, the largest car-sharing company in the world, can be classified into this business model. Companies should take into account that there is still a lot of potential in this area, and consequently take advantage of it by understanding that the key lies in matching technology and innovation with an innovative business model, instead of simply applying the new technology to a commodity business model.
Production
1. Industry 4.0
The ever-increasing digitization of production and the value chain is being called the Industry 4.0. The biggest change from the third industrial revolution is that now we not only have computers and automation, but also manufacturing technologies that are able to exchange data between one another. This plays into the theme of more data being collected, allowing for real-time integration of inventory systems to real-time production figures, as well as determining production plans based on live sales forecasts coming from integrated CRMs.
2. Networking
Today manufacturers want to drive greater value in the factory floor, as well as across the supply network. According to the article from Deloitte “The smart factory”, a true smart factory can integrate data from system-wide physical, operational, and human assets to drive manufacturing, maintenance, inventory tracking, digitization of operations through the digital twin, and other types of activities across the entire manufacturing network. This translates into a more efficient system and better management of process changes in the network. The key word being integrated data, but with the abundance of APIs and open integration technologies, the challenge of integration becomes one of logical and strategic alignment of information, rather than the technical delivery of the solution.
3. Internet of Things
Gartner defines the Internet of Things (IoT) as the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment. There are numerous companies doing business in this field already. Just to mention one, BOSCH today sells an intelligent smoke and fire alarm system supported by an IoT platform that allows the physical products to collaborate and act as an integrated fire alarm system. The system allows for an automatic calculation of the optimal escape route based on the location of the fire, which enables almost real-time management of crowds on the run.
Final thoughts
Digital transformation is already happening in all industries, and the previously mentioned technological innovations will only continue to grow in 2019. Successful companies have already identified these technology trends, and are continuously trying to adapt to their new digital reality. You can see more specific examples and best practices of how you can align your company with the new circumstances in the video “The Digital Advantage — How to manage Digital Transformation with BPM and EA”. Nevertheless, as Pierre Nanterme, former chairman and CEO of Accenture, once said: “Success is no longer about changing strategies more often, but having the agility to execute multiple strategies concurrently. And success requires CEOs to develop the right leadership capabilities, workforce skills, and corporate cultures to support digital transformation”. CEOs then must strive to understand and strategically align these capabilities, skills and technology to deliver the business goals and compete on a global scale.
- Statista. (2019). Mobile Internet & Apps. Number of available applications in the Google Play Store from December 2009 to December 2018. Retrieved from: https://www.statista.com/statistics/266210/number-of-available-applications-in-the-google-play-store/
- Rick Burke, Adam Mussomeli, Stephen Laaper, Martin Hartigan, Brenna Sniderman. (2018, August 31). Deloitte Insights. The smart factory. Responsive, adaptive, connected manufacturing. Retrieved from: https://www2.deloitte.com/insights/us/en/focus/industry-4-0/smart-factory-connected-manufacturing.html
- Gartner. (n.d.).Gartner IT Glossary. Internet of Things. Retrieved from: https://www.gartner.com/it-glossary/internet-of-things
- BOC Group. (2018). “The Digital Advantage — How to manage Digital Transformation with BPM and EA” video. Retrieved from: https://ie.boc-group.com/nc/webinars/single/article/the-digital-advantage-how-to-manage-digital-transformation-with-bpm-and-ea-1
