How companies perform their work and interact with and serve their customers is changing rapidly through digital transformation.
While the term and its application are somewhat broad, it generally refers to companies using technology to upgrade or completely re imagine how they do business. Such endeavors are all but a competitive necessity in the modern era of rapid technological advancement and disruption.
Former NASA engineer Richard Mgrdechian, who runs the consulting firm Prometheus Partners, says that if companies aren’t constantly seeking out new digital transformations, they will fail to keep pace with companies in terms of efficiency and in their ability to branch out into new revenue streams.
Based on International Data Corporation, many companies are planning to do just that — and quite heavily — earmarking an estimated 40% of their technology spending towards digital transformations. It’s expected that more than $2 trillion will be spent on such initiatives in 2019.
That’s a lot of money, but the rewards are well worth it; research from Harvard Business School shows a clear performance gap in terms of net income, earnings and gross margins between the companies using digital technology to its fullest and those that aren’t.
Data is Driving the Digital Revolution
Richard Mgrdechian, who founded two technology companies, one of which was sold to Yahoo, says that the deluge of new data points being grabbed by everything from smartphone apps, to wearable devices, to smart home gadgets is driving the digital transformation revolution.
Data is knowledge and as the proverb goes, knowledge is power. By fully harnessing the tidal wave of data now available to them, companies have the power to better pinpoint customer needs and predict future trends. However, many companies are having trouble sifting through the mounds of data they collect to find actionable insights, making use of only a small fraction of it.
And it’s only going to become more of a challenge in the years to come as the scale of data generated continues to explode, with the number of IoT (internet of things) devices expected to top 30 billion by 2020 and 75 billion by 2025.
Given the stakes, it’s all but vital that companies hire digitally-savvy and analytically-minded team members that can take advantage of the data revolution to spot potential areas of transformation that could be worth millions of dollars to their employers.
Richard Mgrdechian states that Domino’s has been at the forefront of digital transformation in the pizza delivery business, revolutionizing the way customers can place orders. First it was through the company’s website and app, which included a comprehensive pizza delivery tracker. Later, tweeting an order with nothing more than an emoji and using voice commands via the Amazon Echo were unveiled.
The initiatives have been a huge success, driving Domino’s revenue 70% higher over the past five years, while its gross income more than doubled. During that time, the company’s stock has soared by nearly 300%.
By uncovering ways to reach out to customers and transform how they do business, companies can similarly grow sales and boost profits. The alternative is a slow and painful spiral into obsolescence.