Digital Transformation – A Path Forward for Legacy Organizations
Digitalization is not a new concept; it has been an ongoing process. According to IDG research, 89% of the organizations have adopted or are planning to adopt the “digital-first” business strategy. The pioneers are the retail, healthcare and financial services where in digital adoption is over 90%. But today going digital is a matter of survival. A simple disruption can be the game changer, like Amazon. Today amazon is bigger than most of the brick and mortar retailers put together with a market valuation of over trillion dollar company. Digitization has forced other retailers like Wal-Mart, Sears and Nordstrom have revamped their strategy and adopted new technologies.
There are many examples where digital technologies have delivered immense advantages. These technologies have the power to change the world.
Digital Transformation – A Business Necessity
Going digital is not a choice anymore. Organizations across the world are incorporating digital into their business strategy. A simple definition of digital transformation is keeping ahead of disruption before it catches you napping. This involves creating connector tools or technologies that bridges the gap between the current technology and new innovations that will provide a visible return. For example, companies are moving to cloud or SaaS solutions to reduce their infrastructure costs and Total Cost of Ownerships. But new laws like GDPR and privacy regulation make it imperative that customer information is not delivered to third party providers. So, technologies like data masking tools are making an appearance. The essence of a digital transformation is to make businesses agile to identify disruptions and innovations and incorporate them into the strategy.
Understand The Digital Transformation Phenomenon
As a rule, digitalization should impact every organizational touch point. Mobile, IoT, AI and analytics are going to play an all important role in re-inventing business processes. Digitized organizations are not necessarily delivering a particular service or product. For example – Uber is not a taxi company, but are mobility providers, AirBnb do not own even a simple office space, but they are the emerging hospitality leaders.
Similarly all functions within the organizations are relying on digital technologies and tools for decision making. Today a CMO’s budget is equal to that of the CIO’s IT spends. Human resources are leveraging analytics, social media and artificial intelligence to recruit and engage employees. Already your payroll and taxes are done by the friendly neighbourhood bots.
Digital capabilities help organizations to mine internal and external data to create value. They become more responsive to external changes and embrace technologies, re-imagine their product delivery and align with partners to create an efficient value chain.
Digital Transformation, Apply It Correctly
Leaders need to design and create a digital strategy and identify core business areas that need immediate change and focus. Focus on what brings most value for your customer and start from there.
Secondly we need to identify powerful disruptors that can bring value. For example, banks were on the line of attack with the upstart Fintechs that were providing niche customer needs. Today, incumbent banks have survived the Fintech disruptions and have become nimble and agile to meet the new age millennial demands. They have further leveraged the strengths as grand repositories of data to deliver unique PaaS services to Fintechs. CEO’s should look at their businesses holistically in identifying new ways of interacting and re-imagining their product and services for the digital customer.
Third important action is to digitize workflows and processes. This includes using collaboration tools, mobile technologies, visualization and artificial intelligence to continually automate and fine tune processes. This frees up strategic human resource to do what they do best –ie to create and innovate.
Last but not the least; data is your ally in digitization. BCG reported that companies that used big data for value, generated 12% higher revenue. These companies are 3 times more likely to target digital technologies and design to create value added products.
The Digitization of Everything to Achieve Seamless and Consistent Engagement
Many organizations forget that digital transformation is a continuous, interactive process where the learning curve can be quite steep. It involves continually embracing new technologies that can deliver higher efficiencies, lower costs, optimize resources, identify new revenue streams and create a richer experience for customers. The best example is Apple; it made courageous decisions based on data analytics. It is one among the few companies that killed a successful product – like iPod and incorporated all features in to the iPhone. If it had not done that it could have been lost the momentum in the market with iPod imitators. Same is happening with Nike with its Colin Kaepernick campaign. Many predicted as doomsday scenario for Nike to side with Black lives Hero Kaepernick. But the company is laughing its way to the bank.
Digital transformation is ticket to innovation. A bold leadership, smart team dynamics and effective change management tactics can bring in exponential dividends for the business.