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Digital transformation has changed the business landscape and there’s no getting away from it. Fail to embrace this change and there’s every chance customers will fail to embrace you.
Although that may sound dramatic, the reality is that 27 percent of companies identify digital transformation as a matter of survival. And, in a world getting more digital by the day, that figure only looks set to increase.
Digital transformation can look very different depending on the company and its industry. But, although there is no precise blueprint, the common denominator is solving problems with digital technology. This could involve digitizing previously manual processes. Or, it could be innovating by building new processes around cutting-edge tech.
True digital transformation takes place across two distinct dimensions:
In a constantly evolving world, the equation is simple: adapt or die. The evidence is there in the casualties – 50 percent of the traditional companies on the Fortune 500 have disappeared since 2000 due to digitalization. Some of the best-known brands are no longer anywhere to be seen on our trip down the highstreet (Blockbuster anyone?)
The root cause is a failure to recognize, or at least effectively respond to, changes in the market. With such stiff competition around, any kind of delay can potentially spell disaster. Perhaps businesses are beginning to learn these lessons – 70 percent of companies either have a digital transformation strategy in place or are working on one.
Image source: PTC
Digital transformation isn’t only about adapting and surviving. It’s about reaping benefits that will help your business thrive into the future – for example, by being able to:
How valuable is digital transformation? Who leads it and are companies successful? Get the answers and 16 important statistics to help you benchmark your own strategy.
The top industries for digital-first business strategies are services (95 percent), financial services (93 percent) and healthcare (92 percent). But really almost any industry may benefit from digital transformation.
Here are five good examples of digital transformation across a number of industries.
Having previously been hamstrung by siloed IT, and its structure as a loose collection of regional business centers, in 2006, Ford was determined to unify. The goals were clear: simplify the product line and place focus on quantitative data and quality cars.
Perhaps counterintuitively, Ford cut the IT budget by 30 percent.
This wasn’t an exercise in expense reduction though. Rather, it helped free-up resources previously locked into propping up an outdated and fragmented system. These resources could then be used to innovate. It was thanks to this that Ford were able to invest in novel projects such as Ford SYNC and MyFord Touch.
Anheuser-Busch (AB) InBev has looked at how digital transformation can be applied all through the business while retaining focus on serving its consumers.
One of the ways it has done this is by changing how stores are able to replenish their orders, developing a mobile application called B2B. An inbuilt algorithm also makes specific replenishment suggestions, creating opportunities for sales staff to talk about new brands and products with store owners.
AB InBev has even created a tech innovation lab, Beer Garage, to explore ways that artificial intelligence (AI), machine learning (ML) and the internet of things (IoT), among other technologies can be used to improve experiences for consumers and retailers alike. Applications for this include "connected breweries", where the quantity, quality, temperature, and a range of other relevant factors can be monitored across batches.
The company is also looking into software to monitor social media and gain insight into what consumers think of its brands. Through this approach, AB InBev will be able to create evermore relevant and meaningful content for their consumers.
It isn’t just businesses that stand to benefit from digital transformation. Public-sector organizations have a lot to gain, too – even without the big-money budgets boasted by some of the corporate big-boys.
In the UK, Leeds City Council decided on an open data model. This created a vast pool of machine-readable data allowing third-party innovations via useful applications.
On the back of this, a number of new digital services have become available to residents which otherwise would not have been developed due to lack of resources – for example, the Leeds Bins app for iOS and Android allowing residents easy access to waste management information. This approach to data has been so successful that the initiative has been extended to incorporate the whole of the north of England.
Singaporean multinational DBS was actually ranked bottom of the list for customer satisfaction and even given the nickname, the “Damn Bloody Slow”, thanks to the lines of customers queueing in front of its cash machines. Fast-forward a decade and it became the first-ever bank to be awarded with the title ‘Best Bank in the World’ by three major publications.
Getting there involved going from outsourcing 85 percent, to insourcing 85 percent of their technology. This meant it could launch the world’s largest banking API platform. FinTechs and software developers were then able to improve its ability to innovate and increase profits.
DBS also launched a mobile-only bank, DigiBank, in India. DigiBank uses cloud software, making use of Amazon Web Services (AWS), among others. This has improved cost-effectiveness and allowed it to scale.
Now, it has even extended this digital approach to include recruitment. JIM, (or Job Intelligence Maestro) is an Artificial Intelligence bot used to review applicants’ resumes, collect psychometric tests, and answer any basic queries – for example, about hiring response time or career growth opportunities. Only then does a recruiter get involved, looking at the scores JIM produces for applicants.
Despite its success in the operating system market – boasting a market share of 77.7 percent – Microsoft had been struggling in the mobile operating system market, thanks to stiff competition from Apple and Amazon (among others). Because of this, Microsoft changed tack.
Instead, the focus turned to cloud-based solutions and forging relationships with software and technology vendors – quite a departure from its previous approach. Both revenue and stock prices saw a dramatic upturn in response, going from $38 per share in 2014 to $139 in 2019 and $93.5 billion to $122 billion respectively.
No matter how well intentioned, simply taking on digital transformation isn’t guaranteed to deliver the benefits you are hoping for. More than 50 percent of digital transformation efforts came to nothing in 2018. To maximize your chance of success, McKinsey research highlights five different factors to consider.
So, when you undertake digital transformation, make sure to:
According to analyst house IDC, digital transformation is worth almost $19 trillion – that’s 20 percent of global GDP. So, it’s clear a lot is at stake.
In the end, the competition to do things better and adjust to an increasingly digital world has one real winner – your customers. Nail your digital transformation, and perhaps it could be your business providing an example to inspire others in future.