Why digital transformation is the new kingmaker
Digital strategy requires deep product, design, talent and process change.
Businesses today fall into one of two categories: those who recognize the need for digital transformation to stay competitive and those that do not. These are the most vulnerable to being digitally disrupted.
Organisations must be educated about the value of data and encouraged to look at how businesses are changing.
Organisations must adapt to stay relevant in today’s competitive environment. Innovation is fuelled by open collaboration. This includes the sharing of knowledge and data, whether it’s to solve real problems or create new opportunities.
It is interesting to note that many organisations that are digitally changing are not just doing it for themselves but also to demonstrate and prove innovation to their clients.
GE, for example, claims that it will be a global top ten software company by 2020. This is because they want all data from connected devices to help them gain and learn.
Andrew Carr, CEO of Digital Catapult, says that they want to extend the value they receive from their data to the next product cycle. This will result in a decrease in cost of service and a better customer experience. This is not because they want to connect people or create software companies, but because of what they learn about their data.
It’s not only large corporations like GE that must transform. Organizations from many industries are being forced to digitally transform their business models in order to keep up with technological advances. According to the Global Center for Digital Business Transformation, 4 out 10 incumbent companies will be displaced by digital disruption by 2020.
Digital transformation is essential for many businesses’ survival. It also gives companies the opportunity to improve workforce productivity and avoid the limitations of traditional business models.
“By adopting a collaborative approach and digitally transform the workplace, organisations can empower their employees to use the tools, technology and resources at their disposal, creating the creative and innovative environment that will fuel business growth,” Alison Vincent, CTO of Cisco UKI.
It’s more than just becoming a digital company. It’s about being more human with your customers and transforming your business in the right direction.
This should translate into improved customer service and products for organisations. Data plays a crucial role in helping decision-makers understand the behavior of customers.
Carr states that trust must be built in turn. We believe transparency and education about the benefits of data sharing are key to unlocking the potential benefits.
It is what will define businesses of the future. It will also be crucial to the UK’s ability unlock enormous economic benefits.
Most digital transformation projects involve a shift in channel strategy towards mobile and social, along with investments to improve customer insights through big data. These moves include techniques such as “design thinking”, which helps to shape product innovation.
Important foundation investments, such as the move to the public cloud for greater flexibility and cyber security investments that protect customer data, go hand-in-hand with customer-facing investments.
Digital strategy is helping to increase this by transforming the way businesses work. This includes implementing more collaborative and agile ways of working.
Capital One is an example of a company that has introduced agility to its business.
By changing how teams are brought together to develop and design products.
Capital One CIO Rob Harding says that this investment has been paired with investments in engineering, product and data science, as well our technology stack. This combination of investments is leading to an evolution in Capital One’s information-based strategy as well as new ways of engaging customers.
In the meantime, the UK’s healthcare sector has set aside more than PS4 billion to reach the goal of a paperless NHS. This money will go towards initiatives such as electronic records, online appointments, prescriptions, and consultations.
Healthcare organisations have also committed to removing outdated technology like fax machines, strengthening cyber security and transforming out-of-hospital healthcare.
The digital revolution in retail banking is creating new opportunities for consumers to make payments. Banks can also tailor their marketing to customers.
Customers can use mobile apps to perform banking tasks and touch their smartphone or card against sensors to complete transactions.
RBS even went one step further and offered an artificial intelligence chat system called Luvo that can answer staff questions.
Jason Andrew, GP at BMC Software, explains that technology is giving banks a new way to engage customers and build stronger relationships.
The UK is seeing slow, but steady progress in digitally transform their workforce and business.
CA Technologies found that 56% of UK organizations are undertaking some form of digital transformation as part of a coordinated strategic program.
According to the study, 48% of respondents cited workforce efficiency as their most important ongoing project. This was followed by product and service development (43%), and operations and delivery (43%).
UK companies need to be more competitive in the application economy. 18% of UK companies still pursue digital initiatives through separate, not always coordinated channels, while 16% use digital to improve rather than transform their businesses.
“When it comes down to adopting innovations that deliver digital transformation in the UK, only 33% of UK organizations believe web-based apps and services are essential for driving customers engagement,” Ritu Mahandru (VP of application delivery, CA Technologies) says. Good news: UK organizations plan to increase their digital spending from 20% to 32% over the next three-years.
Companies that fail to embrace digital face serious consequences. Half a century ago the shelf life for a Fortune 500 firm was approximately 75 years. It’s now less than 15 years and is declining.
Additionally, the US will see more than three quarters of all S&P 500 companies by 2020 be businesses that were not around in 2000.
Blockbuster Video and Kodak were examples of how organisations can fail to embrace digital transformation. These market leaders were hit hard by disruptive technologies like digital photography and video streaming.
Krishnan Chatterjee is senior VP at HCL Technologies’ Digital Unit. “There are many companies once great that failed to adapt to the digital world around them.
Digital transformation refers to the use of modern technology and communication to transform one or several key elements of a company. It can improve customer engagement but also directly connects to the company’s core processes, workforce, and how they interact with suppliers and partners. This has a positive effect on the business.
CA Technologies’ survey found that 86% of UK companies have experienced or expect to see growth in revenue. 85% have seen increased customer retention and 68% can now act faster on business opportunities.
However, most UK organizations aren’t embracing the innovation required to transform the country quickly enough, despite their desire for digital transformation.
Mahandru says that they are missing revenue and profit opportunities as well as being behind in a very competitive market. Companies that are focused on digital initiatives see twice the revenue growth as mainstream organisations and make two-and-a-half times more profit.
Digital transformation requires both people- and process-oriented changes in the structure of the IT department and the wider organisation. The CIO and his team must work closer together across the business and help to shift to a digital mindset. This will allow for the protection of existing franchises while also creating new frontiers in value.
This goal implies that IT and business leaders need to work effectively together.
Andrew says that those responsible for innovation and those who manage and govern IT infrastructure must work together, adopting the same mindset. This means that the CIO must have more flexibility, agility, and be able to deliver digital services. The business leader must also think in terms of security, value, and the governed delivery IT services.
Who should lead the digital transformation,the IT team, or a dedicated team?
However, there is a dispute over who should lead the digital transformation in an organisation: the IT team, or a dedicated team?
A dedicated digital unit allows the strategy to be more products, design, and customer-centric. IT departments are not limited by the day-today tasks that the team must deal with, especially service performance.
This scenario, however, is more likely to invent at the surface than it is to tackle the complex but vital reinvention of foundational components such as talent, process, and technology.
Harding says that a digital strategy requires deep product, design and talent as well as process and technology changes. Capital One’s CEO is responsible for the digital transformation program, which is ‘extremely successful’.
“While people reporting to the CEO may be the catalyst for some aspects of the change, it takes buy-in from all executive teams and a long-term commitment by the CEO to rebuild a company. These programmes can be challenging and broad, and they take time to pay off.