Digital Transformation is the New Frontier in Business
Sachin Gupta, Vice President – IT
, Decision Resources Group (part of Clarivate)
Digital transformation is the use of technology to change an organization or an industry. The idea could be to create a whole new business, product or service or it could mean improving an existing business.
To understand it better let’s look at some examples of how a new and an existing business adopting digital transformation.
First let’s look at some new businesses that adopted digital technologies from the beginning and transformed an industry. Organizations providing cab hailing apps have changed the way we hire a cab as they provide us multiple options at affordable price and convenience. These apps have changed the customer behavior as many customers who used to drive earlier have now switched to these cabs. More importantly these organizations don’t own a single cab which is in sharp contrast to the traditional cab industry.
On similar lines, a large marketplace for booking hotels and home stays has changed the way we book accommodation for our travel needs. The ease of use and plethora of choices makes it convenient for customers. Using technology, the marketplace can keep a track of customer’s needs, the preferences and history to reward and retain the customer. To achieve this a lot of cloud, mobile, web and analytics technologies come into play.
E-commerce is another example of how technology transformed an entire industry. It has changed customer’s behavior who now wants to buy most of the goods online – be it groceries, clothes, electronics or even insurance policies. Making e-commerce successful is a gamut of technologies and emergence of digital payments (e-wallets, net banking, etc.)
The above examples were where an organization started from scratch using digital technologies.
But how does an existing business adopt digital transformation? An existing company or business must take care of two important aspects while starting the journey of digital transformation – first is business objective and second is change management.
The first aspect for the organization is to define what is the business objective of digital transformation and how will it help to serve the customers better. Most companies fail at this stage. Lot of companies start on the digital transformation journey without a well-defined objective. Some companies are doing it because their competitors are doing it while some are doing it because it’s a buzz word in the industry. All these reasons are recipes for failure.
Here are some obvious goals that a company can set for its digital transformation.
- How will it help us serve our customers better (convenience, retention)?
- How will it help us increase revenue (new line of business, increase share of customer’s wallet)?
- How will it help us reduce cost (reduce manual work, gain operational efficiency)?
Let’s look at the example of the banking industry as to how it is doing it. Banks have invested in digital technologies rather than only focusing on setting up physical infrastructure and adding staff. Now the bank branches are interconnected giving seamless experience to the customer. Digital banking serves most of the needs of the customer who doesn’t need to go to a branch. Be it transferring money to opening a new fixed deposit, a customer can almost do it all using digital banking or the bank’s mobile app. This has helped the banks increase revenue (digital channel for buying bank’s product offering), improve customer experience (24*7 banking, self-service, ease of use) as well as reduce manual cost (bots to handle customer queries, lesser physical setups).
Even manufacturing industry can apply digital technology in transforming itself. It can convert or deploy machinery which are smart interconnected devices. Imagine a machine tracking its own usage, environmental conditions, wear and tear and alerting the shop floor engineer for maintenance. Even the end product can be a smart device. Driverless cars are an example of how Artificial intelligence is changing the auto industry.
The second important aspect in the digital transformation journey of an organization is the change management within the organization and with the eco-system. It’s very important to plan out this aspect carefully. This could mean breaking silos within the organization, convincing the naysayers, training the employees, collaborating with partners and suppliers to name a few.
The buy in from the top to the bottom in the organizational hierarchy is important for the initiative to succeed. The silos across departments need to be broken for the success of the digital transformation. The transformation needs to have a backing of the CEO with relevant stakeholders across the verticals involved in this transformation. The team must collaborate, communicate effectively and celebrate wins in the digital transformation journey.
Most organizations tend to apply existing processes on the digital transformation thus making the change difficult. The change involves an entrepreneurial mindset challenging the status quo and reinventing the operations and processes using technology.
If the aspects of defining the business objective and managing the change are taken care effectively then the organization will succeed in digitally transforming itself. However, I must conclude by saying that digital transformation is not a project with an end date. It is a journey of continuous transformation that the organization needs to sign up for.