So, How are you Mr. Digital Transformation?
If you haven’t read about the Digital Transformation last year, you might have had a Wifi-connection issue. Digital Transformation is everywhere. Connected networks provide access to new (un)structured data. In memory platforms provide the capabilities to process stunning amounts of information and the Internet of Things allows us to connect and follow to almost any device or object. Digital Transformation is about the use of technology to radically improve the performance and reach of enterprises. Digital Transformation is also about change and adapting to turn technological capabilities into transformation.
How are enterprises doing with Digital Transformation today, what are they focusing on and where do they see opportunities? Time to write up a status of Digital Transformation: where are we today and what to expect in the near future?
Digital Transformation in 2016
To get a grip on where enterprises are with Digital Transformation and – more importantly – what they plan to do on it in 2016, I have consulted the briefings from IDC, Gartner and Forrester. These are well grounded and give good insights.
The various initiatives on Digital Transformation within enterprises will be consolidated into one “Digital Vision” showing how their businesses will generate revenue by delivering new digital experiences. Next year it is expected that 60% of enterprises that do have a digital strategy, will raise it to top-priority and even assign an executive to oversee the implementation. 67% Of the Global 2000 enterprises will have digital transformation at the center of their corporate strategy in 2018. Customer expectations rising will force B2B enterprises to close the Digital gap with B2C enterprises; today B2C market segments are in the lead when it comes to Digital Transformation.
With 35% in 2018 raising to 50% in 2020 IT budgets will shift onto the creation of new Digital revenue streams. This has a huge impact on HR since access to talent at the right moment and place becomes a big differentiator. Digital skills like mobile app development, business analytics (yoohoo :-)) and DesignThinking will become the new “normal” for software development. Since this brings a greater reliance on IT and it’s budget, the IT staff for Risk, Security and Compliance will raise onto 10% of the IT budget in 2017.
Interactive exploration of big data analytics becomes the foundation of Digital Transformation. If used properly (see an example over here for Banking and Insurance), enterprises will use big data analytics to deliver personalized services or find new insights using state of art analytical components. A successful adoption of Digital Transformation will lead to new established data streams in and out the organization and monetize them.
The growth engine of Digital Transformation will be the Internet of Things (IoT). Greatly expanding the range of digital interactions between the consumer and the enterprise, 2018 will bring 22 billion (!) IoT devices driving the development of over 200.000 new IoT apps. The support for almost 6 billion connected “things” will create new business models for support services. Even more dazzling, it is expected that in 2020 every single hour 1 million new connected “things” will come online. Competitive advantage will be redefined by the IoT devices and how its consumers interact with them.
Predictive analytics will rise and rise. It is expected that in 2018 at least 20% of all workers in some way use automated assistance technologies for their decisions. These technologies are driven by new algorithms and predictive models. 2 Years later it is expected that 5% of all economical transactions will have some automated software agents participating. These agents are outside human control.
What Customers say: where they see opportunities for Digital Transformation
It is interesting to hear what customers believe are opportunities for them as part of the Digital Transformation. Various recent studies showed that customers see 3 domains with opportunities taken from the Digital Transformation:
Digitally Transforming Customer Experience
Digitally Transforming Operational Processes
Digitally Transforming Business Models
Let’s sort these out a bit more:
(1) Transforming Customer Experience
My customers see three areas of opportunities when when digitally transforming their customer’s experience:
The majority of the enterprises will use business analytics capabilities to better understand their customers. In-memory computing combined with big data - business analytics or applying the closed loop portfolio are just three examples of how they consider to do this. Self-service BI in addition helps to quickly assess new sources of data and gain the valuable insights so needed. Other initiatives that we write-up are the promotions of their brands through Digital media more effectively and further exploration of social media data andd GEO based data.
Lots of enterprises start using digital technology to enhance in-person conversations. The aim is to have applications that allow sales persons to have better – customer-tailored - functionality and data transforming the selling process into a better customer experience. Examamples are apps that have customer purchasing data embedded to provide more personalized sales.
Customer Touch Points
Transforming into more digital touch points for customers prevent from the necessary physically contacts customers have with their suppliers. Governments are massively creating electronic desks: portals that act like a landing zone for citizens to ask for information, or enterprises providing media apps to customers to find interesting places in a city they visit.
(2) Transforming Operational Processes
Though transformed customer experiences are more visible and probably more exciting, the opportunities for transforming operational processes due to Digital Transformation cannot be underestimated. Below is what customers see as opportunities for transforming operational processes:
Digitalized automation of processes has many flavors but all focus on freeing up resources that can focus on more strategic activities. Many examples can be found in the area of shortening and simplifying product development cycles
Separating the work-process of the work-location while in the meantime transforming collaboration processes is something I have heart many times as opportunity. Quite obvious, since todays Cloud capabilities facilitate this transformation perfectly.
Enterprise Performance Management & the closed loop portfolio
Transforming into a closed loop portfolio for analytics and performance management comes also back in the list of opportunities customers see by transforming operational processes. The availability of real-time insights and the highest detailed level available – in a governed way - for all applicable people is a huge opportunity. It saves everlasting discussions on both the availability as the quality of insights.
(3)Transforming Business Models
Applying the Digital Transformation brings new opportunities for either digitalizing business models or even create new ones:
Digitally Modified Businesses
Integrated and in-memory platforms are the big facilitators for digitally modifying businesses. The obvious is of course to think about e-commerce platforms that will further grow. But there is way more: the Internet of Things (IoT) will radically change and modify business processes. A hotel group that uses IoT devices to check every rooms availability of toilet paper instead of sending personnel to check, or a tire company putting “connected things” in their tires to measure the tire condition, just to name a few. Huge and huge opportunities are found in this space of business models.
New Digital Business
Digitally modifying businesses almost automatically implies finding new business models. Have a look at the examples I mention for the Finance & Insurance sector where the modification of the business process is to use “connected things” to link to an insured object, but the new process is the partner network for preventive maintenance of the insured objects. Another example is the same tire company as above that applies a new business model to sell back (!) their IoT data to transport companies who can use the data to better their maintenance and service.
Enterprises are increasingly transforming from multinational to truly global operations. Digital technology coupled with closed loop analytics is allowing businesses to gain global synergies while remaining locally responsive. These enterprises benefit from global shared services for finance, HR and even core capabilities like manufacturing and design. Global shared services promote efficiency and reduce risk. They even promote global flexibility. One manufacturer can shift production around the globe with only a few days’ notice in response to interruptions or excess demand.
Digital transformation requires strong leadership to drive change. But it also requires a vision for what parts of the company you want to transform. Companies in all industries and regions are experimenting with — and benefiting from — digital transformation. Whether it is in the way individuals work and collaborate, the way business processes are executed within and across organizational boundaries, or in the way a company understands and serves customers, digital technology provides a wealth of opportunity.