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Get On Board or Get Left Behind – Why Digital Transformation Has Become a Necessity

November 14, 2016

Culture, especially business culture, historically has shown some degree of resistance to change. On some occasions this resistance is large, other times minute. It’s understandable, change can create turmoil and turmoil can hurt or damage that which it affects. E-mail, now an afterthought and necessary part of all communications, from inter-office to worldwide, once sounded much the same as cloud, IoT, or fiber optics. It was new. It was risky. It changed the way businesses operated for the better and became integral. This is what many companies and corporations around the world are finding out about the process of digital transformation.


What exactly is Digital Transformation?

Digital transformation is the change that is brought about in businesses and society through the use of innovative digital technologies. Digital Solutions harness the power of mobility, IoT, cloud, security, analytics, Big Data, information management and digital commerce can be applied in many unknown and creative ways to improve any aspect of your business. These digital technologies are bringing in what is being called the “second machine age.”

According to a study released by IDC in 2006, it was seen that the amount of digitally stored data was doubling every 18 months, a faster rate of growth than even Moore’s law. If you can’t get your head around that number, let’s look at where we are currently. Today, our best estimates suggest that at least 2.5 quintillion bytes of data is produced every day (Yes, that’s a whopping 2.5 followed by 18 zeros!).

For small to mid-sized businesses, this change can be daunting but doable. For large international companies, even more so, but with an avalanche statistic like this, the time has truly run out to ignore the call. If you think I’m overplaying it – spare 3 minutes and watch this video and hear it from Andy McAfee, MIT’s Principal Research Scientist.

Enterprises that are Outperforming their Peers

To drive successful digital transformation, every organization needs to build two critical capabilities: they should be able to rethink their business models and processes and also, (perhaps more importantly) develop leadership qualities that can envision and lead such a change. Let’s look at some of the digital masters of the business world.

Take the example of Nike – the master of business innovation. Their innovation goes beyond their products – in 2010, they launched a new business unit called Nike Digital Sport, which completely transformed the way they engaged with their customers. By investing in the development of digital devices like Fuelband, their customers could track their workouts, share their performances with others, and even receive advice online from coaches. In other words, it allowed its customers to get up, close and personal with the brand. Do you know the result of this? It now enjoys one the biggest brand audience ever. More than 200 million customers engage with their brand on a daily basis across all its online sites and social media communities.

Then, there’s Caterpillar – a construction tool and machinery giant, which has used the digitalization of data and the use of sensory equipment and readings to improve its products and technical support exponentially. Hours of test runs churn out data from hundreds of sensors on bulldozers, hydraulic shovels, etc., and this data is used to identify potential maintenance issues before their customers do, then prevent them or employ systems to repair them quickly and efficiently, giving them an edge in product life and stability. According to IDC FutureScapes 2017:  by 2018, companies investing in IoT-based operational sensing and cognitive-based situational awareness will see 30% improvements in the cycle times.

The message is clear; in fact even in 2014, 88% of businesses or companies were putting forth effort to digitally transform, the only problem is 90% of that number lacked the skill and overall knowledge for maximum effect and efficiency. Experts of their fields, the field of digital transformation has become its own, with so many aspects and unique variables, situation and conditions, all of the very successful businesses mentioned here employed the services of digital strategists to ensure their transition was cost, product, and customer relations effective.

GE is another big name in the digital transformation game. 3D-printing has been around a few years, and the basic concept is simple. With the help of experts though, a simple idea can be employed in marvelous ways. GE began using 3D-printing to manufacture parts for its leap engine, and can now produce 19 parts in one print. That is, for all intents and purposes, 20 times an increase in speed and efficiency. GE also launched Predix, a cloud based software that is currently used to monitor locomotives, and watch for warning signs to ensure maintenance is done on time and parts are replaced before they break. This could one day be applied to automobiles as well.

Statistics make a Compelling Case for Digital Transformation

Improved Customer Engagement: Through the ever-evolving avenue of social media, digital transformation can be even more effective. Studies have shown a 75% increase in customer engagement. Now a CIO can webcast out his/her message, instead of traveling the country city to city. There has also been a 63% increase in customer satisfaction shown, and when you also see a 53% increase in digital traffic you can observe a process firing on all cylinders. More eyes where you want them, more direct communication with them even with the increased load, and even with all that growth there is still a significant increase in customer satisfaction. This is sure evidence of a natural evolution that works, that is widespread, and that consumers are beginning to expect. Guidance is crucial, but the methodology is virtually failsafe.

Increased Lead Generation: One of the most lauded and desired effects of digital transformation is the increased lead generation, which one study pegged at 49%. A great number, but possibly even conservative depending on circumstance, but one made even more impactful with a 46% increase in lead conversion. Not only can your arms reach farther, but they will be much more effective in communicating your message. This is even more critical when dealing with small to mid-sized business, who have increased pressure to bring in new business in order to grow and prosper. There are many techniques to achieve numbers like these, and they exist for every type and structure of business today.

Increased Employee Productivity: Enterprises are gradually coming to terms with the concept of BYOD. Employees become more productive when they get to work with devices they prefer.  A recent survey by Dell concluded that “approximately 70 % of companies believe BYOD can improve their work processes and help them work better in the future, while an estimated 59% believe they would be at a competitive disadvantage without BYOD.” Studies also reveal that BYOD has led to a 10-25% increase in productivity.

Build your Digital Vision around your Customer

The most important part of transformation is to change the way the customer views your business, and the way they experience, once interested. All the behind the scene changes are impactful and excellent, and they can make your data much easier to manage, but all this must translate into profit, and profit of course comes from consumers.

Digital transformation can take what we understand about market segments and demographics and not only increase that understanding but more effectively use the information to increase business. Some examples of digital solutions include; using social media to understand customer likes and dislikes, digital media for promotion, digital branding, analytics to better understand customer base, using purchase data to personalize sales and services, and the usage of mobile apps. This is a brief look and a large and ever advancing list.

The Intangibles that bring in the Tangible Benefits

Also important is understanding the change digital transformation brings to your operation. You will be faster and more efficient, a few of the many ways have been demonstrated, but this can also change the landscape in ways less obvious. With automation and increased efficiency, the need for testing and development will shrink, 30% on average, and in some cases the amount of inter-company shipping will decrease as well as testing can be done and shared over IoT. This can cause a shift in staffing, funds, or other resources that will be an overall boon, but will require intelligent management and experienced foresight.

Increased knowledge and information can also take the guesswork out of many decisions, and where in the past many had to rely on gut instinct, now more informed decisions can be made. Digital communication, as it relates to operations, is always more efficient and the most common aspect to already be somewhat digitalized in many businesses or companies. Yet this area is always growing and improving, and sometimes in unique ways.

Are you Ready?

Digital transformation can help any type of business in many, many ways. Some aspects may seem, and in fact can be, intuitive, but the landscape is ever-changing and very broad. Even net gains, absolute increases in efficiency, or total automation should be handled with care and expertise. It could be good for your company, even great, but the goal isn’t just to improve, it is to transform, and this can be a challenge for those not accustomed to looking through the lens of digitalization, who haven’t seen how it not only affects one company, but many different businesses and companies globally. Digital transformation can only help, and is becoming a need rather than a want.

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