Technology has become an irrefutable foundation to our society’s daily existence and our human evolution remains increasingly tied to intelligent technologies. The ability for productivity to remain intact while supporting a stressed supply chain and a remote workforce during social distancing is critical however, it is only the beginning of Transformation. This point is driven home by the fact that many technically unprepared Fortune 1000 companies will be severely impacted both during and after the current pandemic has passed. Given the current global situation, Digital Transformation will only continue to accelerate in importance across most enterprises. We define Digital Transformation as:
The strategic use of innovative business models and technologies to fundamentally improve products and services, relevant customer experiences, and accelerate operational efficiency and resiliency.
Over the past year, even laggard companies have come to understand that Digital Transformation cannot wait even a single quarter. Today, businesses that are seeking to transform look to infuse new business model concepts that can be driven by cutting-edge infrastructure. New technologies such as Cloud, AI, Blockchain, Internet of Things (IOT), Robotics, and Autonomous Everything are becoming integrated features of most software. These technology innovations on their own do not translate into new stand-alone companies however, they will have a significant impact once fully integrated into the majority of products, services, and value networks.
At the corporate level, improving everything is not the same as everything improving. Transforming an organization takes a cohesive digital vision, customer-centricity, and the ability to execute with the latest technologies. One thing has become clear, Digital Transformation is not simply a matter of implementing a collection of new technologies. It is about transforming the customer experience, accelerating operational speed, and enabling new business models. These elements require a transformation vision and a cutting-edge portfolio of projects to achieve the desired state. Along this path, the need for vision, strategy and, governance is critical to managing the digital portfolio of projects and change management initiatives.
Designing a winning Customer Experience is critical as this is where the transformative journey begins. The ability to design products and/or services “outside-in” is a critical success factor. This includes incorporating artificial intelligence all along the Customer Experience Journey. We define the Customer Experience Journey as including Awareness, Discovery, Interest, Purchase, Utilization and Service, and Repurchase and Advocacy.
By thinking through how customers could be intelligently served, regardless of existing limitations, powerful technology-enabled business concepts emerge. This requires putting customer data at the heart of the transformed experience. Soon, many value chains will be migrating toward hyper-personalized customer experiences and this is being enabled through Machine Learning (ML) and AI. The combination of new business models that provide incredibly rich personalization through game-changer AI technologies means that non-AI businesses cannot compete at the same scale or price point.
Accelerating Operational Speed
The ability to support transformation requires a highly robust, integrated, agile, and intelligent corporate infrastructure. One of the critical success factors for enterprise companies is the ability to have fully integrated suites of ERP, SCM, HCM, and CRM solutions that seamlessly accelerate operational speed and intelligent decision making. The ability to incorporate Machine Learning into enterprise applications means that some pretty amazing automation capabilities can be enabled. Functionality such as continuous daily financial closes, real-time budget to actual comparisons, automatic fraud detection, AI-enhanced recruiting, and automatic employee performance analysis will provide huge productivity gains.
Likewise, the ability to seamlessly mesh the digital and physical worlds is a critical success factor for many businesses. Commerce is a classic example of the need to combine both physical and online end-to-end capabilities. The inability to integrate the supply chain means that customers will be underserved and omnichannel competitors will ultimately crush the incumbents.
Enabling New Business Models
A business model is how a company creates and captures value. It includes the customer value proposition, pricing considerations, details regarding how the company will organize itself, and what partners are necessary to maximize customer value. It also indicated how it will structure its supply chain to achieve success.
Over time, the business model that creates the most efficient way to allocate and organize resources will win. Digital Transformation thinking is critical to start-ups, but it is also critical to legacy businesses that need to deploy technology platforms to better allocate and organize resources. The ability to satisfy an emerging market need with a compelling business model and accompanying digital technology means a high probability of success.
Examples of new business models that rely on digital platforms include 1) Asset Sharing, 2) As a Service, 3) Low-cost Personalization, 4) Closed Loop, 5) Metered Service and 6) Collaborative Ecosystem. Each of these winning business models is only possible with highly scalable digital technology.
Today, some of the fastest-growing companies across multiple industries are Digital Natives. These companies have typically formed within the past 10 years and do not have a lot of legacy systems. In many cases these young companies are driven by 100% cloud technologies and AI. Interestingly, by 2020, almost every piece of enterprise software will have AI built-in as standard platform functionality.
The creation of world-class customized digital platforms that support entire value chains has the potential to be completely disruptive to industries. Companies like Uber, Airbnb, and Amazon are truly game changers because they have taken the time to digitize entire end-to-end customer experiences.
Digital Native companies often provide exceptional engagement, omnichannel capabilities, move problem-solving, and selling from the physical to virtual worlds and optimize big data through AI and Machine Learning. The fact that computers are much better at pattern matching than humans means that companies can make predictions and accelerate learning about customers at scale.
Also, many companies are leveraging connected devices (IOT sensors) to capture enormous amounts of unstructured data and generate rules driving increasingly accurate decisions. Cloud technology is permitting low-cost decentralized data transactions, analytics, and real-time decision making. Likewise, manufacturing innovations are creating more possibilities for distributed and small-scale production.
The bottom-line with Enterprise Digital Transformation is that it cannot wait. Your ability to combine existing physical assets, legacy IT systems, and deep industry and customer knowledge to automate next-generation customer experiences are mission-critical. The results of any transformation need to be measured in terms of revenue, margin, total shareholder return as well as balance sheet and cash flow impacts. If the initiative cannot be measured, the transformation effort was not successful.
At HBSC Strategic Services, we advise clients on digital strategy, operations, and leading digital technologies and to help generate transformational outcomes. We work with passion and dedication for our clients and focus on long-term value creation and time-to-impact. Major corporations can no longer ignore digital change and remain competitive, especially in a time of crisis. By partnering with HBSC, we will help clients adapt, compete and grow despite quickly shifting digital landscapes and physical uncertainties. For more information please contact us at firstname.lastname@example.org or visit us at www.hbsconsulting.com.
HBSC Strategic Services – Expert business strategy, technology consulting and integration.