ADOPT & ADPAT: Why Companies Should Embrace Technology and Digital Transformation
Digital transformation has become the new norm, as reflected by the most current digital transformation statistics, marked by globally pervasive interconnectivity, digitization now plays a critical role in adding business value. Research & market analysis predicts that the global digital transformation market is expected to grow from US$ 445.4 billion in 2017 to US$ 2,279.4 billion by 2025 at a CAGR of 24.3% between 2018 and 2025.
Two consistent and related themes in enterprise technology have emerged in recent years, both involving rapid and dramatic change. One is the rise of the digital enterprise across sectors and internationally. The second is the need for IT to react quickly and develop innovations aggressively to meet the enterprise’s digital aspirations
If cybersecurity teams are to avoid becoming barriers to the digitization and instead become its enablers, they must transform their capabilities along three dimensions. They must improve risk management, applying quantitative risk analytics. They must build cybersecurity directly into businesses’ value chains. And they must support the next generation of enterprise-technology platforms, which include innovations like agile development, robotics, and cloud-based operating models.
With the consumers being exposed to an increasingly connected ecosystem in the form of everything from home automation to industrial automation to smart cities, companies that leverage digital technologies to deliver customized solutions will undoubtedly have an extra advantage.
Digital transformation, as the term implies, leveraging digital technologies to transform the key business processes and even legacy services. The technologies that are boosting this transformation involves artificial intelligence, cloud computing, and the Internet of Things. Digital transformation is helping businesses in achieving greater efficiency, flexibility, better customer satisfaction, empowering employees, and encouraging innovation. Let us see how businesses are embracing technology and digital transformation. Cyber Security is also a strong component of digital transformation and is intrinsically a horizontal pervading through all the transformation verticals.
How Digital Transformation is rolling up?
Once the stuff of science fiction, mass customization is a reality today enabled by the abundant availability of cheap computing power. Let’s take Netflix, for instance. Started as a mail-order DVD distributor Netflix today has overtaken traditional television cable service providers. It is now providing customized user experiences ranging from web series, movies, and videos on a subscription basis. This is the essence in is SaaS, subscription as a Service. This is one of the best examples of mass, on-the-fly, customized consumer experiences enabled by technology. The experience is tailored to provide a personalized experience for each viewer, taking into account view based analytics.
Another great example of digital transformation is Adobe- Adobe has transformed its core in creative & document software into digital form. Also changing its commerce platforms, marketing, and analytics, while changing its business model from packaged software to cloud-based subscriptions of its various offerings.
Digital Transformation of Industries
Businesses among various industries ranging from financial, consumer, healthcare, telecommunications, automotive, etc. are looking to transform legacy business processes to increase their ROI. Businesses hope that by incorporating smarter technologies, they will become more capable of delivering improved customer experiences, have shorter turnaround times, hold lower inventory, etc. and thus, become more profitable.
Source: Digital Intelligence Briefing
Let’s deep dive to see the industry-wide adoption of digital transformation
The driving force of digital transformation in healthcare is the aging and growing population across the world. Also, chronic diseases, increasing costs and rapidly spreading COVID19 pandemic. People are expecting digital products which mostly involves mobility from smart wearable devices to remote diagnostic.
The legacy healthcare model is becoming increasingly unsustainable, healthcare will need to be transformed, with technology like Artificial Intelligence and machine learning playing the central role. Unfortunately, the healthcare and pharmaceutical industries have lagged in adopting digital technologies. As per Digital Intelligence Briefing, only 6% of healthcare and pharmaceutical companies said they had gone digital.
As an example, to the virtualization and disruption, the virtualization of medical services is becoming more commonplace. Why go to the clinic when the clinic can come to you. An example of such a service is a doctor on demand. Here the practice allows a far more holistic approach to issues rather than the traditional symptom-based model. https://www.doctorondemand.com
Lately, a large number of telecommunication firms are adopting cloud-enabled technologies for managing data. By the end of 2020, about 83% of the total data load will be hosted on the cloud. While many telecom companies are also facing aggressive competition from niche and start-up players as they are looking to adopt a holistic approach towards digital transformation. As per the report, only 2 % of telecom industries have adopted digital transformation.
Telecom services providers need to revamp their business model portfolio to achieve success in this dynamic business environment. With 5G, the telecommunication industry will witness greater connectivity among connected devices and this is a great opportunity to expand its service portfolio to offer value-added services
The telecom service providers need to expand their business model portfolio to succeed in this dynamic business environment. For telecom service providers, greater connectivity amongst devices in a holistic SaaS, IaaS, and IoT environments are best practices in the new landscape of digitization
But digitization is not just a threat; it also offers telecom companies an opportunity to rebuild their market positions, reimagine their business systems, and create innovative offerings for customers. Not surprisingly, most executives consider digitization to be one of their top three priorities, but few companies are close to capturing its full potential. Digitization could enable telecom operators to improve their profits by as much as 35 percent, yet the average improvement achieved is just 9 percent.
Fintech firms are also transforming their legacy business process using digital technologies. The fintech businesses are leveraging the power of intelligent technologies like Machine Learning, BlockChain, Artificial Intelligence, and advanced analytics to drive digital transformation and stay ahead in the competition.
Financial services companies are largely adopting digital transformation. The report read, almost 10 % of fintech companies had transformed digitally. Consumer demand for customized digital experience from their banks is the driving force behind the digital transformation of the fintech industry.
A recent analysis by McKinsey & Company indicated 80% of traditional financial institutions have already developed new emerging tech initiatives in 2019 (think voice, VR, AR, AI, and DLT). What’s equally awesome is the fact that new fintech investments are set to skyrocket in 2020 to exceed an astonishing $30 billion. This is a phenomenal increase when you think that investment in new fintech products was a meager $1.8 billion in 2011 – what we’re currently witnessing is the unstoppable rise of fintech. In the next 12 months, new fintech-related investments and innovations will continue to prosper and proliferate both the consumer and enterprise landscape, and new fintech prototypes and proof of concepts (POC’s) will evolve into a full scale, consumer-facing apps and digital products. The key trends will focus around the use of AI, data-driven development, wealth tech, the fundamental importance of execution, and the need to go beyond simply having a great UX. a decisive competitive edge in the new year, it’s time to start sharpening the financial saw, peer through the proverbial fintech looking.
As consumers are looking for more sophisticated customized products, the consumer electronic market adopting digital technologies. With the increasing adoption of technologies in human lives, things are becoming smarter, there are smartphones, smart TV, smart gadgets, and smart homes. About 5 % of businesses in the consumer goods sector have adopted digital transformation and the total value stake for the consumer goods industry from digital initiatives in the next decade is expected to reach $5 trillion. Digital technologies are not only helping saving time but also helps in enhancing overall operation productivity.
Managing supply chains is an inherently cross-functional activity, for they connect a company’s major internal functions—sales, manufacturing, distribution—and encompass its key external partners, from raw material suppliers to end consumers. Consumer-packaged-goods (CPG) companies are acutely aware that organizational silos will prevent their supply chains from performing well; close alignment and coordination among all participants are necessary.
The use of advanced-analytics techniques isn’t limited to the technical and process aspects of the supply chain: they are also being applied to critical human and organizational issues. Analytics techniques can identify the parts of the supply chain function—and the links between specific individuals—that directly affect its performance. At one automotive company, applying these techniques to several years of data from dozens of different sources helped to reduce both times to market and costs by about 10 percent.
The tools most CPG companies now use to manage their overall supply chains focus on rapidly generating performance reports based on information readily available from the wider supply-chain organization. These tools typically provide useful ways to filter and visualize that data but often lack effective mechanisms to validate them. Without consistent, good-quality information, supply-chain leaders can’t have effective performance discussions with their staff. Furthermore, these systems cannot manage multiple trade-offs, so it is hard, for example, to balance decisions about supply-chain footprints, inventory levels, and manufacturing strategy.
The newest generation of integrated supply-chain-management tools overcomes these limitations with improved data-collection and data-validation features and the ability to optimize multiple interconnected dimensions simultaneously.
One global CPG player, for instance, developed its own system to optimize a wide range of supply-chain dimensions, including footprints, transportation modes, routing, inventory, postponements, and production frequency. The algorithm reduced costs 10 percent more than the company’s conventional individual-optimization approach had.
In the automotive industry segment, the digital transformation is taking place rapidly though only 3% of companies have adopted the digital transformation the opportunity is big with the application of technologies like IoT. Smart cars are gaining a lot of attention from the market and the connected cars market is expected to reach $225.158 million by 2025, registering a CAGR of 17.1% from 2018 to 2025.
Digital technologies are enabling a new paradigm for automotive industries where the emphasis is less on products but more on providing customized user experiences. By digitizing design and manufacturing operations and modularizing production capabilities, automotive companies are looking to meet customer demands for a smarter driving experience that includes vehicle infotainment, autonomous driving, etc.
Even before COVID-19, the automotive industry had its share of challenges. Sales were down in many markets. Huge investments in electrification, autonomous driving and digital were hurting revenue and profitability.
The coronavirus pandemic turned those challenges into a crisis. Global vehicle sales have stalled, production facilities have been shuttered and many supply chains have ground to a halt. China saw a total vehicle sales decline by 84 percent from January to February.
Factory shutdowns in Europe created production losses of more than 1.2 million vehicles through March, affecting 1.1 million jobs. And global supply chains are being hampered by supplier shutdowns, border closings, and curtailed operations by logistics service providers.
On a more positive note, we are already seeing signs of recovery as the COVID-19 risk is declining in China. Vehicle sales for March in China increased by 22 percent over February. Chinese original equipment manufacturers (OEMs) and suppliers are ramping up production. And there are increased investments in digital footprints in manufacturing. OEMs in other parts of the world are offering incentives to drive sales: lease payment deferrals, interest-free financing and job loss vehicle buy-back programs to help spur purchases by mitigating consumer risk.
But the immediate challenges are daunting. Companies have had to enable employees to work from home and keep critical processes and systems operating remotely.
Looking to the Future
Industry leaders are most anxious about the inability to know how long this situation will last, how it may reshape the industry, and what the lasting effects will be.
From a consumer perspective, will the sharing economy lose traction as people reevaluate using someone else’s property? Will consumers prefer personal vehicles over public transport (trains, buses, or ride-sharing) for travel—which in turn will increase traffic congestion?
The global auto industry could see benefits from a relaxation of regulations, as governments try to revive national economies. In addition, the slump in crude oil consumption is driving lower gasoline prices, which in turn could generate more sales of SUVs and small trucks—the industry’s highest-margin offerings.
And all the while, the further adoption of digital technologies and cognitive business practices will help reshape sales systems, supply chain logistics, and manufacturing processes.
That’s why, despite the current struggle, the industry will be wise to accelerate this digital reinvention—driving a more rapid transformation and digitization of the core business with such innovations as touchless car purchases and AI-enabled connected services for vehicles.
Modernization of IT infrastructures and development processes, embracing multi-hybrid cloud network architectures, and agile development and operations (DevOps) will help prepare the automotive industry to withstand future ups and downs.
Importance of Digital Transformation
In the past, when companies witnessed rising levels of uncertainty and volatility in their industry, a perfectly rational strategic response was to observe for a little while, letting others incur the costs of experimentation and then moving as the dust settled.
Such an approach represented a bet on the company’s ability to “outexecute” competitors. In digital scrums, though, it is first movers and very fast followers that gain a huge advantage over their competitors. We found that the three-year revenue growth (of over 12 percent) for the fleetest was nearly twice that of companies playing it safe with average reactions to digital competition.
Why is that? First movers and the fastest followers develop a learning advantage. They relentlessly test and learn, launch early prototypes, and refine results in real-time—cutting down the development time in some sectors from several months to a few days.
Digital rewards first movers and some superfast followers
They also scale up platforms and generate information networks powered by artificial intelligence at a pace that far outstrips the capabilities of lower-pulsed organizations. As a result, they are often pushing ahead on version 3.0 or 4.0 offerings before followers have launched their “me too” version 1.0 models.
Before embarking on a Digital Transformation journey, a business should look at its culture, current technology stack, business operation/processes, and legacy products or services – as all of these will be affected by the upgrade and if any of these is not aligned, it could lead to a less than the optimum impact of the Digital Transformation exercise.
Recommended steps to take in preparation for the business’s Digital Transformation:
Ensure that the goals of the Digital Transformation exercise are aligned to the business goals
Use data analytics and business intelligence to make informed decisions
Adopt a company-wide approach
Prepare for cultural changes across the organization
Combine teams and technology for the smoother roll-out
Monitor and control the process changes
And finally, the companies should get the entire organization enrolled into the digital transformation vision by communicating its significance, incorporating cultural changes, and building a strong team of champions who will be the drivers enabling the organization to succeed in digital transformation.
Digital transformation is enabling businesses to capitalize on real-time data, operate remotely, and perform efficiently. Businesses must embrace the technology and digital transformation to take advantage of this digital revolution. IoT, artificial intelligence, machine learning, smart devices, remote working, big data, blockchain are providing reasons to go digital. Businesses can build a true competitive advantage by leveraging these technologies to create a unique digital customer experience.
As digital disruption accelerates, we often hear a sense of urgency among executives—but it rarely reaches the level of specificity needed to address the disconnects we’ve described in the five aforementioned pitfalls.
Leaders are far more likely to describe initiatives—“taking our business to the cloud” or “leveraging the Internet of Things”—than they are to face the new realities of digital competition head-on: “I need to develop a strategy to become number one, and I need to get there very quickly by creating enormous value to customers, redefining my role in an ecosystem, and offering new business-value propositions while driving significant improvement in my existing business.”
The breadth of digital means that strategy exercises today need to involve the entire management team, not just the head of strategy. The pace of change requires new, hard thinking on when to set direction. Annual strategy reviews need to be compressed to a quarterly time frame, with real-time refinements and sprints to respond to triggering events.
Evermore complex competitive, customer, and stakeholder environments mean that what of strategy needs updating to include role-playing, scenario-planning exercises, and war games.
Traditional frameworks such as Porter’s Five Forces will no longer suffice. Finally, the importance of strategic agility means that now more than ever, the “soft stuff” will determine the how of strategy.
This will enable the organization to sense strategic opportunities in real-time and to be prepared to pivot as it tests, learns, and adapts.
Is your organization ready for the transformation? Seek advice from our expert today.
Marek Boguszewicz is a senior technology executive/adviser/speaker with over 30 years of experience in the Technology-Finance, Digital Transformation and Cyber Security, Risk Management Transformation within the financial/ insurance industry. He works closely with the C suite in providing sound advisory, implementation strategy, and workshops on technology, cybersecurity risk management, and digital transformation for blue chips companies.
He has delivered programs globally which include London, Germany, Hong Kong, Japan, Australia, New Zealand, France, Greece, Austria, Spain, Belgium, Greater China, Korea, Taiwan, Laos, Sri Lanka, Indonesia, Malaysia, and Singapore.
Marek formulated “Digital T Cyber-Security Risk” framework based on a CMMI, CSMS, SIX SIGMA principle-based framework. He has managed, GR, ISMS, IAM, PAN, DLP and encryption programs, toed into legacy digital transformation builds...