The term “digital transformation”, like many tech trends that get overhyped, is in danger of being rendered meaningless by being used as a synonym for “modernisation”. A quick Google search of the term returns over 500 million hits. Yet the importance of digital transformation in today’s COVID-transformed world can’t be overestimated.
According to the last IDC spending guide, published just before the outbreak of the global pandemic, worldwide spending on digital transformation will experience a compound annual growth rate of 17.1% in the five years from 2019 to 2023, to reach $2.3 trillion in 2023. That’s more than half of all ICT spend.
Denis Bensch, CIO of FlowCentric Technologies, believes these numbers will likely be even higher now as the pandemic forces more transformation. While some of the predicted spend may be attributed to simple modernisation of old technology, or the adoption of any technology for the sake of being seen to be modernising, he believes this will amount to a lost opportunity.
Digital transformation, Bensch says, doesn’t come in a box and it involves more than digitisation – the act of changing information from a physical format into digital data – and digitalisation, which is the process of using digitised data to perform work functions.
“Rather, digital transformation is about changing the way you use technologies to do business. It involves the transformation of business activities, processes, products and models to fully leverage the opportunities afforded by digital technologies. Digital technologies allow you to fundamentally change how you operate, deliver value to your customers, and may even change what you deliver to your customers in order to meet changing business and market requirements,” Bensch explains.
The main drivers of digital transformation are therefore customers who are increasingly tech-savvy; the opening up of new markets through the innovative use of new technologies; and the need for speed and agility to maintain a competitive edge within these markets.
“These trends have been evident for some time, but the COVID-19 pandemic underlined their validity, with those able to embrace or leverage digital transformation better able to adapt – and survive – in a suddenly transformed world,” he adds.
Pre-pandemic, it had become increasingly evident that customers wanted the power to order, cancel, deliver and generally manage their own interactions with companies – and the number of companies that accommodated this was slowly growing.
But when lockdown hit, the rules suddenly changed. Businesses that wanted to stay in business suddenly had to adapt. Sit-down restaurants had to offer WhatsApp or online ordering and kerbside delivery; and fast-moving consumer goods (FMCG) retailers suddenly upped their game and began offering shop online and collect or deliver services.
New markets also opened, with opportunities for innovative product and service offerings that were not available before. How Uber made taxi services more accessible to people who wouldn’t traditionally have used a taxi service is well documented, but similar changes became evident as lockdown continued with, for example, new online multi-store shop-and-deliver services introduced (at least one by a company that previously only delivered alcohol); while a host of restaurants and catering companies launched frozen-meal delivery offerings.
With so much competition for a share of the available customer-base giving customers several providers to choose from, companies that are difficult to engage with or slow to respond will find it all but impossible to retain those customers they are able to attract.
However, digital transformation is not a goal; rather it’s a journey with milestones along the way.
“You may have started with taking a portion of your offering online, but to be truly successful and leverage that advantage, you may have to enforce digitisation throughout your organisation – operations, finances – and even your suppliers,” Bensch says.
There are three essential components of a digital transformation exercise: the overhaul of the processes, the overhaul of operations; and the overhaul of relationships with customers.
So, where and how does a digital transformation journey start?
According to Bensch, the first step is to ask three questions:
- What business outcomes do we want to achieve?
- Can digital transformation really improve our business?
- What technologies can assist us in reaching our goal?
“Once you have a vision of what you want to achieve, you can then start to build a roadmap. There is an enormous array of technologies that can be involved in digital transformation, from artificial intelligence and robotics, Internet of things and cloud to drones, geographic information systems, big data and deep learning and much more,” he says.
“It’s important, therefore, not to get carried away by the awesomeness of the technology and rather ensure the technology fits with your overall strategy.”
For example, the restaurant or retail outlet that decides to do online sales may start with an overhaul of its Web site, develop a mobile app and possibly integrate this with WhatsApp. As demand increases, it will need to automate and optimise its delivery system, and once that is done, it could work on getting orders to the kitchen or warehouse quicker, automatically ordering stock from suppliers, and using data analyses to maximise orders from suppliers and reduce waste/spoilage as a result of under-use or over-ordering.
Other industries could do it the opposite way around; in other words, they would digitally automate and coordinate deliveries and then add customer apps and online capabilities.
This is truly dependant on the company’s strategy, but the foundations of any strategy must include:
- Uptime and reliability: Consumers expect 24-hour uptime, which requires reliable cloud services.
- User friendly(ness): Whether Web sites or apps, consumers don’t want a cumbersome experience.
- Accuracy: Whether it be automatically collected data, or sales order information, data needs to be impeccable.
Does your company want to jump-start its digital journey?