From the Amazon juggernaut to the now legendary story of Uber, examples of digital disruption reshaping markets and industries abound. In fact, in their 2017 State of Digital Disruption study, the Global Center for Digital Business Transformation (DBT Center) says that in just two years digital disruption has gone from a peripheral concern to top-of-mind. The DBT Center’s latest study finds that among the 636 business leaders polled across 44 countries and 14 industries, 75 percent believe that digital disruption will have a major or transformative impact on their industry. This is in sharp contrast to the 26 percent that felt that way when last surveyed in 2015.
While it’s clear that digital transformation is inevitable, it’s also clear that it isn’t going to happen overnight. Nearly half of the respondents say that digital disruption is already having an effect on their industry, yet only 31 percent are actively responding. So what’s standing in the way?
In my last article I provided guidance on how to build a strong cybersecurity foundation for a safer path to digital transformation. With a security strategy and architecture in place, you are now ready to take on the next key stages in your digital journey.
1. Hyper-connectivity: Driving new patterns of rich connections between people, process, data, and things.
2. Data integration: Embedding data-driven insights and decisions directly into the workflows and applications that drive business.
3. Machine learning: Automating insight from business and operational data to intelligently scale key initiatives.
As with most new and challenging endeavors, you need to define a pragmatic approach to mastering hyper-connectivity, data integration, and machine learning.
Just as novice runners don’t start with a marathon – they begin with a 5K and work up from there – the same is true as you embark on digital transformation. With a strong cybersecurity foundation in place, the most successful journeys begin with initiatives that involve strategic, but limited, connectivity and data integration. As digital value is realized, you build on success, incrementally expanding connectivity and integration and layering in machine learning.
Below, are two use cases showcasing a pragmatic crawl-walk-run approach to deliver the most significant business outcomes in terms of value. The first looks at the financial services industry which the DBT Center found to be in the center of digital disruption. The second considers the manufacturing industry, also experiencing considerable velocity and magnitude of change.
Financial Services. The financial services industry faces a host of challenges, including changing customer preferences driven by the shift to digital; increasing pressure from agile competitors leveraging new technology to serve customers, such mobile payment offerings from Google, Apple and Vodafone; stiffer regulatory requirements; rising branch costs; and growing customer attrition. New services enabled by digital technologies can help banks and other major segments of the industry, such as insurance and investment/brokerage firms, maximize the value they offer customers.
Crawl: Firms in this sector can realize initial value by focusing their first steps in the journey on omni-channel capabilities across the branch, online, mobile, call center or video-based advisor services. This approach leads to increased cross-sell/upsell opportunities to grow revenue, and accelerated claims processing, which in turn attracts more customers and helps retain existing ones; firms that start with these types of initiatives can confidently transition to additional projects.
Walk: Now the focus is on innovation to realize cost savings and enhance the customer experience. Initiatives can include streamlined claims management and fraud reduction, as well as services tailored to high net worth customers, and connected ads and marketing to capture more retail customers. As firms move away from legacy, paper-based approaches, they are able to improve delivery of services while also reducing operating costs.
Run: Your only limitations here are your own agility and ingenuity. Think personalized interactions and advice available anywhere, anytime on mobile devices; branches that blend video, interactive touchscreens and data-empowered bank associates for a new dimension in convenience and service; and financial advice so timely and appropriate that customers can act on it immediately.
Manufacturing. New capabilities enabled by digital technology can help manufacturers address a wide range of challenges, including increased uptime, labor productivity, and asset utilization; and improving worker health and safety. Digitization is also critical to manufacturers seeking to make the all-important transition from product-centric to service-oriented revenue models.
Crawl: Manufacturers can reap significant initial value through better asset utilization. By getting data from devices on the factory floor or in remote locations, these organizations can begin to predict when assets need servicing, upgrades, or replacement, thus significantly saving on operational overhead. Companies can get more life out of their considerable investment in long-lived assets, and increase their uptime by avoiding unplanned and costly maintenance issues.
Walk: As manufacturers expand connectivity and data integration, initiatives in this phase include visual factories that use digital signage systems and wearable technologies to provide real-time alerts about defects to reduce rework.
Run: Here’s where innovation can bring manufacturers closer to their customers and unlock new revenue streams. Connected product management, turning field sensor and process data from connected products into real-time intelligence, allows for tailor
ed customer offerings. Connected advertising – such as integrating mobile advertising with location-based services – can help you deliver exactly what customers want, when and where they need it; engage in revenue sharing with an ecosystem of service partners; or package data that can be monetized. You can also transition to a service-oriented business model, where you charge for performance vs. physical assets as you master the ability to access, share, analyze, and use data securely across an expanding ecosystem.
The challenges you will face along your digital transformation journey will vary based on your industry, your organization, and its culture. But by leveraging a pragmatic approach that demonstrates initial success and ramps up with experience and time, you can fully engage and capture the lion’s share of digital value at stake.