Digitalization: The Time to Speed Up is Now
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Digitalization will be a never-ending commitment for enterprises, but it has the potential to create significant business impact and ensure relevance in the marketplace.
By Sandeep Kishore
The unstoppable digitalization of enterprises is happening all around us. In an effort to leverage the digital advantage, businesses are being reinvented, rejuvenated and freshly built by a new set of tools, technologies and ecosystem integration. Additionally, since going digital is an irreversible trend, businesses are investing heavily to stay relevant. Digitalization has moved beyond strategy discussions in the boardroom to roadmaps and implementation in order to bring unique customer experiences to the front end and to drive better efficiencies at the back end.
A digital enterprise involves collaboration across customers, employees, partners, suppliers and broader ecosystems. It is about having the ability to quickly adapt and change through the intelligent capture of real-time information, having the heart to deliver amazing customer experiences and feeling the impact being created, as well as delivering significantly superior operational efficiencies at the back end. Overall, a long-term commitment is necessary to create an integrated approach to every aspect of a business which wants to be relevant.
Digital spend over the remainder of this decade is expected to be huge and to contribute more than 80 percent of incremental IT spending. IDC estimates digital spend, including social, mobile, analytics and cloud, will be approximately $940 billion by 2017. The compound annual growth rate is expected to be three times more, compared to the traditional IT spend during the same period. It’s the creation and direct measure of business impact that is clearly the most important reason for enterprises to be investing in digital. To quote the CEO of a Global 500 manufacturing company, "Digital is not only about using a set of cool technologies, it's mostly about how can I run a more efficient end-to-end business that listens to all my stakeholders, and through analytics and rules, implement the changes required to drive real-time impact."
Working With Digital Natives
Native digital companies currently have the maximum leverage and impact. Several market standouts, such as Netflix and Airbnb, have started working with native digital companies and their numbers are rapidly expanding. Not only do they deliver great customer experiences which are unified, multi-platform, pervasive and always available, but they also ensure phenomenal back-end integration with suppliers, partners and payment providers which drive seamless and higher operational efficiencies.
Netflix, for example, has become an alternate to cable television for a large number of U.S. customers as its service streams high-quality, on-demand video content through the Internet. The company currently serves 33 million subscribers in the U.S., with a total of 44 million globally. For only 8 dollars per month, Netflix customers can watch any number of shows, at any time, on any screen. The key success factors for Netflix has been the rock-bottom price points (cable bills often exceed more than $100 per month for U.S. customers) as well as its predictions engine digital interface that customizes video recommendations for each user based on his or her viewing history. And it achieves these features at a massive scale by harnessing the power of cloud computing through AWS.
Airbnb, on the other hand, has seen success by creating an extremely easy-to-use digital platform for buyers and sellers of physical accommodations to meet. These platforms are counterintuitive and allow users to achieve success in this brick-and-mortar business that is dominated by large hotel chains. Airbnb went digital first by making the platform adaptable to all screens, creating analytics, as well as establishing an online trust and rating community from the beginning that addressed quality concerns upfront. All these native digital companies are changing the rules of the game across different industries, forcing traditional enterprises to adopt and leverage digital or become increasingly irrelevant.
Digitalization Requires a Significant Commitment
Digitalizing a traditional enterprise is not a quick-fix exercise. It involves a significant commitment from every facet of the business to ensure an integrated approach and includes direct visibility to the CEO and board members to guarantee the highest level of commitment, support and investment. Several enterprises have hired or created the role of Chief Digital Officer (CDO) to own digitization across its business units. The CDO must implement a unified strategy and integrated rollout plan, working across the organization through IT, marketing, sales, finance, HR, services manufacturing and more. The CDO of a Fortune 500 financial services company recently explained, "Digital has the true north potential to impact the business in the most significant manner that we have seen in a long time. We now have the opportunity to integrate customers' insights and asks on an almost real-time basis in defining new products and solutions. Working with IT, we will leverage cloud and digital service integration to drive massive operational efficiencies."
IT plays a key and pivotal role as several areas are directly in its realm and it is an integral part of the digitization rollout for any enterprise. For example, with IT's help, companies can modernize applications for service, middleware and data integration; enable mobile and cloud for platforms and applications; enhance security architecture to ensure total integrity across multiple platforms, applications, stacks, devices and sensors; and drive information analytics for rule-based and incident-based decision systems. Digital architects, product strategists and product managers are responsible for rich and consistent user experiences across all applications, and all of these components are critical aspects of digitization in any enterprise.
Digitalizing an enterprise does not have a silver bullet solution, and there is no one-size-fits- all solution. Companies in the digitalization process should take stock of the current situation and, at the senior-most level, ask relevant questions such as, Where is the potential maximum business impact? Which business processes or functions can demonstrate success over a short term? Who is the leader who can drive this change? Should talent be brought from outside the company or outside the industry to adopt digital best practices? Should customer experience be the starting point of digitalization or first drive operational efficiencies at the back-end in leveraging digital? How would company culture need to align to this new digital world in order to create the best impact?
Digitalization of an enterprise will be a continuous journey. Embarking on this journey will be a never-ending commitment for enterprises, but it has the potential to create significant business impact and ensure relevance in the marketplace. It is no longer an option for any modern enterprise. The time to speed up digitalization is now.
About the Author
Sandeep Kishore is corporate vice president for life sciences, healthcare and public services sales, HCL Technologies.
To read his previous article for CIO Insight, "Digital and Physical: Finding the Right Balance," click here.
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