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What is all this Fuss about Digital

Transformation?
The words digital and digital transformation, have been trending very actively
and have become buzzwords of some sort. There is a need for some form of
structured understanding about this term and what it entails.

What is Digital?
Everyone is rushing to become digital and every CEO has a digital agenda that
he or she wants to push forth. Some believe digital is only about technology and
higher investments in technology. Some believe digital is about interacting and
engaging with consumers in different ways. And for some digital is finding a new
way of operating and conducting business. Having such varied perspectives is
causing leadership teams to lack a common vision. Due to such misalignment,
misplaced efforts are resulting in missed opportunities, poor performance
relative to competitors and loss of brand equity. Digital should be seen less as a
thing and more a way of doing things (Dorner and Edelman, 2015). This has
been further divided by Dorner and Edelman into three attributes creating
value in new areas of the business, creating value in customer experience
processes, and building capabilities that support the entire structure internally.

Creating Value in New Business


Here one can explore an entirely new way of doing business, or can be creating
new businesses in other categories, or creating new value pools in the existing
business sectors. It is essential to understand the implications of new
technologies and developments in the marketplace. Opportunities and threats
need to be carefully weighed against each other before making such a decision.
For example, Internet of Things is exposing flaws in existing value chains,
connected cars are redefining incar entertainment and self-navigation, and big
data analytics has revamped efficiency levels in the logistics and supply-chain
industry.

Creating Value in Customer Experience


Understanding and engaging with the consumer is the most critical to capturing
consumer mindshare. Examining each step of the customer journey across
channels to understand where the experience can be incrementally enhanced is
key. To enable a dynamic process where the digital journey evolves along with
customer preferences requires an integration of four core capabilities (Dorner
and Edelman, 2015):
1. Proactive decision-making to make intelligent decisions based on varied
data to deliver personalised experiences
2. Contextual interactivity analysing how the customer interacts with the
brand and modifying interactions to improve experience
3. Real-time automation leveraging automation to enable customers to
complete interactions and tasks now
4. Journey-focussed innovation this includes expanding the customer
journeys into other service lines and thus extending the relationship

Creating Value from within the Organisation


This includes both the people and the processes within the organisation. These
are the two resources that are key in enabling an organisation to be agile and
adaptable. There are two elements that can enable the creation of a truly agile
organisation mind-sets and system architecture. A digital mind-set within
organisations not only fosters cross-functional collaboration and seamless flow of
information but also builds an environment conducive to new ideas. System
architecture relates to how information technology (IT) enables interconnected
networks amongst devices and people and optimises processes that are key to
decision making, thus reducing lead-time and enhancing better customer-facing
interactions

What is Digital Transformation?


The process of embracing technologies is divided into three stages (MIT Centre
for Digital Business & Capgemini Consulting, 2011):
1. Digital Competence having ICT skills and an ability to critically evaluate
information and social awareness.
2. Digital Literacy having basic computer skills and practical knowledge in
using software and applications.
3. Digital Transformation using technology to radically improve the
performance and reach of enterprises.
Digital transformation falls in the third stage of this technology journey. It
enables organisations to survive in todays technologically advanced and highly
dynamic environment. Such transformation can occur at various levels, within
various verticals, and various functions. Digital transformation drives value in
four ways connectivity, automation, decision-making and product (Olanrewaju
and Willmott, 2013). Application of technology tools such as big data analytics,
mobile, cloud and social are applied very selectively and not leveraged fully to
enable transformation. This results in missed opportunities to create greater
value in every process and aspect of the business. Digital transformation will
occur differently in different industries, disrupting the entire business models,
while in others it may cause a change only in a particular function.

As demonstrated by the above figure, digital can affect an organisation in one or


a combination of six areas customer experience, product or service innovation,
marketing and sales and distribution, logistics and fulfilment, risk optimisation,
and corporate control.

As we moved from the late 90s, the dot COM era towards the millennium and
now, to the digital age, the type of digital attributes changed as did their impact
on the economy. During the 90s, digital products such as music and video, and
infrastructure such as telecommunications and enterprise software had very
limited impact on the economy. In the 2000s, with the web and along with it ecommerce coming in, the impact increased with the dawn of virtual marketplaces
and all-pervasive retail. Finally in this current age, mobile, data analytics, social
and cloud are redefining the way companies do business and exposing
enterprises to a much wider array of opportunities and value.
Digital Transformation is evolving as a result of three causes mobility shift,
social networking and hyper-digitisation.

Mobility has caused a major shift in time and space for customer interaction via
smartphones with high-speed Internet connectivity, GPS targeting and
processors that can handle a variety of applications. As eMarketer reported,
more than a third of the worlds population, which amounts to 2.56 billion will be
on smartphones by 2018. The millennials segment of consumers, that is, 18-34
year olds exhibit the maximum propensity to spend their internet time on
mobile. This is further supported by a 90%+ penetration of smartphones within
this segment. Moreover, in every demographic, mobile is outpacing desktop in
digital media time spent. (comScore, 2015). All the aforementioned statistics
prove that mobile will be the primary source for digital consumption for this
generation and the next.
Social networking is scaling up rapidly with number of users reaching 2.44 billion
by 2018 (eMarketer, 2014). Below is a graphic depicting active users as of 1st
August 2015, to give a brief picture of number of users across various social
networking platforms. Facebook has about 1.5 billion active users, which is about
21% of the global population. With an unprecedented availability of real-time
information and by virtue of its instant shareability, an amplified network effect
has been created within which millions connect, interact and drive decisions a
critical factor for an enterprise, brand, product or service to consider.

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