By Swapnil Srivastava, Executive Vice President & Global Head of Analytics
In recent years, the term “digital transformation” (DX)has become increasingly popular in the business world. It has been used to describe a variety of different initiatives, ranging from the adoption of new technologies to the overhaul of entire business models. Despite its ubiquity, however, the concept of digital transformation can be difficult to pin down. Business professionals often struggle to define what it means and how to go about implementing it effectively.
The rise of digital transformation as a buzzword can be attributed to several factors, including the COVID-19 pandemic, which accelerated the adoption of digital technologies across industries. Additionally, the emergence of new business models such as e-commerce and direct-to-consumer (D2C) has increased the pressure on companies to digitize their operations to remain competitive. To demystify digital transformation, it’s important to break it down into its core components– Digitization, Digitalization, and Data Monetization (Internal and External). Digitization involves converting analog data into digital format, while digitalisation is the integration of digital technologies into all aspects of a business. Data monetisation refers to the process of generating value from data, both internally and externally.
Understanding these three components is essential for designing a comprehensive digital
transformation program that addresses the full scope of a company’s needs. In this article, we will explore the concept of digital transformation in greater depth, examining why it has become a buzzword and what it means for businesses today. Unpacking the key components of digital transformationmay provide business professionals with a clearer understanding of how to design and implement successful digital initiatives.
Digitisation
Digitisation? It’s all about data! It involves converting analog data into digital format and managing the data’s availability, access, quality, and governance. The availability of the cloud and associated technologies is a catalyst for digital transformation. As a result, companies are investing heavily in migrating to the cloud, implementing data lakes, and procuring tools and technologies to improve data quality and governance. This is why the role of a Chief Information Officer (CIO) and Chief Data Officer (CDO) has become increasingly important, as they lay the foundation for DX.
Digitalisation
It’s the process processes, workflows, and digital business models. Businesses are investing heavily in implementing key business processes in software to improve operational efficiency, customer engagement, and innovation. This includes implementing software such as supply chain control towers for supply and demand planning, digital twins for condition monitoring and predictive maintenance, conversational chatbots for virtual assistance, etc.
Several industries, including traditional and core industries, have ventured into e-commerce and D2C models. For example, industrials have an e-commerce for spare parts, CPG companies have D2C models to have direct access to end consumers, and banks have launched e-banking to cater to millennials. Moreover, businesses now have access to Robotic Process Automation (RPA) tools to automate standard manual activities, leading to substantial productivity gains. Chief Technology Officers (CTOs) are collaborating with CDOs and businesses on these initiatives.
Data Monetisation
Data monetisation leverages data, math, and technology to drive ROI in different parts of the business. This includes lead scoring and churn prediction for sales, campaign optimization for marketing, demand forecasting and inventory optimization for the supply chain, etc. Internal data monetisation helps businesses make more informed decisions and optimize business operations. External data monetisation opens up new revenue streams by monetizing data, insights, or platforms they own or have developed. For example, Predix by GE is an Industrial Internet of Things (IoT) platform that helps companies monetize their IoT data. Analytics Leaders of Chief Analytics Officers (CAOs) drive the above in collaboration with IT, CDO, CTO, and business leaders.
Early digital adoption drives revenue growth. Data shows that companies that were early digital adopters have experienced significant revenue growth compared to those that have been slow to adopt. This is why the adoption of cloud, Artificial Intelligence (AI), and Machine Learning (ML) are emerging trends in digital transformation for 2023.
In an increasingly digital world, cybersecurity has become an integral element of DX programs. A cyber-attack can have a significant impact on a company’s reputation, financial performance, and customer trust. Hence, cybersecurity needs to be adaptive to keep pace with the evolving threat landscape.
Personalisation is another trend in digital transformation. Customers expect a personalised experience across all touchpoints, including social media, email, and websites. Personalisation requires collecting and analyzing customer data to gain insights into customer behavior, preferences, and needs. This helps businesses to create personalised experiences that drive customer loyalty and increase revenue.
Conclusion
In conclusion, digital transformation is a complex process that involves multiple components, including digitisation, digitalisation, and data monetisation. Businesses that invest in digital transformation can experience significant revenue growth and operational efficiency gains.
The adoption of cloud, AI, and ML are emerging trends in digital transformation, while cybersecurity and personalisation have become integral elements of DX programs. As businesses embark on their digital transformation journey, they need to collaborate with CIOs, CDOs, CTOs, and CAOs to design and implement successful digital initiatives.