Digital transformation is the profound and accelerating transformation of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritized way.
The development of new competencies revolves around the capacities to be more agile, people-oriented, innovative, customer-centric, aligned and efficient with present and future shifts in mind. Digital transformation is a journey with multiple connected intermediary goals, in the end striving towards continuous optimization across processes, divisions and the business ecosystem of a hyper-connected age where building the right bridges in function of that journey is key to succeed. In this online guide we explore the essence of digital transformation, its evolutions and how it is present across various business processes and industries.
Table of Contents
- 1 Digital business transformation – a holistic approach
- 2 Digital transformation and the usual suspects – beware of hype
- 3 Digital transformation happens everywhere
- 4 Digital transformation myths and realities
- 5 Pro-sponsiveness and pro-daptation: focus on future and outcomes
- 6 Digital transformation, digitization and essential elements
- 7 Digital transformation and the customer experience
- 8 The evolution of digital transformation: towards a DX economy
- 9 Moving from transformational technology to transformation economy in 5 stages
- 10 Digital transformation and marketing
- 11 Digital transformation and hyper-connected optimization
- 12 Digital transformation and the key role of data and information
- 13 Digital transformation across various industries
- 13.1 Digital transformation in the retail industry
- 13.2 Digital transformation in government and the public sector
- 13.3 Digital transformation in the utilities industry
- 13.4 Digital transformation in the insurance industry
- 13.5 Digital transformation in retail banking
- 13.6 Digital transformation in the supply chain: logistics and transportation
- 13.7 Digital transformation and business process outsourcing
- 14 Digital transformation beyond technology: the human differentiator
- 15 Digital transformation and linear management thinking
Digital business transformation – a holistic approach
Digital technologies – and the ways we use them in our personal lives, work and society – have changed the face of business and will continue to. This has always been so but the pace at which it is happening is accelerating and faster than the pace of transformation in organizations.
Digital transformation is probably not the best term to describe the realities it covers. Some prefer to use the term digital business transformation, which is more in line with the business aspect. However, as an umbrella term, digital transformation is also used for changes in meanings that are not about business in the strict sense but about evolutions and changes in, for instance, government and society.
From digital transformation to digital business transformation
This guide is about mainly about digital business transformation. In other words: about transformation in a context of digital business where there is a decentralizing shift of focus towards the edges of the enterprise ecosystem.
Digital business transformation and hyper-connectedness: when the focus shifts to the edges
Customer and customer experience, purpose and end goals, partners, stakeholders, the last mile of processes and disruption sit and occur at these edges and are key for digital transformation.
The end goals of the business, customers and stakeholders drive the agenda. The central role of the organization is to connect the dots and overcome internal silos in all areas in order to reach these different goals as interconnectedness is the norm.
The movement towards the edges also reflects in technologies and the decentralization of work and business models. However, it does not mean that strategic decisions move to the edges or that digital transformation is only possibly in organizations with “new” organizational models. Digital transformation requires leadership, regardless of how it is organized and as long as the holistic approach towards the goals with the edges in mind prevails over internal silos and de facto gaps between reality and perception.
Digital business transformation areas
Digital transformation in the integrated and connected sense which it requires can, among, others, touch upon the transformation of:
- Business activities: marketing, operations, human resources, administration, customer service, etc.
- Business processes: one or more connected operations, activities and sets to achieve a specific business goal, whereby business process management, business process optimization and business process automation come into the picture.
- Business models: how businesses function, from the go-to-market approach and value proposition to the ways it seeks to make money.
- Business ecosystems: the networks of partners and stakeholders, as well as contextual factors affecting the business such as regulatory or economic priorities and evolutions.
- Business assets: whereby the focus lies on traditional assets but, increasingly, on less ‘tangible’ assets such as information and customers (enhancing customer experience is a leading goal of many digital transformaton “projects” and information is the lifeblood of business, technological evolutions and of any human relationship).
We do look at some less business-related ‘digital transformation’ phenomena and at so-called disruptions but the focus is on the business, which by definition means a holistic digital transformation view whereby aspects such as customer experience, technological evolutions and innovation with a clear purpose, instead of a buzzword, are crucial elements.
Digital transformation is certainly not just about disruption or technology alone. It is even not just about transforming for a digital age. If it were the latter, one has to realize that this digital age exists since quite some time and is relatively vague.
Causes of disruption and transformation
“Disruptions” and digital (business) transformation can be caused by numerous factors:
- Technological innovations (technology-induced), which are more impactful than ever before. However, it’s not the technology that drives the disruption or transformation. It’s how it is used and adopted by customers, partners, competitors and various stakeholders.
- Customer behavior and demands. This so-called customer-induced transformation and disruption is not necessarily related to technology. Technology often enables or, as just mentioned, causes it, when adopted and turned into business challenges. An example of a force that drives digital transformation and is not caused by technology but merely strengthened by it in combination with other factors: the demand of customers for ease of use and simplicity in dealing with businesses is far older than today. It goes back to times when even the Internet didn’t exist. In that sense, digital transformation can be simply catching up too because businesses don’t have another option anymore (it’s not as if they didn’t know the importance of making interactions and support for customers easy and frictionless decades ago).
- Ecosystem-induced: economical changes, demands from partners who want you to adapt, regulatory changes, the list is endless.
And this ecosystem aspect brings us again to this essential aspect of digital transformation: the interdependency and interconnectedness of everything: from business processes and models to business activities and each single activity of the organization. The butterfly effect in action. Think about how virtually all business processes de facto are linked, the interconnectedness of business activities from the customer perspective, the way information runs across all digital transformations and much more.
Why the holistic picture matters
So, while we just split up some aspects of digital (business) transformation, it’s of the utmost importance to get that holistic picture.
Businesses have always been changing and innovating, technologies always came with challenges and opportunities, regulations and ecosystems have always evolved.
It’s in the degree of interconnectedness and of various accelerations as we cover them that digital (business) transformation is to be seen as more than a buzzword but as a profound challenge, force and most of all opportunity for organizations that will enable them to achieve the core business competencies they need to succeed in rapidly changing environments where speed of change touches upon a myriad of phenomena, ranging from the acceleration of technological innovation and disruptions challenging the status quo of common business models to the need for speed in dealing with changing customer and partner demand across the value and supply chains.
Speaking the same language
To make sure we speak the same language it’s important to emphasize that digital transformation is not just about:
- Digital marketing, even if that’s an important part of the business activities and if it’s the context in which digital transformation is often used.
- Digital customer behavior, although it plays a role and customers are increasingly ‘digital and mobile’.
- Technological disruptions because the disruptions are always about customers, workers, markets, competitors and stakeholders, even if related to technological evolutions and knowing that ’emerging’ technologies indeed can have a ‘disruptive’ effect.
- The transformation of paper into digital information as originally meant nor the digitization of information (flows) and business processes, which is simply a condition sine quod non.
Finally, the reason why we would prefer to speak about accelerated business transformation or, if needed, digital business transformation, is that it’s just a matter of time before no one makes a distinction between digital and physical or offline and online. Customers, for instance, don’t think in these terms at all, nor in the terms of channels.
So, digital – and technologies in general – always had a deep impact on business and society. As mentioned, one of the changes that we see in recent years is the speed at which it’s all happening. The technological evolutions and changes they bring upon us are accelerating fast, displaying exponential growth – and consequences.
This speed is contextual and felt differently across various industries. It goes hand in hand with the role ‘new technologies’ can play in the specific industry, the market conditions, the types of customers and stakeholders (and go-to-market approach) and so much more. Still, speed is crucial in more than one way. There can always be an organization in any industry that sees and grasps the opportunities competitors don’t. And in some parts and functions of the business a lack of speed just isn’t an option, regardless of industry.
Finally, exponential growth or speed of change in any area whatsoever (customer behavior, regulatory frameworks, technologies etc.) can happen at the most unexpected moments.
Creating the conditions to be ready for rapid evolutions and ideally pro-dapt and take the lead, changing the status quo, is part of business transformation.
Acceleration of innovation and transformation
While a range of technologies, known as 3rd Platform technologies, have accelerated disruption, business innovation and changes in human behavior, the exponential growth and pace of change is just a fraction of what is yet to come. Although digital transformation is not about digital technologies as such, it is clear that the adoption and opportunities of technologies under the umbrellas of social business, cloud, mobility, Big Data (analytics), cognitive computing and the Internet of Things, to name a few, speed up changes across society.
However, the real acceleration happens when the acceleration of innovation and transformation as such goes exponential. And that is what analysts mean when they talk about the digital transformation economy or DX economy, which is tackled below: not just acceleration of disruption and changes but acceleration of the actual digital transformations and innovations leading organizations will go through, making the gap with laggards even bigger.More about the DX economy
Digital transformation and the usual suspects – beware of hype
Digital transformation is not just about technology and certainly not just about companies in technological industries. This is an often made mistake that can be partially explained because such “usual suspects” (Uber is probably the most mentioned – and most controversial – example) indeed are “disruptively” using digital technologies to alter existing models and markets and – at least as important – get a lot of attention.
However, it’s a mistake to just look at all these tech companies out there that we keep showing as examples of digital transformation. While some have indeed been ‘disruptive’ in the sense of forcing bigger players to adapt or die and we can learn from these start-ups and the technology success stories everyone talks about, it’s easy to overestimate them, certainly when comparing with the organizations that have been successful at digital transformation in ‘less sexy’ but sometimes far more challenging and interesting areas.
The attention given by media and tech fans to disruptors such as Uber and the other usual suspects is not without danger and hype. Digital transformation leaders can be found in virtually all industries and often are not among these darlings of those fascinated by digital technologies and companies as such. Digital transformation is industry-agnostic and starts with the business goals, challenges, customers and context of the organization.
Digital transformation happens everywhere
So, digital transformation hits each industry. But it can also affect all activities, divisions, functions and processes of the organization as it can impact the very business model as such.
CapGemini Consulting was one of the first to come up with the concept of digital transformation and a digital transformation framework as you can see below. The company did so in collaboration with the ‘MIT Center for Digital Business‘ during a three-year study which defined an effective digital transformation program as one that looked at the what and the how.
The McKinsey chart below shows just aspects where digital transformation can play:
- The (digital) customer experience (de facto a key element with many digital transformations being a mix of customer experience optimization and process improvement – and cost savings).
- Product and service innovation where, for instance, cocreation models can be used.
- Distribution, marketing and sales: another usual suspect and in practice an area (along with customer service) that is often one of the earliest areas undergoing digital transformations.
- Digital fulfillment, risk optimization, enhanced corporate control, etc.
Others we can add include:
- Intelligent information management (with information, data and the processes they feed being key and a focus on activation).
- Customer service, customer experience management and contact centers, customer relationship management.
- Work, human resources, new ways of collaborating, workforce engagement and enablement (agile working, social collaboration, enterprise collaboration, unified communications,…).
- Learning and education.
- Procurement, supply chains and supplier relationships.
It’s important to remind that in a digital transformation (and, for that matter digital business) context, all these aspects, functions, processes, etc. are interconnected and silos have less (or no) place, not from a technological perspective but most of all also not from a process and people perspective.
Digital transformation myths and realities
Digital transformation is on the radar of many organizations. In order to reap similar benefits, it’s important to focus on real business and customer challenges, have a clear – often staged – approach, prioritize and involve all stakeholders in any digital transformation process.
The graphic below from Capgemini (check out the eBook from Capgemini: “The Digital Advantage:How digital leaders outperform their peers in every industry“), dispels some myths and offers some realities.
Four digital transformation realities we want to emphasize:
- Business/IT relationship is key (closing the gap between both, focusing on the same goals and NOT overlooking the role of IT).
- There is a common DNA among digital leaders and the path to digital transformation shows common traits (even if context matters).
- As said, each industry is impacted, including your industry. Customers, employees, partners, nor competitors or new, disruptive players, will wait for business to catch up, regardless of industry.
- Digital transformation is led from the top (or at least requires firm buy-in from the top – and all stakeholders).
Pro-sponsiveness and pro-daptation: focus on future and outcomes
Beyond a dimension of responsiveness/agility (and adaptation and often catching up with customers and ecosystems that change faster than organizations can) in a rapidly evolving context (remember: not linear but exponential), which de facto requires a higher degree of agility and connectedness, there is also a “pro-sponsive” element.
A dimension of being the disrupter instead of disrupted. Of forward-thinking change, anticipation, innovation and simply thinking and working out of the box of the usual, the past and the present. The outcomes of such “pro-sponsive” approaches are what matters most, which brings us to the next point.
To achieve them, however, many conditions need to be fulfilled in an often staged approach and always involving people, processes and technologies. Again three usual suspects indeed.
Digital transformation, digitization and essential elements
Digital transformation is often used in a context of the transformational impact of technologies as such, although that’s not how we look at it. Historically, digital transformation was also used in another sense: namely the digitization of paper into digital formats into processes.
These digitization dimensions of turning paper into digital information into processes in a more ad hoc way are obviously necessary in digital transformation in the broad sense.
Digital transformation projects requires several elements to succeed and digitization is a part of it. Among the many elements, we mention four that are related with technology, people and/or processes.
As it is the case in virtually all impactful changes that affect multiple stakeholders, divisions, processes and technologies (including implementing an enterprise-wide marketing ROI approach, a content marketing strategy or any integrated marketing approach with CRM, marketing automation, etc. to mention three marketing-related ones), there is not only an opportunity for change and looking at what can be done better and what should be (re)connected but also a need for change management.
Knowing the role of data and analytics in digital transformation, there are even more opportunities for change and needs for change management. This is not new: when web analytics became popular, for instance, their implementation and the connection between different data and analytics “silos” in the customer/marketing space, often showed clear needs for digital transformation in many customer-facing and customer-oriented operations, long before the term digital transformation became known. Grasp those opportunities and tackle the challenges. People and processes.
Intent and priorities.
The world is full of roadmaps for virtually any digital transformation project. However, roadmaps are what they are and the intent, priorities, pain points and actual needs for the individual business and its ecosystem, within a broader reality, matters more.
There is never a one size fits all solution and intent, outcomes and priorities steer the digital transformation efforts, on top of changing parameters in the ecosystem. Priorities also means prioritization, often including looking at the low hanging fruit but always with the next steps and ultimate goals in mind, knowing these goals – and the context within which they were set – will evolve.
We mentioned it before but it’s important. It’s a mistake to think that organizations are really ready for profound digital transformation in a broad way. There are still far too many gaps in regards to the digitization (and automation) of existing processes and the digitization of data from paper carriers. Worse: what is sometimes called digital transformation is sometimes “just” digitization (turning paper into electronic information into processes). You need digitization in order to optimize in a digital transformation context but digitization does not equal digital transformation. What matters is the combination, strategic and prioritized interconnecting and the actions you take to achieve business goals throug digitization and combining data.
Furthermore, there is an even bigger gap between back-office processes and the front end. An example of this phenomenon can be seen in the financial industry, where there are extremely strong disconnects between the back-office and front end. There are lots and lots of digitization efforts that still need to be done in many areas of business and society and we all know and feel it, whether it’s in our daily experiences as “business people” or in the often totally unnecessary administrative tasks in regards to our governement-related or finance-related ‘duties’ and interactions with business where we’re forced to use paper, the phone or channels we really don’t want to use anymore.
Silos, responsibility and skills
Digital transformation – just as social business, digital business and any form of customer-centric marketing and business processes, requires the ability to work across silos. In many cases, digital transformation even is about totally reworking organizational structures, which can be as much about collaborative methods, Centers of Excellence as removing specific silos.
The debate about the responsibility over digital transformation as a whole and within specific functions and processes in that sense of genuine transformation is archaic, even if it needs to be held as Chief Digital Officers, CIOs and other CxOs all play a role. Here again, there is no ideal solution regarding responsibility: context does matter.
Marketing should learn from IT and IT from marketing. Sales from customer service, the contact center from sales, the list goes on. A digital-savvy culture is not the goal of digital transformation but today’s CxO needs to be not only digital-savvy but also know 1) what others are doing and 2) their experiences, methods and skillsets. As for the responsibility debates: we will look more in depth at them later.
This list is not exhaustive, yet essential.
Digital transformation and the customer experience
In most digital transformation projects the customer experience and the user experience (remember both are not the same) take center stage. The customer experience, however, is a catalyst and driver of many digital transformation efforts.
The customer experience doesn’t belong to just one department and a transformational approach by definition includes several stakeholders, including the customers.
While technologies have affected customer behavior and expectations on one hand and enable transformations on the other, the focus is on people and processes. To truly enhance the customer experience in an enterprise-wide and holistic way, several elements, divisions, caveats, processes and technologies need to be taken into account.
However, the people dimension is probably – and obviously – the most crucial of all in the customer and customer experience context. The customer experience is probably also one of the key areas where business meets IT in a transformational perspective.Digital transformation and the customer experience
The evolution of digital transformation: towards a DX economy
With strong roots in the accelerating adoption of 3rd Platform technology and the transformative effects of this adoption by organizations, workers, consumers or let’s say people, the role of digital transformation is evolving.
With a clear focus on (digital) customer experience and overall stakeholder experience, while optimizing costs, innovating and creating competitive differentiation, digital transformation is set to become the cornerstone of a digital transformation or DX economy in the words of IDC.
Adding more technologies to the 3rd Platform and, more importantly, witnessing an added layer to the core technologies and innovation accelerators of innovation and transformation, IDC sees a future whereby this layer where the optimization, transformation and innovation as such accelerates.
And this, in turn, will lead to a DX economy. But make no mistake about it: despite all the technology it’s still about (digital) customer experience and stakeholder experiences or the human dimension, empowered by processes, information and the 3rd Platform evolutions in the first place.
Moving from transformational technology to transformation economy in 5 stages
Stage 1: the 3rd Platform and digital business
In 2007 IDC introduced the 3rd Platform, back then consisting of four technological/business pillars: cloud, big data/analytics, social (business) and mobility.
Gartner called it the ‘Nexus of Forces‘ and, as others did, talked about SMAC (social, mobile, analytics and cloud). Regardless of the name: what mattered was that these technologies and, more importantly, their adoption by consumers, workers and businesses, their behavior-changing impact and the ways they were leveraged to achieve various goals were dramatically altering the business reality – a digital business reality.
Stage 2: the innovation accelerators of the third platform
The 3rd Platform, which is preceded by respectively the mainframe and client-server model era/platform, was joined by various other technologies which IDC called innovation accelerators.These include robotics, natural interfaces, 3D Printing, the Internet of Things, cognitive systems and next generation security.
Stage 3: from transformation to innovation stage
What we see now is that with the (digital) customer experience, disruption, innovation, competition, differentiation, automation, cost reduction, optimization, speed and experiences of stakeholders as business drivers, the mentioned technologies and the way they are used lead to that famous next wave or additional layer of innovation and of digital transformation. This in turn, IDC says, led to an innovation stage and information is essential to enable it. Digital transformation requires IT and information excellence in an end-to-end approach.
Stage 4: the acceleration of innovation and transformation
This stage of innovation and further challenges brought by disruptive business models will accelerate in the next years. In other words: what we (will) see is that the pace of innovation and transformation is changing and resulting in a stage whereby the disruptive impact of digital transformation is about to be felt in every industry as enterprises flip the switch and massively scale up their digital transformation initiatives as IDC’s Frank Gens puts it, to secure a leadership role in the ‘digital industrial revolution’.
Stage 5: digital transformation at the core of a new economy
Finally, it’s this ‘digital industrial revolution’, which IDC dubbed the digital transformation economy or DX economy, that will put digital transformation at the center of growth and innovation strategies that will rapidly impact all industries even more and faster than we’ve seen before. And the innovation accelerators such as the Internet of Things, cognitive (artificial intelligence) and the likes will be key in this evolution, as are the ‘traditional’ backbones of the 3rd Platform (cloud, big data/analytics, mobile etc.)
Digital transformation and marketing
Just as the customer experience is a catalyst in many digital transformation projects, it also has become pivotal in marketing, service and customer-facing processes.
Marketing is one of many areas where digital transformations take place (even leading to confusions whereby digital marketing transformation is used interchangeably with digital transformation).Digital transformation, the customer experience and marketing
The digital customer journey, data and data-driven marketing, social CRM, the contact center and – again – the customer experience are important elements in this regard. The digital marketing transformation imperative is driven by changing customer behavior and expectations before anything else. With the end of the sales funnel and ongoing fragmentation in an increasingly digital customer reality whereby control has shifted in mind, marketing has no choice than to transform and to work closer together with other divisions such as IT and customer service, to name just two. This also has consequences for the marketing function and changing role of the CMO.
Last but not least, the need for digital marketing transformation goes hand in hand with the connected optimization goals.Digital marketing transformation – the customer leads the dance
Digital transformation and hyper-connected optimization
Regardless of the technological evolutions and the acceleration and impact of their adoption, a core reason to ‘digitally’ transform is the urgent need to have a very holistic and connected approach towards (customer-centric) optimization.
For all too long optimization efforts, whether it’s in business processes, marketing optimization of customer service level improvement, has occurred in disconnected and siloed ways.
In an increasingly connected and complex customer, worker, partner and other stakeholder environment, this isn’t possible anymore.
Holistic optimization looks at the broader picture of improvement, not just by seeing how everything in an optimization ‘chain’ is de facto connected but by actually setting in motion the necessary transformations and innovations to optimize in a far broader and interconnected way than ever before: beyond functions, divisions, silos and anything making an end-to-end optimization and experience flow impossible.
This focus on optimization through digital transformation is directly linked with the goals of (customer) experience enhancement and stakeholder engagement. It goes hand in hand with process optimization, often automation and cost efficiencies.Digital transformation: when hyper-connected optimization becomes a must
Digital transformation and the key role of data and information
Even if information is at the very center of digital transformation, the link between information management and digital transformation is not made often enough. If we look at other elements at the center of digital transformation this is a pity.
After all, whatever the form of optimization, communication, collaboration, interaction, experiences, innovation and so on: information (or content or data) is a key success factor to make it happen (on top of human factors, leadership, processes, organization etc. which also require information).
Information chaos and information as an enabler
There are four so-called information chaos challenges according to John Mancini of AIIM (association of information management professionals):
- How do we optimate business processes?
- How do we get any business insight out of all the information we collect?
- How do we use information to better engage customers, employees and partners (also think omni-experiences)?
- How do we manage the risk of growing volumes and complexity of content?
Turning these ‘information chaos’ problems into solutions is a lot what the link between digital transformation and information management is about.
But there is more. Information management plays a role as a digital transformation enabler and in each step towards achieving digital transformation goals such as increased customer-centricity, the enablement of effective knowledge workers and operational excellence.
Information and information management are also key in all three parts of the well-known 1) people, 2) process and 3) technology/tools triangle. To learn more click the link below.Digital transformation and information management: enabling change
Digital transformation and intelligent information
In a digital transformation context, ‘managing information’ and data is crucial but it’s not enough. In today’s and tomorrow’s information- and data-driven business, insights, intelligence and actions matter most: the outcomes.
That’s where context, semantics, artificial intelligence and activation come in. With the Internet of Things and Web 3.0 upon us the intelligent dimension becomes more important in regards to making sense of unstructured information, automation and connected devices and putting information at work. It’s why we talk about ‘intelligent information activation’.
As we shift towards information-based organizations and information has become part of the capital and business assets of the enterprise, an intelligent information management approach enters the boardroom.
At the same time the activities around and value of data are looked upon from the perspective of engagement, outcomes and the last mile.
Making data actionable, introducing devices (IoT) in an increasingly complex and growing data landscape, the steep growth of unstructured data, deriving meaning and insights from information and leveraging it at the right time and right moment for the right reasons and actions are all critical.
From information management to intelligent infomation activation
This isn’t just about ‘managing’ information in the traditional sense anymore. It’s also not just about connecting systems and data nor even connecting through information. With the advent of the Internet of Things, the need to ensure data quality and the increasing need to use and unlock it faster, despite the sheer volume, adds several elements to the information and transformation equation.
Among them are:
- intelligence (as in artificial intelligence as the only way to add and extract meaning from ever more data and as the only way to use information and data in an IoT and inter-device context),
- speed (with speed being a customer experience and even competitive benefit),
- a holistic security approach (with information and data as assets),
- the need to digitize and capture paper-based data (digital transformation requires digitization and thus scanning) closer to the source, owner and process to go paperless (paper slows down digital transformation),
- and an increasing focus on accuracy, quality and outcomes.
What this all means and how it will evolve? On top of the existence of systems of records and systems of engagement – which are both needed – we are moving to systems of intelligence and intelligent automation and optimization, ecosystems of code, algorithms, cognitive computing (understanding and beyond) and fast/smart data as ways to succeed with digital transformation and, vice versa, information-based challenges as transformational drivers. To learn more click the link below.Digital transformation success: the role and evolution of intelligent information
Digital transformation across various industries
Each business is different. Yet, many of the lessons we learn from leading companies show that digital transformation shows very similar aspects across industries. Still, it’s also important to look at your business and of course your industry.
Digital transformation in the retail industry
Retail is one of the most rapidly changing verticals across the world and is often at the forefront of technological advancement to keep pace with the evolving needs of a 24/7 customer base.
That’s the clear digital transformation message from OVUM regarding the changing retail customer. We can’t but agree and would even add that digital transformation is omnipresent in all aspects of the retail industry. From data and information optimization, supply chain digitalization, delivery and back-office processes to the front end where customer expectations are necessitating transformations and enhancements regarding a seamless channel-agnostic customer experience.
Let there be no mistake: the shop is still very important in retail but here as well consumers have come to expect innovative experiences which bridge the physical in-store and digital journey, which doesn’t exist in the eyes of the consumer anyway.
On top of traditional 3rd platform technologies such as the cloud and big data, there is a myriad of additional technologies that is changing the face of retail completely.Digital transformation in the retail industry
Digital transformation in government and the public sector
The role and structure of national and local governments, government agencies, state-sponsored organizations and public sector institutions differs from country to country.
However, regardless of the ways typical areas where governments are involved such as public healthcare, transport, public infrastructure, policing and defense, citizen services or regulation, are organized, there are many commonalities in the challenges and priorities, not in the least from the digital transformation perspective.
While from the citizen experience perspective the role of digital transformation becomes clear in areas such as e-government and digital identity programs, in many other areas transparency, efficiency and coordination are key in the digitization of processes and project management.
Research shows that a majority of public sector professionals recognize the disruptive impact of digital technologies on government.
- The first driver of digital transformation in government and the public sector is cost savings in a world where populations are aging and a mix of local, national and geo-political shifts necessitate choices and changes, whereby higher cost transparency and cost reductions are key.
- The second driver of digital transformation in government is meeting the demands of a ‘digital’ citizen and enhancing the citizen experience. Citizen demands are evolving because demands of people are evolving, whether it’s in their capacities as workers, consumers or citizens. Improving the citizen experience of an increasingly digital and mobile first citizen whose digital lifestyle doesn’t match with the often paperwork-intensive reality that is still too dominant and causes frustration is a priority.
Digital transformation in the utilities industry
Utility firms face tremendous challenges. Yet, they are at the same time active in an industry where digital transformation can lead to tremendous cost savings, new offerings, alternative pricing models, customer experience optimization and even radical new ways of ‘doing business’, engaging with customers and their very business model.
From a technological viewpoint, the Internet of Things, Big Data and everything related to ‘smart’ play a key role. Furthermore, investments and innovations in making customers aware of their consumption and allowing them to control it in unseen ways add to the many possibilities in areas such as ecology/environment and changing supply chains.
More about these evolutions, challenges and ‘digital possibilities’ on our overview page where we tackle the utilities industry.Digital transformation: focus on the utilities industry
Digital transformation in the insurance industry
The insurance industry has numerous opportunities to leverage technologies in transformational ways.
Among the typical areas which are often mentioned are telematics, the Internet of Things, the use of predictive analysis (risk) and new business models and pay-as-you-go insurance approaches.
A majority of consumers would, for instance, be willing to have a sensor attached to their car or home if this woud result in a reduction in premiums. Yet, just as much as technologies offer tremendous opportunities which are increasingly being embrace by insurers, there are also challenges. The changed expectations of policy holders and younger consumers play a significant role here. Moreover, there is a lot of work in essential business process such as insurance claims management, customer service and meeting changing regulations. On top of that there is the rise of InsurTech and the fact that consumers buy insurances from non-traditional providers, including retailers.
The challenges and opportunities are vast as you can read on our page about digitization and digital transformation in the insurance industry.Insurance: digital transformation, digitization, disruption and optimization
Digital transformation in retail banking
Another example of an industry/vertical that faces urgent digital transformation challenges, albeit with contextual differences, is retail banking.
Although there are several changes, disruptions and digital transformation (challenges) in retail banking as you can read here, some are restricted (or more/less important) to specific geographies given, for instance regulatory, consumer-related, focus-related and even broader societal elements. More about these geographical differences in “Retail banking: the growing importance of direct and digital channels“.
Retail banks are increasingly collaborating with FinTechs as they don’t dispose of the speed, technology, agility, technological (non-legacy) experience and sometimes even customer experience skills and deep customer understanding FinTechs have. In some regios these collaborative efforts are more important than in others but we clearly see a convergence of FinTech and incumbents in many forms and shapes.
These evolutions, as well as the many challenges, opportunities and transformations retail banks face on our overview page.Retail banking: digital transformation, evolutions and challenges
Digital transformation in the supply chain: logistics and transportation
There aren’t many industries with as many interconnected organizations, ecosystems, processes, information flows, devices (from individual goods, boxes and pallets to trucks and ships) and physical distribution and handling operations as transportation and logistics.
In a context of globalization, changing customer expectations, huge pressures on margins, high risks of enormous volumes of data, the logistics and transportation industry is in full flux.
Strictly speaking we of course need to differ between the transportation of people, animals and goods. While the transportation of people of course is being transformed, a large majority of digital transformation budgets goes to supply chain transformation projects with the move from the hybrid model to a full digital supply chain in mind.
In the context of the transportation of goods and the supply chain, speed, visibility, digitization and digital transformation rank high on the agenda.
Given the long-standing usage of sensors and RFID, as well as the need to dispose over data which enable new business models and better processes, the (goods) transportation and logistics industry takes a leading place in the deployment of Internet of Things space.
Also data analytics are big in this industry that has been used to work with big data before the term existed. However, among the many transformational challenges is the fact that data maturity levels need to go up and that digital strategies need to be deployed across end-to-end supply chains. It’s a complex given in a highly complex and interconnected industry with many different activities.More about digital transformation in logistics, supply chain and transportation
Digital transformation and business process outsourcing
There is a thin line between digital transformation and business process management, more specifically business process optimization and reengineering for a digital age and customer.
However, digital transformation also has a profound impact on business process outsourcing (BPO) and thus the industry of BPOs. Business process outsourcing is moving from its traditional predominant cost-saving and (otsourced) process optimization roots to a cost plus optimization plus innovation plus value proposition.
Organizations have changing expectations from their BPO partners, who need to transform themselves, in order to meet these changing demands of disrupted customers.
Business process outsourcers need to be far more aligned with business, acquire new skills, transform and optimize their own operations, and last but not least, seek how to add more value to their propositions.
When organizations transform, then so do their partners to whom they outsource specific business processes.More about business process outsourcing in the age of transformation
Digital transformation beyond technology: the human differentiator
To understand digital transformation, it’s key to put people and processes above technology, even if technology is a change agent – or at least the ways we use it to evolve, innovate, adapt and “pro-dapt”.
Digital transformation is about using digital technologies to improve (and connect and often radically change) processes, enhance customer experiences, focus on the area where business and customer value meet and seeing new and better possibilities , while using different and digital-intensive ways to realize them. Digital transformation even goes beyond the use of digital technologies to support or improve processes and existing methods. It is a way to alter and even build new business models, using digital technologies. In that sense, it also goes beyond digitization (although that’s often a condition to make it happen) and certainly beyond a digital-savvy skillset and capacity which is nothing less than a must in the age of an increasingly channel-agnostic and digital customer.
However, this so-called digital culture is not the start or essence of digital transformation. Digital transformation is also about responding to the changes that digital technologies have caused – and will continue to cause – in our daily lives, individual businesses and organizations, industries and various segments of society. These changes are obviously not brought upon us by the technologies themselves. The human dimension is not just an important focus of digital transformation, it’s a catalyst whereby the ways we use and see digital technologies can have very unexpected consequences, regardless of whether it concerns consumer/customer behavior or the innovative capacity of disruptive companies (nearly always a mix), in the end also people.
In the end, the mindset, let alone somewhat vague term ‘culture’, and approach we need is one of continuous optimization, holistic improvement and a focus on what people need, far beyond the digital context.Disruption and transformation: on people and change
Digital transformation and linear management thinking
With digital transformation being a de facto very hyper-connected reality on human, societal and various business and technology levels, linear management thinking and siloed approaches make place for hybrid, integrated, inclusive and fluid ecosystem views beyond the classic extended enterprise model.
In practice this means that executives need to have a far better understanding and skillset regarding the various domains which are involved in digital transformation processes.
A CIO needs to understand customer-centricity. A CEO needs to know about the many parts of business process reengineering, cybersecurity, IT and more. The list doesn’t end there. As the drivers of technological innovations also shape the directions in which economies and businesses move (and vice versa) the ability to connect the dots and step away from linear view towards elasticity and hybrid approaches. Understanding the impact of transformations in so many areas is probably one of the main challenges for executives. Welcome to a hybrid and fluid world – for executives too.Read more