Digital – A Perspective

Digital’s progress is signified by six trends we have witnessed in the recent times. Digital initiatives in turn influences these trends to become mainstream.

The terms ‘Digital’ and ‘Disruption’, either independently or combined with each other or combined with other terms (‘Digital Economy’, ‘Digital Quotient’,  or ‘Disruptive Models’) can be found in the top  bracket of the business lexicon now-a-days and so much so that if the usage trend continues these will possibly stake claim for the ‘word(s) of the year’.  In the recent times, there have been many definitions, point-of-views and scholarly discussions on ‘what’ and ‘how’ of Digital. We also see some early actions as service providers rush to their clients with their digital offerings and claim break-throughs in deals and CIOs indicate digital as their top priority justifying the hype.  However,  there is still a lot of mystery surrounds these concepts and the fact remains that the businesses are still unsure of what is in it for them though there are making attempts to explore and learn from the early forays of the peers.

If we read through some thought leadership articles, hear what CIOs have to say or go through the service offerings of vendors, Digital seems to mean different things to different people. More content gets added every passing day. In such a situation, adding more substance may possibly add to more confusion; alternately if we think positive such content may also help get more clarity. Hence, here is a stab at unpacking Digital and the impact it may have on the businesses.

This perspective is influenced by six trends we have witnessed in the technology domain in the recent times. These trends have caused considerable shifts in the way technology is perceived and used and may have played a role in shaping the advancement of Digital either independently or collectively.  Before we look at these trends, it may be worthwhile to share what we consider as the basic tenets of digital. There seems some agreement on these tenets in the industry albeit at a high level. One, digital is not a technology or a set of technologies but ways of running the operations efficiently with technology at its core; two, it is not a pre-defined template that is applied to business problems but an approach to anticipate and avoid problems; three, it is not just automation of customer processes but ways of converging the organisation towards better customer engagement and experience and finally it is not a goal or a destination but a journey to achieve sustained growth.

Working from this premise, we can see how these trends have influenced the advancement of Digital which in turn is transforming these trends into mainstream and thus the evolution becomes iterative.  There is nothing like a project or a method when completed would make a company Digital. However, riding on these six trends may make an organisation become more digital.

  1. Technology powered business models

result-1In the past, technology was seen as an ‘enabler’ that supports the business goals and solves problems.  The problems could range from managing large volume of customer accounts for a bank or making inventory visible across the supply chain for a manufacturing firm or bringing transparency in contracts for a government. The demands of the business would determine the choice of technologies and for the choice to be proper, the specifications have to be clear. Thus IT always followed the business and enabled the requirements.

There has been a role reversal in the recent times in that the technology can determine the business. The advancements in technology have powered new business models that are entirely technology driven. The growth of e-commerce and the emergence of new age companies like Uber and Airbnb are prime examples of the role reversal.   The term ‘disruption’ is associated with these companies and rightly so. These companies had technology define their businesses and went further to change the way people interact with them. To book a taxi through Uber or a room through Airbnb, the customers would need to use a technology. The success of these enterprises can be expected to rub on to traditional companies in many ways than one and may prompt them to look at technology with a different perspective to see if there is an ‘uberization’ opportunity.

  1. IT in the Board

If you pore over the organization structure of yesteryear companies, you will find IT represented as a box possibly buried under finance or operations rarely making it to the top layer reporting to the CEO. In these organizations the CIO was never a ‘CxO’ , a label normally reserved for top management.

Cut to today, with technology gaining more traction, playing a more crucial role in running the businesses, IT  has moved out of the box and is longer a function or a department but has become a partner in business to the other functions. CIOs are more frequently seen in Board deliberations and slowly gaining the role of advisor to the business, a major shift from the past where he/she was taking orders from the business.  Traditional consumption of IT was largely in the areas of Finance, Production, Procurement and Sales where transaction processing was crucial. Increasingly we see functions like Marketing becoming major users applying IT to customer profiling, campaigns and promotions. Digital Marketing, Social Media integration and automated campaigns are routinely discussed by the Marketers with their technology teams.

  1. Empowered Customers

Businesses know that their customers have 24/7 access to information on the go thanks to proliferation of mobile and other pervasive devices. They also know that their customers are much smarter in using the technology and capable of doing research using multiple sources before making their purchase decisions. Social media has added another dimension where opinions/feedback are shared at will that greatly influence buying behavior of the customers.  An experience of a poor delivery or a bad service spreads fast in the virtual world that keeps the companies on their toes to track and address problems instantaneously.  With the market expanding and customers getting more options to source their requirements from, they become fickle minded and more demanding. On the other hand, companies make all out efforts to retain their customers, work towards brand loyalty and look to reach out to them in as many ways as possible. When the communication channels go up, customers expect to have the same experience across the channels thus forcing the companies to address the demands with cutting-edge technology.

  1. Data for Decisions

As the businesses go global and the competition intensifies for the same set of customers, data in various forms – structured or unstructured, from variety of sources – internal or external – become a powerful source in understanding the customers better. Analytics that crunches massive amount of data to see hitherto unknown patterns of market and customer behavior, has taken centre stage in most companies. Developments in the areas of Big Data have extended the scope of analysis and the insights gained from the analysis are fed into improving existing products and designing new products that are centred around the needs and aspirations of the customers. IT teams are suddenly augmented with new disciplines such as data sciences and statistics.

  1. Connected Devices

The ‘Connected Life’ is becoming a reality with the prediction that there will be an exponential growth in more and more devices getting connected on to internet. From industries such as mining to construction to customer appliances, plethora of devices can possibly store and transmit data providing multiple possibilities in managing the physical assets and using the data for variety of applications such as supply chain efficiencies in factories and health monitoring of individuals. Though early stages, companies are attempting to explore areas where they can bring in next level of automation and data convergence to make better market decisions. The significant shift will be when the data from the connected devices will be used for not just for problem detection but also for predictions, course corrections and risk mitigation.

  1. New Model Sourcing

Cloud computing, ‘As-a-Service’ delivery models Thumbs up in business or life indicating successhave provided companies  completely new methods of procuring and managing technology.  The benefits that come with such sourcing models such as capex-to-opex shifts, outsourced support and maintenance, demand alignment have already been proved in the market and these use cases have sufficiently moved from the concept stage into execution.   These services have direct impact on resource utilization of the businesses. Even today, a large portion of the IT budget is locked up for maintenance leaving very little for ‘future-ready’ technologies. With such cost saving services at their disposal, companies can look at their IT budgets differently, moving from single-minded focus on cost-cutting to revenue enhancing investments.

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The business environment is getting more complex and volatile and companies have come around to accept the ‘new normal’ in their respective domains.  Technology can play a crucial role in managing the complexities by helping companies become Digital.  These trends signify the shift to become Digital is multi-dimensional and as the adoption rate in these dimensions increases, we will see more developments resulting in strong technology driven organizations of the future.

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About Raghuram S

I am a Management Consultant with over 25 years experience in the industry and run my own firm called Cohere Consulting since 2008 focusing on business strategy, IT advisory and program management. Prior to this I was with some of the top consulting firms in India including S.B. Billimoria, PricewaterhouseCoopers and IBM. I have participated in a number of strategy and IT delivery engagements across a wide range of industries including manufacturing, consumer products and IT Services. In addition to my consulting assignments, I also spend considerable time in industry research and teaching at premier management institutes. I am based out of Bangalore. I have an MCA from Birla Institute of Technology, Mesra, Ranchi and an MBA from XLRI, Jamshedpur. I can be contacted at raghurams@cohereconsulting.com
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