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Let’s Get Digital

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By Martin Conboy

digital-enterpriseThe call to “Go digital” is echoing in boardrooms across the globe. It’s a herald of momentous and ground shaking change that has potentially far-reaching consequences. Organisations have always relied on technology to innovate and improve efficiency. But the rapid advance of cloud computing, mobility, social media and big data requires a major change in the mindset of business leaders and their organisations.

Previously I had written that current trends in Corporate IT have caused enterprises across industries to rethink their digital strategies. The second generation of Silicon Valley innovators and the rise of disruptive technologies have together redefined both innovation in IT and the IT industry itself. The worlds of consumer technology and enterprise technology have merged.

The next wave of IT can be found in Social, Mobile, Analytics, Cloud (SMAC) delivered as a holistic solution known as the SMAC stack.

Disruption and innovation as caused by the adoption of digital technologies have propelled some companies to meteoric success while contributing to the demise of others. Even companies once viewed as innovative have often failed to respond to disruption in the market, hanging on to legacy business models and out dated IT systems.

Disruption and innovation as caused by the adoption of digital technologies have propelled some companies to meteoric success while contributing to the demise of others.

A digital business not only employs information technology to manage operations and processes, but uses it to develop and deliver new products and services.

The cycles of innovation are occurring faster and faster. The ability of a company to keep up with these changes will determine how business contends with the challenges of tomorrow. Digital transformation through SMAC gives businesses an advantage over the competition in winning the battle for the future. Source: Capgemini Consulting

Margaret Rouse in her blog on Whatis.com says that SMAC is the concept that four technologies are currently driving business innovation. SMAC creates an ecosystem that allows a business to improve its operations and get closer to the customer with minimal overhead and maximum reach. http://searchsoa.techtarget.com/definition/reach

The proliferation of structured and unstructured data that is being created by mobile devices, sensors, social media, loyalty card programs and website browsing is creating new business models built upon customer-generated data. None of the four technologies can be an afterthought because it’s the synergy created by social, mobile, analytics and cloud working together that creates a competitive advantage.

SMAC (social, mobile, analytics and cloud) technologies have been reshaping BPO relationships for some time now. They have proven to be disruptive, affecting the buying behaviours of customers as well driving the digital transformation of enterprises. Most organisations, however, are failing to appreciate the full impact of SMAC and what it means for their future.

Enterprises and businesses need to become digital enterprises and businesses. According to Joe McKendrick, writing for Forbes Magazine, “These changes arising out of the digital and cloud movement has both memorized and terrorized business leaders of every stripe. I say “terrorized” because the ground is shifting beneath everyone’s feet across a range of industries. Newspapers have felt the blow, retailers are being stung, and insurance companies see a new breed of competitors arising out of the Internet stew. ”

Paul Willmott. A director for McKinsey and Company, comments, “Consumers are increasingly willing to buy goods and services through digital channels. Over 50 percent of air travel is now purchased online, for example”.

“But in addition to that”, adds Willmott, “we’re seeing digital used to automate previously manually intensive activities. Perhaps more fundamentally, new attackers are emerging that are offering very differentiated value propositions for customers, or perhaps a radically lower cost structure. So when you put these different trends together, you can see that digital becomes a top agenda item for most executives”.

These changes are starting to have a dramatic impact on the design, development, enablement and management of business processes. The advances in analytics, automation, Cloud and mobility have the potential to unlock substantial and previously untapped value from BPO, where providers can assist their client’s transition into becoming digital enterprises.

How does one become digital

There are a number of challenges that large and established enterprises face in transforming themselves in this age of digital disruption. It’s hard for incumbent businesses with legacy systems to move and innovate as quickly as start-ups born in the digital age.

They lack the digital skills across the enterprise to enable the necessary changes. The traditional role of outsourcing and BPO is to allow organisations to tap into skills and expertise that they can’t or find too difficult to manage themselves.

A recent article in ZD Net, “Another dimension to consider here is that as consumers — who are also employees — get more exposure to apps, and their attendant services, they get better at innovation. Although companies generally are either wary of or downright hate employees using Dropbox to get data into and out of the business, the act of doing that is innovative.

As a result, throughout you can now find throughout the organisation employees that have latent talent in terms of IT innovation. It’s no longer the case that all innovation has to come from IT as a top-down effort. IT can take advantage of innovation from the bottom-up.” According to Paul Willmot, for organisations to make a real difference they need the chief executives to drive the digital agenda and for it not to be left as a departmental responsibility.

IT becomes a significant driver behind creating business value. A digital business not only employs information technology to manage operations and processes, but uses it to develop and deliver new products and services. A recent thought leadership piece released by Accenture describes it as, “industrial companies are becoming customer service companies. Consumer products companies are becoming Internet companies. Energy companies are becoming information companies. And media and entertainment companies are becoming logistics companies.”

The benefits of being digital

Digital can reduce costs by replacing labour-intensive activities and processes with software-supported activities either through full automation or through improving the productivity of individual workers in their jobs. Willmott states, “One example would be customer service. Historically, if you wanted to change the details on your account or change your address, you would have to ring up and talk to someone or go into a store”.

“Whereas now you can access that function online or through your mobile phone, hence the costs are reduced. If you apply that automation potential throughout the value chain—and this would include functions like HR and finance and operations—you see there are sizable opportunities to reduce costs.

http://www.mckinsey.com/insights/business_technology/the_digital_enterprise.

http://www.forbes.com/sites/joemckendrick/2014/03/19/want-to-become-a-digital-enterprise-cloud-computing-is-one-place-to-start/

http://www.accenture.com/Microsites/it-technology-trends-2014/Pages/home.aspx.

http://www.mckinsey.com/insights/business_technology/the_digital_enterprise.

http://www.zdnet.com/article/the-emerging-trend-of-bring-your-own-services/
June 16, 2015
Comments
  1. Jeff Mazzini said on June 17, 2015 4:10 am:

    Great article Martin and you so spot on with this your article. We see low cost start ups now growing faster than long established business models of the past that are not only struggling at the top end but there is also a lot of resistance from all level with the companies to accept urgent behaviour changes are required by every individual within the organisations. The smart companies are now looking for any area that can generate income and targeting those business models with lower cost distribution and client gathering methods.

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