Technology has had an undeniable impact on how we carry out our daily routines, but it has also changed the way we do business.
In today’s business environment ‘digital transformation’ is a well-known and much-hyped concept. In this post we are going to cover various important aspects of digital transformation and what it means for a company.
This industrial revolution has brought with it magnificence in some areas of the business, while others are suffering a particular collapse, unable to know where to orient the investment or innovation decisions. Whatever the critical factor is, it is not worthy of such high consideration, because here, at this point in history, many variables are at stake.
Technology has been updating itself and adapting to the demands and needs of each era for centuries. Yet in the last Industrial revolution, it was heard about “machines” and how they would end up creating an apocalypse. Just outside of reality. The conclusion is that the market capacity, due to its obvious technological gap, can be as attractive as it is puzzling.
Today’s Digital Challenge
If something characterizes the present times, it is that technology, in itself, is also living a revolution. Incorporating core data, real-time or machine learning to optimize processes based on it. As if this was not enough, the devices and viewports have become user-friendly and the reality is as digital, as it is physical or virtual. It is rather a combination of these three concepts.
Brands established in the market, of reputed success, doubt the emergence of new technologically based competitors such as Uber, Airbnb, Amazon or Just Eat, which pose a disruption in price, service or customer care that they cannot (or don’t know how to) cope with, at least for now.
And, it is not a question of costs, but of investment and especially of capacity for innovation. Traditional companies do not know how or in what technology to invest while new ones are taking advantage of the added value of technology, without just competitors on the horizon. They become the first to capture global market share and open the experience, products or services to new hypes.
Change of an Era
There is a lot of information about how technology is influencing eminently digital markets, such as mass-media or advertising… But it is difficult to determine its scope in other sectors or in more traditional businesses such as logistics, sales or manufacturing.
Digitization has brought with it an adaptation of people to a more agile, comfortable and connected world. Giving rise to a new consumer profile, the Prosumer, an empowered customer with the ability to influence the whole brand destiny. On the other side, technology allows companies to receive information in real time, analyze data and follow the customer along the whole value chain to keep him faithful and safe, which makes, in turn, easier (albeit specific) to coordinate decisions for the good running of a business.
Two Key Indicators
Digital transformation in business fluctuates between two variables. Measure the revenue that contributes to each action in relation to competitors, and, add value to the client through the technology, creating an easy shopping experience or controlling the whole supply chain.
According to McKinsey, a consulting firm specializing in transformation, the digitization of companies is still less than 40% of its potential. Being the communication companies, the retail sector and the tech industry the vectors in which there is greater penetration.
Digital Transformation Puts the Customer at the Center of Everything
Since 2014 Forbes refers to digital transformation as a way to optimize all customer contact channels by taking advantage of technology.
This is yet another definition, but it is very specific as to the position of Customer in the supply chain and therefore, the business in general. This approach has resulted in new models that put the client as the core of the whole experience shaping a new way of producing, but also of working.
Thanks to WhatsApp, smartphone apps or pay-per-phone alternatives the shopping experience and the manufacturing processes can become even smoother.
Technology Allows Developing New Products or Services
Businesses like Thai Tea Rooms in the United States, a sector to which no one (or very few) dedicated efforts at the end of the last century, are getting their benefit in 2019. These “new” tearooms are unseating the traditional ones with an innovative service based on mobile, but also affect the business of those establishments where people came for a drink, like coffee or refreshments shops, that do not know how to resist the coup.
The phenomenon of the tearooms, or the eSports in the promotion of goods, is useful to understand how analyzing all the forms of contact with the consumer (what is also known as omnichannel) result in new ideas of business, new products or services and different ways of client-brand connection. In short, new marketing.
Accelerators and Hype Techs
A few years ago, particularly in some sectors, the idea that it is not only important to follow the technology but to anticipate it was imposed. Brands look to be an active part of the transformation of their sector and to invest in innovation.
Obviously, this can widen the gap, but it will also set a standard in each industry that determines the real value of technology, based on the future decisions that these leaders take, for whom the pursuit of accelerators requires a hard-working dedication and taking risks.
The Financial Brand published in November this year a diagram about the “mainstream and emerging disruptions”, similar to what Gartner did last year with its adaptation curve. It seems that issues such as automatic payment, hybrid cloud and machine learning are established as a reality, while quantum computing and the Blockchain loom in the distance. The application of these technologies gains momentum when coupled with the possibilities of Big Data and Machine Learning.
Contactless technology for paying without cash, through mobile or chip cards, has given fresh air to the banking sector that has found in microtransactions a new way to take a commission (and revenue) for their services. In 2020 the benefits of the digital banking sector will be up to 30%.
Main Benefits and Goals of Digital Transformation
The value of a specific supply chain, team, action or decision is no more guided by intuition, but by real-time data archived and organized by employees, who will create more connected, agile and goal-oriented teams.
There are lots of brands, such as Amazon that has created a successful business from here, making every purchase of the customer faster, even instant. Using GPS-driven drones Amazon can deliver almost every single product directly to any place, but they are challenging on offline distribution as well, monitoring deliveries with real-time data updated on an application by the workers themselves.
At the same time, customer expectations at all stages have become more achieved. Due to the online platforms, it is easier to access and convince targets, developing special actions or messages according to their emotions or step on the purchase funnel.
At this point, we must say that the costs of being online have increased during the last years. Big retailers in online spent so much budget in order to maintain the leadership in publicity or branding, for example, Zalando.com spent in 2017 1 billion dollars in social or performance adverts, and this was just one of the keys for their success, but not the only.
As technology advances, it optimizes and improves the relationship between brands and consumers, helps to make better marketing decisions based on target reactions and allows to have all the supply chain under control.