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Digital Transformation: A practical guide

I remember being impressed with the ingenuity of Disney’s PhotoPass service nearly a decade ago. It was such a simple idea: “Let us take your pictures for you so you don’t have to carry a camera.” When you leave the park at the end of the day, your pictures are waiting for you. You can even put them in a Disney themed photobook while you’re there or online when you get home. That was a really smart way to leverage existing strategic assets (famous characters, beautiful theme parks, captive customers) through the use of technology. Disney managed to introduce a new business capability, improved operational efficiency and a better customer experience with this one innovation, long before we called an idea like this “digital transformation”.

Fast-forward to 2016 and ideas like this are no longer considered trailblazing. Organizations are feeling pressure to find ways to transform the way they do business through the use of technology to meet customer expectations and stay relevant. Perhaps your CIO has heard success stories similar to the Disney PhotoPass example and has provided direction to develop a digital transformation roadmap so “we can do the same thing”. Digital transformation sounds exciting but knowing where to start can be difficult.  

Digital transformation is different for every organization. Some run theme parks, while others manufacture control panels or provide in-home healthcare. So where do you begin? A good place to start is identifying your strategic assets. Digital transformation is about leveraging your existing assets to improve your:

  1. Products and Services
  2. Business Operations
  3. Customer Engagement

Products and Services

Digital transformation of products and services includes things like changing or enhancing current business offerings in addition to creating new offerings. In 2004, Blockbuster Video revenues were roughly $6B. Six years later the organization was bankrupt. Why? While many factors can be pointed to, the most prominent is the launch and success of Netflix.

Customers chose access to a wider in-stock selection without waiting lists or late fees with at-home delivery over trips to a crowded local video store. While Netflix was able to unseat Blockbuster Video, they continued to evolve their business with later offerings of on-demand streaming across any device. This is digital transformation.

Product and service opportunities for digital transformation include…

  • New digital versions or add-ons to existing products or services.
  • Subscription-based cloud hosted solutions with lower cost of ownership.
  • Shared services architectures to align common business functions.
  • Access to legacy data through new channels allowing new offerings.

In the summer 2016 edition of this newsletter, we will further explore digital transformation as it applies to products and services.

Business Operations

Digital transformation of business operations is about improving efficiency. In 1994, a small online bookstore was founded with the intent of offering a wider selection of titles than could be afforded by the largest brick and mortar stores. Since that time, Amazon has grown to become the largest retailer in the world. Much of their success is due to continually improving the efficiency of their business. Digital transformation is a way of life at Amazon.

When Amazon identified their expertise in managing large data centers and excess capacity due to seasonality, Amazon Web Services was born. Amazon created a new online industry when they exposed their existing retailing technology to third-party sellers. Most recently, leveraging their logistics experience, Amazon acquired 20 cargo aircraft to move inventory to their distribution centers at a lower cost than other carriers.

Business operations opportunities for digital transformation include…

  • Self-service software for benefits and human resources.
  • Transactional workflows to increase efficiency and quality.
  • Automated server provisioning, software builds, deployments, and monitoring.
  • Performance management of systems and processes using data analytics.
  • Collaboration tools to improve communication and knowledge sharing.

Customer Engagement

Digital transformation of customer engagement is about using technology and data to better serve your customers. Apple Corporation has long been considered a leader in digital transformation, pioneering new ways to engage and change customer expectations on what is and should be possible. Starting with the iPhone, Apple challenged BlackBerry’s successful approach on what customers wanted from a handheld device. Apple risked replacing dozens of buttons and a trademark trackball with a single physical button; moreover, it introduced iTunes, an ecosystem customers didn’t even know they wanted.

iTunes became the gateway drug for new Apple users as it provided a seamless cross-device experience, an industry first. As technology has advanced, Apple has continuously added new services and devices to their ecosystem expanding upon the value customers receive. FaceTime provides true video conferencing the way the Jetsons meant for it to be. Siri is a voice-activate personal digital assistant straight out of a science fiction movie. Today, Apple Maps manages your commute automatically notifying users of traffic conditions and drive times when they leave for work.

Customer engagement opportunities for digital transformation include…

  • Trusted, secure and seamless identity management.
  • Connecting with audiences through their preferred methods and communities.
  • Delivery of a harmonious experience across devices.
  • Leveraging data analytics to provide meaningful content and interactions.
  • Intelligent systems that are predictive, personalized, and empowering.

Final Thoughts

Digital transformation finds new ways technology can improve your business. Focusing on ways to leverage existing assets in the areas of products and services, business operations and customer engagement provides an outline for creating your digital transformation roadmap. It’s important to remember that each company’s digital transformation journey is different and comes with a unique set of challenges and opportunities. Like Disney and PhotoPass, identifying your strategic assets and ways to use them is key to digital transformation. What works for one organization may not work for another as their strategic assets are different. Focus on what drives value for your business, your operations and your customers.

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Stay Tuned! 

This is the first in a four-part series where we will explore how sdg helps our customers embrace digital transformation. In the upcoming installments, we’ll take a deeper dive into the categories outlined above and demystify digital transformation using concrete examples of how we’ve helped our customers create and implement their vision. We’ll look at what digital transformation means to different companies; from large scale integration projects that surface existing data to customers through new channels, to completely reshaping the face of a company’s flagship product.  Watch for the next segment this summer!

References

  1. https://www.capgemini.com/resource-file-access/resource/pdf/Digital_Transformation__A_Road-Map_for_Billion-Dollar_Organizations.pdf
  2. http://sloanreview.mit.edu/article/the-nine-elements-of-digital-transformation/
  3. https://en.wikipedia.org/