Digital Transformation explained – How does it impact your business?

Alexander Mahr Opinion Leave a Comment

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Digital Transformation is a heavily used buzz word these days. In our daily work we realize that there are multiple views on Digital Transformation and what exactly it is. This often causes confusion. In the presentation attached, we would like to offer our perspective on what it is, what drives it, and how it impacts your business.

The Stryber Digital Transformation Framework identifies the underlying technology mega trends as well as their impact on consumers and businesses.

We believe (and Harvard Business Review does, too) that the technology mega trends Cloud, Social, Big Data, and Mobile are truly game changers. With today’s cloud services formerly expensive infrastructures become inexpensive. The costs of starting a tech-enabled startup are significantly lower than ever before. Social platforms achieve remarkable levels of penetration in any target group. This is true for both, private consumers and businesses’ employees, and hence also changes the way people and companies interact with each other. Increasingly available big data capabilities enable businesses to create powerful insights and even deliver services in real-time, for instance in digital advertising. And with mobile technologies everyone and everything gets more and more connected and services get more ubiquitous.

Clearly, this must have an impact on consumers and businesses. Consumers adopt technologies at an increasing rate. Fueled with innovation speed, short time-to-market cycles and effective distribution these technologies can reach a significant penetration in no time. New technologies come up in many forms and can be combined in powerful propositions. Old problems can be solved in a much better way and a superior user experience can become a competitive advantage. For instance, there has been personal transport before Uber, however, a superior user experience has made this seven-year-old startup the most valuable private company (according to Wall Street Journal, July 2016). Consumers get used to these trending on-demand services and – in use cases where it makes sense – expect this level of accessibility also in other areas.

Businesses have to deal with innovations in their industries impacting their ability to forecast their revenues as they used to. Just as the adoption rate of technologies, market shares can change quickly, too. Some innovations can even be disruptive in the true sense of the word (Clayton Christensen has coined the term and reinforces its meaning in his HBR article). But apart from a potential positive or negative impact on a company’s revenues, digital technologies can also be used to improve cost structures. Enterprise Resource Planning systems have been a good start to digitalize processes, however, there is more efficiency potential to be harvested in many aspects, e.g. removing media breaks, optimizing inter-company processes, enabling (near) real-time analytics and insights, etc. Also, businesses have to think about impact on their working mode. Employees are users of digital services and technologies on a private basis and companies also have to enable their employees (especially product-related people) within their working environment to create competitive products for their consumers. Out-dated equipment, administrative hurdles and working modes will not do the trick any more. A company has to have the ability to react to change.

So, will Digital Transformation impact your business? We believe, for the reasons given, that it will impact every industry and businesses of all sizes – however, there are differences in how big that impact is. While the impact on working culture will be defined by size of the company, the impact on revenue and cost efficiency is determined by the specific characteristics of the industry. The speed of the industry’s change will be a decisive factor. For instance, due to disruptive innovation from early Internet-based business models, telecommunication and media are sectors that are early adopters for Digital Transformation on the revenue side.

Digital Transformation, of course, also offers opportunities, e.g. new business opportunities or competitive advantages. However, you will have to determine what the right level of Digital Transformation is in your industry – either to maintain steady state or even to gain over your competitors (old and new).

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