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Digital Predator Or Prey? Survival Of The Fittest In The Digital Economy

Forbes Technology Council
POST WRITTEN BY
Rutesh Shah

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Digital is the reason why half of the companies in Fortune 500 have disappeared and new ones have shown up. Discussed among those in IT, operations and, increasingly, the C-suite within organizations across the globe, the term "digital transformation" has become practically ubiquitous. The textbook definition of digital transformation, according to a CIO article, is the "digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, and uncover new monetization opportunities."

A broad term that can be applied to multiple levels of an organization, digital transformation can be as straightforward as re-engineering existing processes and products to embrace technology that wasn’t previously available, or it can be about creating something entirely new. Fundamentally, though, it’s about leveraging digital technology to achieve two objectives.

The first of these is to change the way in which a business operates by transforming its processes, activities, employee mindset and business model. The second is to change the value proposition of what the business offers its customers. After all, while technology may lie at its heart, digital transformation is primarily driven by the changes in consumer requirements that have arisen as a result of digital-native companies like Amazon and Google.

Aware of this -- and in a bid to compete with their more disruptive, digital-native counterparts -- many of the more traditional businesses are focused on transforming their customer-facing activities and creating new channels of engagement with their customers. Indeed, according to Gartner, "Two-thirds of business leaders believe that their companies must pick up the pace of digitalization to remain competitive."

Digital transformation asks organizations to re-imagine their business from a consumer perspective. However, while most companies are applying digital technologies to create new goods and services, the full benefits of a digital transformation will only be realized when they are applied to internal operations as well. By digitally re-imagining their internal processes and making use of newly available forms of data, it’s possible for organizations to create a more intelligent, agile and flexible customer-centric business.

Transforming Technology And Processes To Become Outcome-Centric For Consumers

The most noticeable impact of digital transformation is the seismic shift in the way businesses now think about technology. Not so long ago, corporate IT was seen as just another back-office function, a cost center that could be outsourced or off-shored. Now though, it has become a company-wide concern, as most CEOs will be engaged in their company’s technology to some degree. To use an oft-quoted phrase, “Every company is now a technology company.”

The extent to which this is true is reflected both in the technologies that businesses are investing in and IDC’s forecast that spending on digital transformation technologies would reach $1.3 trillion this year.

Automation, for example, often considered to be digital transformation, is used to improve the efficiency of processes across an organization, while investment in artificial intelligence (AI) and machine learning is expected to reach more than $57 billion by 2021. Indeed, businesses are looking to take advantage of the predictive capabilities the technology offers, helping to support employees and increase their productivity.

The use of advanced analytics in enabling companies to unlock the stories hidden in their structured and unstructured data is a key driver of investment in digital transformation technologies. Business intelligence (BI) and data visualization tools enable organizations to improve their core performance management by using timely information and share data in a way that’s easy for all stakeholders to understand. Big data processing engines are increasingly popular, too. Many businesses initially invested in on-premise Hadoop ecosystems, but I believe there is now a growing realization that greater value lies in moving to the public cloud.

Transforming Talent To Enable Agility

Digital transformation is not only changing the way in which businesses operate, but it is also disrupting the talent pool. Parameters, processes and technologies are being redefined faster than many HR teams are able to keep up. Forrester suggests this should strike a note of caution for many organizations, claiming that “executives at digital leaders have 90% of the talent they need, while those as self-described digital laggards have only 19%,” driving a growing wedge between “digital predator and prey.”

Given the impact this could have on an organization’s competitive edge, the ability to access and incubate the necessary talent should be a board-level priority for many businesses. Organizations shouldn’t underestimate the value of training and up-skilling existing staff. Rather than viewing it as an overhead, the right training should be considered a cost reduction measure in light of the efficiencies they stand to gain as a result. Remember that digital-ready talent would cost you at least 20% more than your usual cost.

How To Become A Predator 

The exact shape of digital transformation will be different for every organization because every organization is unique. However, what is clear is that it is the organization’s intentions toward digital transformation that will have the greatest long-term impact. If the focus of the transformation is an internally focused cost-cutting exercise, while not necessarily a bad thing, the result is most likely to stave off digital predators for a time. However, if the focus of the transformation is externally focused on delivering a customer experience that is unique and better than any rival can compete with, it is possible to become the digital predator in any given market. It is no coincidence that some of the world’s best-known digital predators such as Netflix and Amazon are known for being obsessed with understanding their customers to improve their offerings.

No organization can afford to ignore digital transformation. It touches every area of a business, from the board to sales and marketing, from IT to finance and HR. At its heart, it’s about creating a consumer-centric organization, optimizing internal processes and customer-facing services to ultimately make life easier for the end user. By investing in the right technologies, talent and training, businesses everywhere can undergo the transformation they need to better meet evolving customer demands and operate in the same marketplace as their digital-native competitors -- or should I say the digital predators.

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