Are You Ready for Your Digital Transformation?

The Digital Economy is revolutionizing business processes, business models and how companies interact with end users and customers. How will it affect your business?

Today's digital transformation

Just when you got all your data and processes digitized, now the pundits are saying they need to be digitalized. What’s the difference? Digitization is the simple conversion of analog to digital. Digitalization is a transformation of data and processes that actually blurs the line between manual and automated, physical and virtual.

[The Digital Economy] will transform how organizations interact with their people and their customers. - Aly Pinder, senior research analyst for the Aberdeen Group
It’s more than just semantics. “The Digital Economy represents the incorporation of digital technologies into every aspect of business,” says Aly Pinder, senior research analyst for the Aberdeen GroupTM. This integration is occurring through technologies such as cloud computing, the Internet of Things (IoT), advanced analytics and mobile platforms.

“It will transform how organizations capture, analyze and provide access to data,” Pinder says. “And it will transform how organizations interact with their people and their customers.”

Digitalized Drive

Organizations seem to recognize the promise of digital transformation. But few claim to be far along the path.

Larger companies have made more progress, with 41 percent saying they’re underway in applying technology. (See Figure 1.) But while smaller businesses lag, the highest-growth small companies, at 38 percent, nearly match their larger counterparts.1 (See Figure 2.)

Figure 1: Digital Transformation by Company Size

Much of this digital transformation represents a second wave of investment in technologies such as cloud and mobile. “Most organizations have already transitioned from paper-based processes,” Pinder explains. “Now they’re moving to the next level, and that’s where the real transformation will occur. Rather than looking at this as a simple technology investment, they’re asking, how does this transform my processes to deliver value — for example, by getting me closer to my customers.”

Figure 2: Digital Transformation by Company Growth Rate

Transforming Processes

The Digital Economy will dramatically improve processes and even replace business models. An example is the cable industry. A few years ago, if you needed your cable serviced, you were given a four-hour window, one week in advance. Today you can be assigned a specific service time, one day in advance, with automated text updates. Even better, many services can be delivered remotely. These capabilities are made possible through the digitalization of processes.

Manufacturing in particular is being transformed by digitalization. IoT sensors and other data streams are giving manufacturers new insights up and down the supply chain, from customer demand signals up through their suppliers’ own internal processes. This enables manufacturers to be far more efficient and responsive to customer requirements, such as enabling them to achieve rapid product individualization to meet unique needs.

Pinder worked with a leading provider of building services such as equipment installation and maintenance. In the past, the company simply sold equipment. “Today, it’s selling not the equipment per se, but the outcomes of that equipment,” Pinder explains.

By leveraging sensor data and IoT technologies, the company can track equipment usage and performance in real time. It can use those insights to improve the performance and maintenance of the equipment, predicting failures before they happen. “But they can also sell intelligence reporting and consulting to their customers,” Pinder points out. “They can advise them on the right internal conditions to optimize their equipment performance.”

Inside the enterprise, the Digital Economy is also transforming processes to improve the end-user experience. “Digital-enabled processes can not only be handled in real time and with less error, but they also make the job easier,” Pinder says. For instance, you can empower field technicians or service workers with digital tools such as smart glasses, sensor data and real-time access to knowledge. “That lets them make smarter decisions and work more safely and efficiently,” says Pinder.

Your Digital Journey

Pinder emphasizes that digital transformation is an ongoing process. But it starts with an honest assessment of your current progress. “Are you still digitizing manual processes?” Pinder asks. “Or are you ready to start actually transforming processes through digitalization?”

With that self-knowledge, you can establish a strategy for the unique ways your organization can leverage Digital Economy technologies. “Is your goal to become more efficient? To get closer to customers and deliver better customer experience? Don’t make investments before you have a clear strategy,” Pinder advises.

Just as important, make sure key stakeholders are onboard. “A common mistake is having only one function, such as IT or customer service, pursue these goals,” Pinder says. “You won’t truly be participating in the Digital Economy until your digital transformation is being driven by top management and extends throughout the enterprise.”

1 “Thriving in the Digital Economy,” IDC, February 2016  | All items in this story are used with permission. 
Third parties quoted in this article are quoted by permission. 

Aberdeen GroupTM is a trademark of Aberdeen Group LLC. 
IDC® is a registered trademark of International Data Group, Inc.

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