In the Fourth Industrial Revolution, the lines separating the physical and virtual worlds have become increasingly blurry. Today, new digital business models have transformed enterprise designs, markets, organisations, and industries.
Our immediate digital future will be dominated by technology. In fact, technology and intelligence will be embedded in everything we do.
It will be the underlying force that helps companies exploit digital transformation initiatives to better align the physical and virtual worlds of their customers, employees, and partners.
What is Digital Transformation?
Digital transformation can be described as a process where companies transform their core business operations by leveraging digital tools and technology.
Some of the tools and technologies at the heart of digital business are as follows:
- Artificial Intelligence (AI)
- Augmented Reality (AR)
- Big data and Analytics
- Cloud Computing
- Edge Computing
- Internet of Things (IoT)
- Machine Learning (ML)
- Virtual Reality (VR)
It’s an approach that helps organisations adapt to the changing business environment (brought on by technology and customer demand) and gain a competitive advantage.
For example, it can take the form of streamlining business processes to improve active collaboration and communication.
When all stakeholders can engage efficiently across multiple platforms and touch-points, companies will be better placed to deliver enhanced customer experiences, cost-effectively.
Depending on your systematically driven enterprise digital strategy, this process can be seamlessly enacted at scale.
However, the beginning of any digital transformation journey should start by finding answers to the following questions:
- What does the word “digital” mean to your business?
- How will you align technology with specific types of growth and business goals?
- What’s your primary success metric to measure progress?
- What are your Key Performance Indicators (KPIs)? Are they adaptable?
The answers to these four questions will help you devise a robust digital transformation strategy. While there were some (unfounded) concerns surrounding this form of digital disruption, it has now grown into a necessity to ensure business relevance.
In Australia, technology isn’t expected to create a job apocalypse. Instead, research suggests that it will create approximately 35,000 new IT-related jobs this year. That translates into almost one in five Australian companies creating new internal roles to meet the growing demand of new digital business models.
Some of the jobs that will be in high demand across industries are Business Intelligence Analyst and Data Architect with over a third of the proposed new internal roles covering administration, banking and finance, support, and professional services.
Let’s take a look at the impact of digital disruption in some key industry verticals.
Digital Transformation in Financial Services
The financial services industry has been historically averse to change. However, as the technological revolution threatened its very existence, the industry forced to embrace digital disruption.
It was a necessary disruption because both wholesale and retail customers now demanded enhanced digital experiences from their financial institutions.
Today, technology is leveraged by financial services companies to differentiate customer experiences, identify new business opportunities, and to enable new digitally driven operations and business models.
CaixaBank, a leading bank in Spain, for example, took a four-pronged approach to their transformation journey. First, they focused on enabling (what they called) digital proximity to simplify the relationships between branches and clients.
This approach, with tools for chatting, file sharing, “Ready to Buy” buttons, helped dramatically accelerate processes such as loan approvals.
Next, they focused on developing real-time reporting solutions. Applications like CardBox and ReciBox helped customers manage their finances better by understanding their current financial position (with real-time alerts, analyses of costs, and spending patterns).
However, the innovations mentioned above were only possible because CaixaBank streamlined backend processes to achieve improved processing speed and integration.
Finally, the bank also deployed a platform to generate feedback from both customers and employees. This provided an opportunity to compare input on how each initiative was doing with available performance data and analytics.
Today, CaixaBank has grown into one of the biggest banks in Spain, serving over 16 million customers. It has also won prestigious awards including an award for the “Best Digital Bank in Western Europe.”
With a brand penetration of 32%, it boasts the largest segment of digital banking customers in the country with 6.1 million engaging the bank through its digital channels.
So what does the future hold for digitally transformed financial institutions?
The future will offer customers much more than mobile banking apps. Advancements in AI and ML will help transform the industry even further. CaixaBank already uses Amazon Alexa as a virtual assistant that’s able to answer more than 450 questions in several languages.
Smart algorithms, for example, can also be used to identify anomalies. This will help banks better mitigate the risk of fraud and money laundering.
Big data will also enable rapid smart analyses that improve personalised portfolios and boost customer experiences. Automation and chatbots will also continue to drive down operational expenses while increasing operational efficiencies.
Digital Transformation in the Retail Industry
The retail industry has been in a constant state of evolution to adapt to the changing demands of the target audience. So it wasn’t surprising to find the retail sector at the forefront of digital transformation.
If we take MECCA Brands, for example, this Australian premier beauty retailer has a history of consistent innovation and evolution. With approximately 100 stores in Australia and New Zealand, Mecca.com.au is also one of the leading online retailers in the country (in terms of sales and web traffic).
The company strives to deliver enhanced omnichannel experiences to better connect with customers. For example, Mecca uses group tutorials, digitised real-world experiences, user-generated content, and company generated video content to engage their customers.
When this approach was leveraged to promote the brand on social media platforms, the company was able to achieve exceptional levels of engagement and organic reach.
Over the last couple of years, these YouTube videos have also been shown in their brick and mortar stores. This allowed customers to watch beauty tutorials and try on the products simultaneously.
Another Australian brand, Vinomofo, is an excellent example of digital disruption in retail. Launched in a little garage (in Adelaide in April 2011) by Justin Dry, the company grew rapidly to turnover $50 million in annual revenue.
Today, with over 500,000 active members spread across Australia, New Zealand, and Singapore, Vinomofo successfully disrupted Australia’s $14.5 billion alcohol industry by focusing on the customer.
Through automation, retargeting, and multi-channel communication, Vinomofo effectively turned the Australian wine industry on its head and went on to win several accolades for its achievements.
Vinomofo is an outstanding example because it reaffirms the need for traditional enterprises to embrace digital tools and business models.
Digital Transformation in the Insurance Industry
If you take a look at Insurance digital transformation trends in 2019, you’ll notice that most providers are concentrating on leveraging AI and big data to help deliver highly personalised insurance products like Usage-Based Insurance (UBI).
The QBE Insurance Group in Australia already offers UBI coverage that rewards policyholders for good driving. This telematics or black box insurance technology has helped create pay-as-you-drive insurance models that are powered by IoT.
Going forward, UBI-based coverage will be the norm. Rewarding “connected” drivers for good driving behaviour makes our roads much safer. It also makes coverage more affordable for safe drivers while reducing the cross-subsidisation of bad drivers.
Digital future trends suggest that this same model will be used to better serve smart connected homeowners.
Like banks, insurance companies are also automating processes and leveraging smart algorithms to reduce their risk exposure to fraud and cyberattacks.
By now, most have already integrated mobile apps and self-service dashboards into their service offering. This approach has made processing claims much easier and faster.
These tools also make comparing coverage and costs across providers a seamless experience. Immediate purchase options also make it much easier for companies to make a sale without ever having to engage an insurance agent.
Over the coming months, we can also expect to see more distributed ledger technology (like the Blockchain) and drones making a substantial impact on the industry.
Threats to Successful Digital Transformation
Formulating and deploying successful digitisation strategies demand a digital transformation leader. However, this can sometimes prove to be a challenge.
Research suggests that almost 40% of Australian CEOs are digitally illiterate. At the same time, a third of Australian CEOs lead their organisation’s digital transformation strategy.
In this scenario, there’s a significant mismatch between workforce capabilities and business requirements, and this threatens to derail efforts to take a digital-first approach.
Whenever this is the case, it’s best to consider engaging a third-party partner to help map out your digital transformation strategy.
Having professional support right from the first discussion to deployment can help your company go digital, cost-effectively. An established third-party transformation partner can also help your business effectively respond to the tech skills gap.
For example, it will enable access to highly experienced cloud computing specialists, DevOps leaders, product managers, and software engineers. These professionals can help you adopt agile execution methodologies that ensure a successful transition.
They can also help embed a culture of rapid innovation while stripping down legacy processes and technical debt investments.
It’s essential to act now and lay down the foundations of modern business to guarantee business relevance. For example, digital transformation trends suggest that 35% of the Australian workforce will be working along with all forms of AI, including bots, by 2023.
Projections like this make it critical for digital transformation leaders to redesign performance metrics, operational processes, and recruitment strategies now to better accommodate their digital future.
If your company needs help identifying digital transformation opportunities that can ensure a bright digital future, reach out to 4mation today for a risk-free, commitment-free consultation.