For companies that use the newest digital solutions, namely social, mobile, analytics and cloud (SMAC StackTM), major benefits can quickly accrue. Today’s organizations have a variety of information technology solutions at their disposal to simultaneously increase operational efficiency and generate unprecedented business capabilities. Unfortunately, many do not use these tools to their full potential, often as a result of not knowing what these solutions entail or because of the sheer volume of data and complexity of analysis that renders decision-making a challenge. As a result, these organizations miss the most profitable business opportunities.
Digital transformation often begins with the customer: How to get to know customers better, improve your service levels and digitize the customer experience. It then extends to three additional areas: digitizing operations, products and services. By analyzing digital developments across several industries — for example, life sciences, electronics, retail, manufacturing, consumer goods, chemicals, banking and insurance — we have found common elements in all four of these areas that apply to most companies in both the B2C and B2B markets. Based on these common elements, we have developed a framework for organizations to develop a digital transformation blueprint. Not all elements will be relevant for every industry, so for each market and organization, the framework must be tailored to ensure proper fit. For instance, not every organization is ready to operate its business in line with the Agile
Note that when an organization decides to use this digital framework, it should be introduced in a staged approach rather than all at once; therefore, it is vital to set priorities and identify the most important areas of focus.
Digital Re-mastering of Business
The following sections elaborate on each area of our digital framework
Digitizing the Customer Experience
Customers are clearly the most important stakeholder of any organization. In order to serve customers in the best possible way, it’s essential to know them, which until recently was only possible through companies’ internal systems. Using CRM, companies can identify which products a particular customer has historically purchased; now, better analysis can be performed through the Internet
We call these digital footprints that consumers leave behind in their day-to-day online behavior a Code Halo™, or the digital field of information that accumulates not only around customers, but also around processes, organizations and devices. Based on information derived from social media, organizations can link certain consumer preferences to potential buying habits. Every action that consumers take, in both the physical and virtual worlds, contributes to the growth of Code Halos.
Digitizing Products and Services
Organizations today increasingly realize they can no longer focus on just selling products; they need to sell an experience. An increasing number of products today both consume and generate data, and many are interconnected through the Web. Because of this increased intelligence, their usage can be monitored, additional services can be proactively offered, or maintenance can be provided when a problem is detected. A good example is a smart toothbrush with sensors scanning your teeth for any problems. The physical tool itself is a commodity, but a user’s brushing habits, dental hygiene history and health needs create a Code Halo of information of premium value. Information can be sent to the dentist, who can provide feedback and advice or schedule an appointment. The Code Halo can also be used by the device manufacturer to make product improvements. As it becomes easier and more affordable to make products Code Halocapable, the question will soon become not what to wrap with a Code Halo but what not to wrap with a Code Halo.
Advanced digital technology, powered by the SMAC Stack and aided by sensors, can improve business processes in several ways. For example, big data analytics can help in-bound logistics run more smoothly by tracking product movements; the cloud can be used to create uniform business processing platforms; and mobile platforms can enable employees to perform their work anytime, anywhere and on any device. Standard cloud platforms offer feature and functionality updates more quickly and can lower testing costs.
When using standardized platforms, either within a large organization (as a propriety platform) or as an open-market standard, it is also much easier to globally source processes, which can lead to substantial cost reductions. Based on our own experience, aggressive sourcing and offshoring can cut up to 50% of operational costs. More organizations are choosing to do this across a larger variety of business processes and IT services.
Digitizing the Organization
With value chains increasingly integrated among businesses, organizations can become part of a larger ecosystem, enabling them to offer end-to-end services to their customers. Insurance companies can, for example, offer a car replacement when a customer’s automobile breaks down, improving the customer experience through this added service.
Digital solutions can support value chain players to work more closely together. Organizations can either shape and orchestrate an ecosystem themselves, and provide a significant number of products and services, or focus on a niche service that adds value to the customer experience and become part of an already existing ecosystem. Organizations that shape and orchestrate an ecosystem and introduce their standards into the industry value chain, like Airbus and Walmart, tend to become dominant players in global markets.
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