“Digital disruption is the main reason just over half the companies among the Fortune 500 have disappeared since the Year 2000.”
— Pierre Nanterme, former CEO of Accenture
Today, successful companies realize the costs of failing to innovate in a business landscape that is seeing incumbents displaced at an increasingly rapid speed. Intel, which has more than 100,000 employees, holds quarterly innovation days where employees can report the digital threats and opportunities they see in the distance.
Meanwhile, many CEOs recount a new mantra: “Data is the new oil.” It’s true that both assets generate wealth and power the cogs of economies and corporations globally, but the similarities stop there. The fact is, oil is a finite fossil fuel, while data is infinite. In the next two years, 40 zettabytes of new information will be created. And to help those of us who don’t understand what that means, it is the equivalent of four million years worth of HD video.
While the analogue economy has quickly given way to the digital one with increasing buy-in from industry chiefs, the biggest challenge in corporate boardrooms is unifying the strengths of the “old” with the opportunities of “new”. Faced with this challenge, anyone reading anything about digital transformation may conclude that many industry leaders have different definitions of what this topic is all about.
Most organizations seem to use the term to describe significant changes, enabled by digital technologies, that they are attempting to make in their businesses by utilizing digital tools and new technologies. Digital transformation involves using digital technologies to remake a process to become more efficient or effective. The idea is to use technology not just to replicate an existing service in digital form, but to use technology to transform that service into something significantly better. It’s not just about the technology, however; changing business processes and corporate culture are just as vital to the success of these initiatives.
Digital transformation will require organizations to examine all areas of their business, including supply chains and workflow, employee skill sets, board-level discussions, and customer interactions.
Digital transformation initiatives are often a way for large and established organizations to compete with nimbler, digital-only rivals. These projects tend to be large in scope and ambition but are not without risks. In general terms, it can be defined as the integration of digital technologies into all areas of a business, resulting in fundamental changes to how that business operates and how it delivers value to its customers.
Digital transformation will therefore require organizations to examine all areas of their business, including supply chains and workflow, employee skill sets, board-level discussions, and customer interactions.
Last summer, Crowell & Moring became the first law firm to announce the launch of a Digital Transformation practice to serve clients in a “broad” array of privacy and cybersecurity; artificial intelligence and robotics; the Internet of Things (IoT); blockchain; drones; and autonomous vehicles. This new practice claims to encompass a cross-disciplinary team of internal lawyers with external technologists and consultants.
Apparently, a focus of the group’s efforts will be “speed to market” in helping corporate clients quickly launch new innovative products and internal processes. To help clients reach their goals, the practice group will strive to increase the client’s awareness of new technologies and of regulatory trends that may be shaping the technology sector.
On average, many companies believe that half of their revenue, by next year, will come from digital channels. Further, the World Economic Forum has estimated that the overall economic value of digital transformation to business and society will top $100 trillion within the next six years. Any way you look at it, the largest growth opportunities that most organizations can access now is to better seize the white space in these rapidly expanding digital markets.
But it’s crucial to remember that simply introducing digital isn’t really transformative; it needs to be genuinely transformative to the way the business works.
Here is what some in the C-Suite are saying:
“Digital transformation continues to be a strong trend and driver for growth. More companies are starting to execute their digital strategies and experiment with proof of concept around IoT, robotics and analytics. We are seeing an uptick in cloud adoption and the use of cloud platforms.”
“In financial services there is a big focus on growth and the customer experience. Banks are looking to change the legacy system and infrastructure — and so we are seeing big transformation programs around IT replacement and putting in new digital solutions.”
In the second part of this article, we’ll examine the U.S. market in digital transformation and take note of certain developments happening in this area.