‘Digital’ is clearly going to be a key theme as businesses start to emerge from COVID-19.
Business has been upended. Successful business models that have worked for decades have been put on pause or irreparably damaged overnight, while customer habits are changing rapidly to cope with a new environment.
EY report “COVID-19: Which critical choices should business take next?” June 2020:
“Digitalization was a ‘can’ before the pandemic. It’s now a ‘must’. COVID-19 has given many a crash course in digital, which creates significant opportunities.”
The way teams work, collaborate, and interact is changing, probably for good. For some this will have come naturally, but for the majority will have required some rapid decision making, adaptation, and rolling out new tools and ways of working. Satya Nadella, CEO of Microsoft observed in April 2020:
“We’ve seen two years’ worth of digital transformation in two months.”
How can business adapt to the new normal?
In 2019 a survey of directors, CEOs, and senior executives found that digital transformation risk is their number one concern. Yet 70% of all DT initiatives do not reach their goals. The Harvard Business Review reported in March 2019 that of the $1.3 trillion that was spent on DT in the last year, it was estimated that $900 billion went to waste.
For companies to succeed they need to understand where to start in evaluating what their digital capability strengths and weaknesses are, and build a plan of action for capabilities that will digitalise their business, and provide resilience and adaptability.
To support this, we at Deltabase have determined the six factors proven as critical to achieving sustainable competitive advantage and ROI from investments in digital transformation initiatives:
How prepared in the business to manage disruption risk and guide the Dx agenda?
Understanding your strategic capabilities, and where to focus investment strategically to address risk is critical to success. The 2019 AIIM market research studies reported that “79% of organizations realize they must transform into true digital businesses in order to survive.”
Few companies are adapting their strategy fast enough to keep pace with technology and speed of change in the market. Only only 38% of organizations see themselves as “advanced” or “highly advanced” in adopting artificial intelligence tools to automate the process of information governance.
George Westerman from MIT Sloan said “When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.”
2. Business Model
How far has the business adapted its proposition and underlying business model to thrive in the digital age?
Adapting your business model and ways of working to support your digital transformation agenda is a critical success factor. Information Services Group reported that:
“Adopting technology such as Robotic Process Automation (RPA) can drive significant returns through operational efficiency:
- RPA enables companies to execute processes 5-10 times faster. This is an average of 37% fewer resources.
- investment in RPA can yield returns of up to 535% of Year 1 ROI”
3. Customer Engagement
How capable is the business at realising customer value through its digital tools and processes?
The companies that do transform digitally are creating highly engaged customers that are:
- Six times more likely to try a new product or service from their preferred brand
- Four times more likely to have referred your brand to their friends, family and connections
- Two times more likely to make a purchase with their preferred brand, even when a competitor has a better product or price
Furthermore, highly engaged customers buy 90% more frequently, spend 60% more per purchase, and have 3x the annual value (compared to the average customer).
A study at MIT found that companies that have embraced digital transformation are 26% more profitable than their peers.
How proficient is the business at using data to its full potential?
According to a 2018 study by management consulting firm McKinsey & Company, data-driven companies are:
- 23 times more likely to outperform competitors in acquiring new users.
- 19 times more likely to achieve above-average profitability.
- 15 times more likely to deliver better value to their customers
A Deloitte customer survey revealed that of the 26% surveyed that use a single, common set of tools and methods across the enterprise for accessing and analyzing data, 80% exceeded their business goals last year. Adding to this, 37% of the companies with the highest level of analytical maturity on the IDO Maturity Scale, nearly half (48%) significantly exceeded business goals in the last 12 months.
How ready is the business to deliver value through digital transformation by exploiting technology?
Technology is a key enabler of digital transformation. Getting the basics right such as investing in cloud computing can not only transform the technology environment but meet business goals too. Companies that invest in big data, cloud, mobility, and security enjoy up to 53% faster revenue growth than their competitors. Other benefits can include:
Resillience: 20% of cloud users claim disaster recovery in four hours or less, only 9% of non-cloud users could claim the same (Rapidscale, 2015).
Speed to value: A 65% majority of respondents to an InformationWeek survey said “the ability to quickly meet business demands” was one of the most important reasons a business should move to a cloud environment.
Security: 94% of businesses saw an improvement in security after switching to the cloud, and 91% said the cloud makes it easier to meet government compliance requirements.
6. People & Culture
How ready is your business to identify, embrace and adopt new digital innovations?
Bringing people with you on your digital transformation journey is essential to success. This needs to be a business-driven, rather than technology-driven programme to be true business change. The digital transformation strategy is owned by a non-tech senior executive (e.g. CMO, CEO, COO) in 46% of mid-market firms whilst the CIO/CTO takes the reigns on just 31% of firms. (source: BDO Survey, 2019)
Driving an innovative culture is important too: “When HR can improve the innovative effectiveness of the organization, annual revenue can increase by as much as $8,800 per employee.” (source: Gartner, 2019).
Deltabase is here to help
At Deltabase, our mission is to democratise the power and potential of digital transformation. All companies, regardless of size, have the power to embrace digital and transform the way their business operates to thrive and grow. We want to accelerate your journey.
Our Dx Intelligence Report assesses your company against the six factors to determine the company’s overall Dx capability score. This provides a benchmark of Dx capability of the business against its competitors, industry averages and a consistent definition of ‘world class’ digital capability.
The report enables the identification of strengths related to ‘best in class’ Dx capabilities, weaknesses related to Dx capabilities which lag the competition and unlocks opportunities to improve the performance of the company relative to competitors through selecting the right digital transformation initiatives.
Addressing these opportunities, prioritised against the business needs, will put the business in a stronger position to adapt to the changing market conditions and increase resilience in the marketplace enabling the business to have a much higher chance of success.
Find out more
If you want to know more about Deltabase, or talk about a company you’re interested in understanding the digital benchmark of, please get in touch using the button below: