A recent McKinsey Global Survey of executives revealed that companies had accelerated their internal and external digitalization by about 3-4 years over the last year. This is primarily due to the global shift online during the pandemic, when social distancing compelled businesses - large and small - to find new ways to transact while working from home.
While many of these digital solutions were taken-up as temporary measures, evidence indicates that most of them - such as remote work and cloud migration - will be around for the long haul, and many companies have already allocated budgets towards more advanced technology and faster implementation programs. Let's take a closer look at the foundations on which this was built.
Factors that Enabled this Transformation
During the pandemic, new systems were embraced, and pivotal shifts were made at an unprecedented speed. This was enabled not only by the immediate need to take things online, but also by several factors gaining sway over the last few years. For instance, in recent years, there has been a shift in focus from `product' to `platform.'
From e-Commerce giants like Flipkart and Amazon to payment gateways like PayTM or Google Pay, online platforms have become a ubiquitous part of people's lives. To cater adequately to the population, companies also needed to be present on or transact via these platforms.There is also growing competition from new, digital-first startups. More and more startups have received extensive funding in the last several years, with India currently boasting 39 unicorns across multiple sectors.
Even in 2020, India added the most number of unicorns out of any country in the world during the pandemic except the US. These startups are being born out of a need to serve large customer bases in an agile fashion - and to keep-up; big companies will have to display similar agility.
Finally, with social distancing norms in place, relying on the traditional heavy server rooms to store IT infrastructure was no longer feasible. Businesses thus began the migration to the Cloud, which allows large volumes of data and software to be stored securely and assessed from any device, anywhere in the world. Moving to the Cloud requires a robust digital infrastructure in place, prompting companies to invest.
Benefits of Opting for Digital Transformation
Digital transformation is a complete, multi-level change that encompasses systems, processes, hardware, and the entire work culture. Companies that proactively invest in it now will be the first to enjoy the benefits, including the following:
· Better Data Collection:
Digital transformation enables the large volumes of raw data collected every day to be processed and incorporated into business intelligence. With multiple connected devices doing the same thing, the entire company can gain a single holistic view of the customer journey.
· Data-Driven Consumer Insights:
Data on consumer behavior, tastes, buying patterns, and social media activity can enable the company to reach the customer with agile, hyper-personalized marketing. This makes for more meaningful interactions and thus higher customer loyalty - a valuable asset given that over two-thirds of companies are competing on customer experience.
· Smarter Resource Management:
Digital transformation does away with scattered systems and resource databases by consolidating them on one platform. This enables all departments to perform consistently and in sync with each other, as they all have access to the same information.
· Increased Agility:
With digital transformation and the positive impact on speed and accuracy, companies can significantly reduce their time-to-market and innovate much faster based on market feedback data
With digital transformation and the positive impact on speed and accuracy, companies can significantly reduce their time-to-market and innovate much faster based on market feedback data.
· Increased Profits:
Data from the SAP Centre for Business Insights and Oxford Economics shows that 80 percent of businesses that completed their digital transformation showed a rise in profits. In comparison, 85 percent reported a higher market share. The benefits of streamlined operations and data-driven decisions translate clearly into higher revenues and profits, making a strong business case for companies to start the shift.
· Encourages a Digital Work Culture:
With the right tools at their disposal, employees will share knowledge and collaborate on projects much more effectively, regardless of where they are located. Not only does this foster better camaraderie - particularly in a post-pandemic world where many offices are still working remotely - but it also enhances overall productivity while encouraging each team member to upskill and improve.
What Lies Ahead
Going forward, there can be no separation between corporate strategy and digital strategy. Digital transformation, though challenging at the outset for companies used to traditional ways of working, leads to significant cost savings and enables nimble responses to changes in a highly dynamic world.
The changes that have already come-in must be expanded on, while those yet to come must be facilitated as far as possible through proactive and concentrated effort.