Digital transformation as a term has been around for over 30 years. As the digital aspirations of businesses around the world expanded rapidly, technology departments quickly needed to manage the latest social and web platforms.
This, in turn, is said to have encouraged organisations to use digital information for their own unique processes and automation experiences.
Businesses recognise that they operate through a broad ecosystem that connects customers, suppliers, resellers, employees and more.
What was, a decade ago, a 'nice to have' business model went on to become crucial to the delivery of the highest level of service demanded by today's digitally astute consumers.
However, the arrival of COVID-19 forced digital transformation to move at an unprecedented rate. Gartner estimates the pandemic − with the urgent need for remote working and integrated supply chains − fast-forwarded consumer and digital business adoption by five years in just eight weeks.
That's a staggering statistic. It goes on to note that digitalisation at scale and velocity triggered massive skill shifts, with more than 58% of workforces reporting experience transformations since the onset of the pandemic.
Transformations are journeys − a passage of continuous change and improvement. So, it is superfluous to ask the question: why do companies need to embark on a digital transformation journey?
The fourth industrial revolution has hailed the era of digital disruption; for example, Credit Suisse estimates the average age of an S&P 500 company is currently under 20 years. This is down from 60 years in the 1950s and it continues to accelerate.
In a KPMG survey of over 740 global technology business leaders, Amazon, Apple and Alibaba were named as the most disruptive companies that tech industry leaders worry most about unsettling their businesses. Other examples of this include Uber and Airbnb.
This survey ranked e-commerce as the most disruptive business model and continues to capture attention with its dramatic growth prospects. Global e-commerce spending is predicted to increase from $3.5 trillion in 2019 to $6.5 trillion in 2023, accelerated by the COVID pandemic.
The bottom line is that businesses that ignore the threat of digital disruption do so at their peril.
The bottom line is that businesses that ignore the threat of digital disruption do so at their peril.
A key first lesson is that digital transformation is not a magic pill. It is a fact that few digital initiatives will result in a 10x factor of change − contrary to the claims of some consultants.
But McKinsey internet of things (IOT) research results indicate that two-thirds of companies surveyed achieved between 5% and 15% cost savings or revenue gain − which is still notable − while only 17% achieved over 15% cost savings or revenue gain.
More rather than less
There are no limitations to IOT use cases, from contactless retail checkouts, to predictive and preventative maintenance. On average, companies that are leaders in IOT adoption have over 30 IOT projects and varied use cases that result in significant savings, revenue growth and even operational efficiencies.
Many companies are at a pilot phase on their IOT projects and few move beyond pilot phase, since the savings or revenue growth are modest at best.
IOT is a scale game. Pilot projects cannot prove long-term savings or revenue growth as the IOT economies of scale, such as volume-based hardware rebates or reporting dashboard costs, are recovered over thousands of devices as opposed to hundreds.
If you are serious about digital disruption, be really serious about scale and remember more rather than less.
The next key lesson is to understand the importance of planning. IOT, like most things in life, requires the development of implementation strategies.
Detailed planning and a clear vision of what the goals are, target dates for the achievement of those goals and what the likely outcomes will be for the business are essential elements of success.
Knowing and understanding what the commercial challenges are and how data analysis or system and process changes can result in savings or revenue growth are all key to the successful implementation of an IOT strategy.
Many companies are overwhelmed by IOT-use cases, but a focused and structured approach led by a clear vision of what the organisation wants to achieve out of a digital transformation journey is necessary.
In the absence of such a vision, companies can find it difficult to link their IOT programmes to their business strategies, or prioritise a coherent and well-integrated set of plans. Devising an IOT vision provides clear direction for IOT adoption.
Having the right IOT partner is key to success; therefore, the final recommendation is to choose IOT partners wisely.
The digital transformation journey requires an implementation partner that provides a strategic framework for developing a vision, identifying business problems, developing use cases, and then managing the implementation from start to finish.
The IOT service requires strong strategic partnerships with hardware vendors, communications platforms and software platform providers − all of which must be managed with scale, agility and innovation. Finding the right digital transformation partner is critical.
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