The impact of digital transformation on the global retail, banking, insurance, manufacturing, and life sciences industries is estimated to amount to $20 trillion between 2015 and 2018. If this existed as a separate country, the ‘Republic of Digital' would be the third largest economy in the world, valued at $6.6 trillion.
There is no doubt the “Republic of Digital” is impacting every facet of business today. However, with many companies still only scratching the surface of what this growing economic power has to offer, it is critical to understand where your company's dollars are being spent ineffectively, and how to create new revenue streams as the digital revolution unfolds.
Falling behind competitors comes with a high economic price. Companies behind the curve are effectively subject to a large annual “Laggard Penalty” — paying more and making less, just due to inadequate and late adoption of technology. In financial services, for example, an average digital laggard has a total economic impact of about 3.1% of all costs and revenue.
Leaders have an impact of about 7.4% — more than double. So despite the investment in technology required upfront, any hesitancy to embark on a digital-first approach will deprive businesses of significant revenue dollars in the long-run.
Once accepted that the “Republic of Digital” is worth joining, it is then a matter of ensuring your business has a practical and forward-looking approach to turning digital revolution in your favour.
So where should you start?
Transforming your entire business model to allow for digital transformation is both overwhelming and expensive. However, looking at specifics is more manageable and could deliver significant benefits for a fraction of the cost.
Consider starting your digital transformation with your call centre or logistics department. A combination of technologies such as bots, artificial intelligence and blockchain could help automate manual processes for answering customer enquiries, managing the completion and submission of forms, or inputting data and process documents between disparate IT systems.
The saved person-hours, plus the reduction in human error, will save time, money and resources. Automation reduces costs and frees cash to fuel innovation, and your organisation's initial savings should be reinvested into the business to improve customer acquisition and retention activities, and to build and strengthen its technology platforms.
Once you have successfully tackled digitising your middle and back office, it's time to look outwards. Customers' expectations are higher than they've ever been, thanks to the incredible digital services they've become used to through the likes of Netflix, Uber and Slack. So any company offering a sub-standard website, mobile app or other digital experience will stand out like a sore thumb.
Digital experiences need to be engaging, long-term, frictionless, invisible, rewarding, and noteworthy. A customer's digital experience with you is the product, not a necessary transaction that leads them to your product.
Last but not least, an important element of creating new digital capabilities is putting a stop to outdated processes. While often overlooked, adding without subtracting will result in chaos and stress, not to mention increased workloads.
Within the team or organisation involved, it is critical to create a plan that clearly outlines the projects, products, processes and work streams that will not continue the following year, as well as what, if anything, will replace them. This will allow new innovations to become core to the work ahead, rather than acting as a mere lip service.
Companies must understand that a dollar spent on digital is better than a dollar spent on almost anything else. Digital transformation works in a virtuous circle and creates a positive loop — the more you invest, the more you make and can reinvest. By prioritising digital-first strategies and investments, businesses can start to foster organisation-wide cultures of putting digital at the core of their strategy.
Moving into digitalised ways of working is not a one-off exercise. Given the incredible pace of change, executives need to maintain a steady stream of action, focused on implementing new technologies and ways of working as they become available, while always remaining open-minded to the potential of the “Republic of Digital.