In the last few years there hasn’t been a more abused term than ‘Digital Transformation’. Every time I google see zillion different definitions and ways to transform, such as changing the culture of the organization, becoming more agile, new economy v/s old economy companies, using data to make decisions etc. etc.
While all the definitions we see out there have a point, the more prevalent one seem to be taking an old-economy (sorry, very difficult to define this term) company putting it through some kind of Data processing engine, make them to use data to make decisions and somehow magically transform them into a new-economy company. Sorry for the use of few subjective terms in my previous statement, did that just to drive the point. So fundamentally it’s all about making organizations data-driven.
Data is at the heart of disruptions occurring almost in every industry. With the proliferation of IOT devices, social media, and other online resources businesses have so much data. They struggle to identify what is important, what is not and what actions to take, suddenly they have a BIG DATA problem. It has become a critical corporate asset, business leaders need to know what the information they hold is worth, but its value depends on how it is used and by whom.
From using granular data to personalize products and services to scaling digital platforms to match buyers and sellers, businesses are using analytics to enable faster, data based decision making. Studies show that data driven organizations not only make better strategic decisions, but also enjoy high operational efficiency, improved customer satisfaction, thus leading to higher revenue and profit growth. A report from McKinsey Global Institute indicates companies that are data-driven (analyse in real time as data flows in) has a 23X greater likelihood of customer acquisition, 6X greater likelihood of customer retention, and a 19X greater likelihood of profitability. So, understanding Data is the foundation of Digital transformation.
Let’s look at few examples of how businesses that uses data as a primary differentiator to their basic business models changed the status quo of many traditional businesses
Amazon which is considered to be a destroyer of the traditional retail businesses around the globe, the very same retail businesses which were once blamed for destruction of mom & pop stores, did it by focusing solely on customer value. Today it’s scary to imagine the scale of Amazon ecosystem w.r.t its global presence and impact. It changed everything from starting how consumer shops, retailer promotes their business, manufacturers explore newer ways distributions while changing the entire supply chain machinery. The impact is massive, a new Trillion dollar company while destroying few hundred billion dollar companies along the way.
How Uber and many other ride sharing companies world over use data to balance the demand and supply which has created private transportation network in many countries and changed the entire automotive sector.
The impact of Online Advertisements which has created a multi-billion dollar revenues for several online social platforms world over while pushing all the other traditional ad-platforms such as NewsTV, Radio, Billboards to the hilt of mounting losses, bankruptcies
Today its hard to imagine a new startup that’s not starting with Data at the core of their business model. So to sum it up, if businesses (irrespective of whether it’s an online company or a brick and mortar business in any industry vertical) do not analyse and use data effectively, they will soon be disrupted and fighting for survival.