Digital Transformation can be explained as the transformation of the existing physical business processes into a digital format that increases the productivity of that business. As an effect the lead time between different business processes, for e.g. time between development of a product and its actual use by the customer can be reduced significantly. Such a transformation is made possible with the help of information technology. Let us take an example to understand how digital transformation can reduce costs, improve productivity and increase revenues for an enterprise.
Bridgestone Europe follows a unique tire-as-a-service business model, where customers are charged by usage as well as tire wear and tear. Bridgestone’s business requires their dealers and service engineers to undertake inspections of tires on vehicles at various outdoor locations, often in difficult working conditions. Data needs to be obtained regularly from thousands of vehicles across numerous fleets.
- Capturing the tire usage data (millions of data points) on paper was inconvenient and messy due to the tough weather and working conditions, and often resulted in poor data quality.
- Lost or incorrect data resulted in high operational costs and loss of revenue.
- Other challenges included ensuring data was captured only for the vehicles validated to be a part of the contract.
- Unavailability of real time data added to Bridgestone’s program management challenges.
- The high cost of operation and risks involved resulted in poor acceptance of the tire-as-a-service business model by dealers, creating a serious business challenge for the company.
- An efficient solution for easy and error-free data collection during inspections was desired.
An innovative and comprehensive solution enabled Bridgestone’s dealers and service engineers to efficiently collect and update data from vehicles, leveraging a handheld device. With buy-in from the end users, the actual solution development was undertaken. End-user focused innovations, such as a virtual numeric keypad, added to the development of an intuitive user interface, with an eye toward service engineers’ daily workflow. Training sessions were conducted to ensure the end-user’s familiarity with the solution. The application was built using the Microsoft .NET Compact Framework and later ported to other devices including Symbian/J2ME.
The solution was targeted for deployment at approximately 2,000 dealers (3,000-4,000 fleets) in more than 15 European countries – all integrated seamlessly with Bridgestone’s centralized ERP and CRM applications in Brussels.
How does the Market look like for Enterprise Digital Transformation?
During 2013- 2015, 550 companies will move out of Forbes 2000 list due to digital disruption. Data-driven enterprises are leveraging contextual public and internal enterprise data and use new-age technologies to generate deep insights that are both predictive and prescriptive to drive exponential business impact. Six key areas have been identified for digital transformation -Customer Targeting & Engagement, Digital Products & Services, Risk Management, Supply Chain Optimization, Operational Excellence, and Workforce & Partner Enablement.
A study also indicates that verticals with a high degree of direct consumer connect are likely to witness greatest degree of disruption. These verticals include Retail, BFSI, Media &Entertainment, and Travel & Hospitality.
The study also reveals that enterprises will need to spend USD 70 Billion in 2015 in order to stay competitive against new emerging digital native organizations. This spend is expected to grow at a CAGR of 26% to reach USD 230 Billion by 2020. Of this, enterprises in North America are expected to take a lead with a spend of USD 26 billion, which is expected to reach USD 73 billion by 2020.
Drivers of Transformation
Four critical areas of technology are driving the changes in today’s enterprises and creating a perfect storm of innovation.
Big Data –
Companies, customers, partners, and machines are all generating more data that can be classified into structured, unstructured and semi-structured. Twitter streams, social media data and more are unstructured data that does not fit into neat categories, but if assimilated, can be more valuable than structured data. The rapid expansion of big data means there is more data about customers in more places than ever before.
Social Media –
Social media is largely responsible for a shift in the balance of power from businesses to consumers. It has also created a powerful, two-way communication between consumers and businesses. As a tool, it has tremendous potential for both business-to-business and business-to-consumer engagement, building loyalty and sharing or crowdsourcing solutions among partners and customers in the ecosystem.
Enabled by mobile communications, the “anywhere, anytime” culture is pervading and transforming business. Location-based offers to mobile devices target consumers near the point of sale. Productivity increases as workers access corporate resources from mobile devices. Business processes can be rethought and informed by mobility (dynamic rerouting of service calls for example). Mobile apps will ultimately be the face of customer engagement.
Cloud Computing –
Cloud computing offers new scalability and makes it economical to run businesses, for e.g. enterprises move from focusing on capital expenditure to more focus on operating expenditure.
Given the amount of focus and energy invested around Digital Transformation in the first half of 2014, increase in revenues for the Information Technology industry would be seen in the second half of 2014 and the momentum is expected to continue throughout 2015.
We are actively studying companies in the Information Technology industry that would benefit from digital transformation in the near future.