Although digital electronics has been in existence for many decades with its widespread use in computers and electronic equipment of all kinds, recent use of the phrase digital transformation is confusing as if digital is a newly invented word for the web, social media and social networks!
Here are 4 tips for leveraging the new trend in digital for discovery analytics, strategic intelligence and operational intelligence for optimising business performance.
What is Digital?
In 1975, Kodak invented the digital camera, which is now an integral part of all smart devices! It’s a pity, Kodak did not see the success of its own digital innovation, left it for its competitors to claim the glory – (possibly because Kodak thought it was still in the chemical business and failed to see the shape of things to come!).
RadioShack, the digital electronic retailer was once the go-to shop for innovators and engineers for a range of products, has filed for bankruptcy as it seems to have failed to transform itself into the new market dynamics. At the same time, Amazon is considering using the RadioShack stores as showcases for the company’s products, as well as potential pickup and drop-off centres for online customers, thereby underscoring the need for exploiting convergence of all kinds, including the online and offline channels often called omni-channel.
In essence, digital is all about adapting to the changing attitudes and behaviours of customers by leveraging the ubiquitous availability of broadband networks and connected smart devices that now reach over 7 billion people around globe to communicate and interact with customers better than what competitors can do. In doing so organisations can complement the new use of digital, (i.e. Online portal, online chat, social network, social media) with existing digital tools such as SMS, MMS, e-mail that they are currently using for communicating and interacting with customers.
Thinking that digital is about social networks, online search and streaming videos is a mistake. Also, trying to replicate the advert-supported business models of Over The Top (OTT) Internet companies mentioned earlier is not relevant for most organisations that have high infrastructure costs, contractual obligations and service level commitments with their customers. As otherwise, many organisations would have long adopted the models of the Free To Air (FTA) broadcasters or newspaper publishers. However, some of the innovations in interaction, communication and sharing brought about by the OTT players are very relevant that can be supplemented and integrated within the existing business models of the organisations.
Digital is not just about omni-channel campaigns for marketing purposes. It is an enabler and part of end-to-end integration of the organisation’s business processes to achieve strategic capabilities, remembering that an organisation’s capabilities are not confined to those it owns and is strongly influenced by resources outside the organisation which are an integral part of the chain between product or service design through production and marketing to the use of the product or service by consumers.
The linkages and relationships between the various activities are often the basis on which competitive advantage is achieved. So, Michael Porter’s value chain model (M.E.Porter, Competitive Advantage: Creating and sustaining superior performance, Free Press, 1985) is more relevant in the digital era where the need for real-time capabilities and active operational intelligence become the standard operating model. In fact, one executive of a multi-national organisation operating in Australia admitted that they have had Online Portal (i.e. Web Pages) for a long time but they have not been successful in translating this capability to online-commerce due to lack of seamless integration between their value chain partners.
Advancement in digital technologies allows organisations to be loosely coupled and yet allow for easy integration by means of RESTful APIs and JSON to achieve strategic capabilities.
Boston Consulting Group (BCG) studied organisational performance showing direct relationship between volumes of production and declining cost which they called the experience curve. The premise of BCG is that in any market segment of an industry, price levels tend to be similar for similar products. Therefore, what makes an organisation more profitable than the other must be the level of its costs.
The component parts that contribute to declining costs are self-learning (i.e. efficiencies from learning to do job better), specialisation (i.e. division of labour) and scale (i.e. reduced capex with volume growth). The experience curve is not confined to the mass production industrial era for which it was designed. In the digital era wherein volume, velocity and variety dominate and learning cycle is shortened due to fast turnaround times, the experience curve needs to be supplemented with discovery analytics for translating insights into learning, decision and action.
In summary, convergence of all kinds is rapidly changing the market dynamics. Making sense of the dynamic changes requires a clear vision and an ability to make the best decision possible. Failing to recognise the impact of the change often leads to short-sightedness resulting in wrong decisions and ultimately the demise of the enterprise as evidenced from history. New wave of digital and Big Data technologies are playing a crucial role in the convergence of traditional data warehousing into Unified Data Architecture (UDA) to support discovery analytics and enable active enterprise intelligence.
Stay tuned for what digital means to the Public sector, Media and Entertainment and Telecom industries respectively.
Sundara Raman is a Senior Communications Industry Consultant at Teradata. He has 30 years of experience in the telecommunications industry that spans fixed line, mobile, broadband and Pay TV sectors. He specialises in Business Value Consulting, business intelligence, Big Data and Customer Experience Management solutions for communication service providers. Connect with Sundara on Linkedin.
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