Published on August 28, 2013
THE DIGITAL INFLECTION POINT V2 HOW DIGITAL WILL DRIVE INDUSTRY DISRUPTION (AND HOW TO RESPOND TO YOUR ADVANTAGE) Ben Gilchriest Originally published January, 2013 Updated, December, 2013 Transform to the power of digital
The cohesion of different technologies and consumer expectations has created a series of inflection points in the Australian market driving major industry impacts The Digital Inflection Point The Digital Inflection Point Some Examples Potential impact of digital recognized Burning desire Burning platform Industry Digital Transformation Intensity Financial Results § Characterized by ongoing period of rising revenue & profit. § Followed by a sharp downward trend as several elements of digital coalesce. Big brand names are catastrophically impacted. § Often the impact of digital is already foreseen but the company / industry is too slow to respond. § Companies are often doing something; § However, in the absence of a compelling reason to change do not make fundamental changes to their business model. § A “burning desire” to change is key to a response in this stage. Some examples of drivers for inflection points; Print media; Key financial indicator = advertising revenues. § Proliferation of online sites; § Rise of social media (the bloggers); § Moving slowly to protect content and responding to changing customer demands; § Very low click-through rates in on-line etc. Retail sector; Key financial indicator = margins. § GFC pushing USA / UK players to look to overseas markets for growth; § High strength of AUD vs. USD; § Increasingly reduced cost of supply chains, increasing push of these to SE Asia; § Explosion of social media usage in Australia with a rapid discovery of alternates to Australian companies. § Significant rise in local, niche online players. Time Defining a clear case for change and unified vision is critical in driving a burning desire and to navigate through the inflection point. 2
Preparing for, and responding to, the inflection point and ensuring business value requires a balanced approach Digital Maturity & The Digital Advantage WHAT is the organisa0on doing (digital investments & assets) Investment in technology enabled ini6a6ves to change how an organisa6on operates) FASHIONISTAS Digital DIGITAL INTENSITY § We find digital maturity to be a combination of Digital Intensity (“What” you do with digital) and Transformation Management Intensity ( “How” you manage digital). § Fashionistas focus largely on the “what” and whilst driving some value from digital though it is often at the expense of net profit and market valuation. § Digirati are those most successful in building digital innovations while also considering how it drives business value. Digital Digital Digital DIGIRATI +9% revenue +26% Net Profita Digital BEGINNERS CONSERVATIVES This is not for us! Analogue focus HOW is the organisa0on doing it (vision, governance & roadmap) Crea6ng the capabili6es necessary to drive digital transforma6on) TRANSFORMATION MANAGEMENT INTENSITY Focusing on the “what” and not the “how” can mean programs are not suﬃciently transforma9onal to buﬀer against the Digital Inﬂec9on point. Sources: Capgemini Consulting-MIT Analysis – Digital Transformation: A roadmap for billion-dollar organizations; Capgemini Consulting – MIT, “The Digital Advantage: How digital leaders outperform their peers in every industry” © Capgemini, 2012. Copyright © 2013 Capgemini Consul;ng. All rights reserved. Notes; a. as compared to less mature peers.
Companies that have successfully applied digital follow a common pattern, a focus on excellence in one or more domains The Patterns for Success Most common linkages between domains of excellence CUSTOMER-FACING PROCESSES ‘Digirati’ make strategic choices on where to excel OPERATIONALFACING PROCESSES Social Media Analytics Customer Experience Mobile Channel Process Digitization Internal Collaboration Data Integration § Note; charts represent percentage of companies that exhibit Excellence in one or more of the six digital intensity domains. We define excellence as an average score > 6 (on a 1-7 scale) on all questions of a given domain, after dropping the question with the lowest score. Understanding strength in exis9ng strategic digital assets and on which digital domain to start is key to a successful transforma9on. Sources: Capgemini Consulting-MIT Analysis – Digital Transformation: A roadmap for billion-dollar organizations; Capgemini Consulting – MIT, “The Digital Advantage: How digital leaders outperform their peers in every industry” © Capgemini, 2012. Copyright © 2013 Capgemini. All rights reserved.
However, realising the Digital Advantage is complex with companies facing common challenges Common Challenges Realising Value from Digital 1 Initiation MANAGEMENT INERTIA § Skepticism at the top § Lack of building platform § Lack of understanding DT opportunities REGULATION AND REPUTATION § Security and privacy concerns § Reputational and regulatory repercussions , particularly in healthcare and financial services UNCLEAR BUSINESS CASE § Lack of economic business case to justify investment in new technologies § Lack of understanding of the role of infrastructure investment before ROI 2 Execution § § § § § § § § 3 MISSING SKILLS (77%) Skills scarcity: mobility, analytics, social media... Reliance on external experts and/or vendors CULTURE (55%) Changes in jobs due to automation or information empowerment Weak leader vision on digital Labour relations IT DIFFICULTIES (50%) IT systems complexity Lack of data / information management Poor business / IT relations Source: Capgemini Consul;ng-‐MIT Analysis – Digital Transforma;on: A roadmap for billion-‐dollar organiza;ons © Governance § § § § INCREMENTAL VISION Lack of a truly transformative vision Inability to transcend organisational boundaries COORDINATION ISSUES Ineffective coordination across business units or processes Ineffective coordination between new and traditional businesses or processes
Capgemini Digital Transformation Think - Design - Develop Driving Digital Transformation for Australian business Capgemini’s Digital Transformation practice helps organisations find the digital opportunities within their business. Our team specialises in identifying, designing, and developing new ventures, innovative delivery models, and digital transformations to get real value from the digital economy. We offer a fresh approach based on collaborative and iterative design with a focus on targeted outcomes. You bring your customer and business experience. We bring perspectives from our understanding of the Australian and global digital economy and our leadership in organisation transformation and technology. Helping you ﬁnd, size, and catalyse digital opportunities.
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