The COVID-19 crisis has brought about several years of change in the way companies in all sectors and regions do business. According to a new McKinsey Global Survey of executives – their companies have accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years. And the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years.
What is digital transformation?
According to IDC – Digital transformation is a continuous process by which enterprises adapt to or drive disruptive changes in their customers and markets, leveraging digital competencies to innovate new business models, products, and services that seamlessly blend digital and physical and business and customer experiences, while improving operational efficiencies and organizational performance.
Why is digital transformation important?
There is intrinsic value in embarking on a digital transformation journey. Digital Transformation (DX)Technology and Industry Outlook, April 2019 found that digital companies’ compounded annual growth rate in revenue, gross profit and research & development spend far outweighed that of semi-digital and non-digital companies.
According to research from AppDirect, more than three-fourths of US companies are in the process of digital transformation and nearly 7 in 10 executives polled believe that only businesses that digitally transform will survive over the next five years.
The varying pace of digital transformation
The pace and maturity of digital transformation varies from industries and geographies. In media, for example, digital transformation is quite advanced as evidenced by the fall of print news in favor of online, and the ever and ever rise of streaming media. The retail industry’s brick-and-mortar stores are evolving into experience centers as huge chunks of sales are now migrating to digital platforms. Other industries, meanwhile, are still in the early stages of leveraging digital to transform their customer experiences. If we dig into geography-wise research by Usabilla – highest competitive pressure to digitally transform is in North America and least in Asia/Pacific and Japan. Western Europe being somewhere in between.
Digital transformation is a reality, pulled a lot forward by the COVID-19 crisis. Digitally matured companies are not only performing well today but are building up a future-ready competitive advantage against their semi-digital and non-digital peers. It is high time that the executives put this right up their strategic priorities if they want to steer their businesses forward.