The second day of TMForum Live! in Singapore started with some sanguine observations about digitization, going beneath the headlines and plumbing the realities of what a sucessful digital transformation entails. Among the conclusions, flying solo isn’t going to be the best approach.
Gartner’s 2016 CIO Insights predicts digital revenues will increase from 16-37% next year. Fair enough but this number, if impressive, may only be the start of far greater growth in subsequent years. Why is this likely to be the case? Well, as conference speakers suggested, if digital is basically a way of acquiring and engaging customers then in many ways, early services are falling somewhat short of the mark.
Put another way, early digital offerings often provide little more than transactional and functional value. They serve, but they don’t excite. Look at financial services for an example. You use your banking app to check balances and perform a few basic tasks but you don’t really interact with it, using it once or twice weekly as needed but no more. This is true of numerous applications in multiple vertical industries. In short, they enable the end user to accrue some, but only a small percentage of the potential benefits that digitization can deliver.
There’s more than one reason this is the case. In part, it’s because organisations don’t yet really know how to digitize. There may be multiple approaches but there’s a lack of best practice. Presentations in Singapore suggested three different ways to digital transformation are common. The first of these, “Project”, involves often larger and established organisations who see digitization as something to investigate and embark upon cautiously with research. So there’s progress, but it’s slow and uncertain.
The second group, more common with green-field companies, is “New Business Model.” These are companies who see digital as “how we do business” but that doesn’t necessarily mean they execute effectively yet. And thirdly, there is the “Aspriational” approach. It’s in this camp that the pioneers reside; those companies old or new who are flexible and imaginative enough to understand what capitalising on the digital opportunity requires.
What that is is “going beyond your own app” as one speaker put it. Companies need to think about the value they can create for their users/customers and this is something they can rarely deliver on their own. In fact, innovation requires strong customer insight (early in the process) and can also involve fairly long development times, one reason why the real digital boom may be a year off yet. Put another way, “you can’t deliver innovation from inside your own building alone.”
There are two real points here. First, success will involve multiple partners who buy into the same core concept, and second, an enabling ecoystem will be required to realise appealing digital services which are then brought together by APIs in a way meaningful to the customer. One example returned to the financial services industry; an app that brings together banking, real estate, mortgage, location and other separate services like moving companies which draws customer enagement far beyond an app focused on any of those individual services alone. It’s this sort of application that will truly realise the value digitisation can deliver. And after that, its underlying enabling platforms can be used “as-a-service” to provide ecosystems for subsequent digital initiatives.
The digital future will be rich and rewarding but we're still in the planning stage. Watch for ecosystem developments and best practices to become bywords in 2017.