As digital technologies continue to sweep through our lives, there is growing realization among business leaders that their organizations must evolve to fit into the new environment.
However, when I look around, I see very few organizations embracing the ‘digital way of engaging / thinking / doing things’ as a business…very few are ‘digital natives’ as they call it. Most others are still testing the waters of what it means to be digital.
A business that conducts mere cosmetic changes in its business model without evolving its core finds itself in a similar unenviable position. The investments it has made with the expectation of joining the digital world have not brought in the desired results. Instead, there is increased complexity now since the legacy systems and multiple management layers of the pre-digital days are not well-suited for today’s business environment.
What makes a company a successful digital enterprise is its digital core. A digital core is the outcome of a vision that its business leaders have for the company and a digital transformation strategy that ties in all the aspects of the business to realize that vision.
It cuts through complexity which can be like a millstone around the organization’s neck, slowing down any transformation effort. A digital core allows an organization to integrate its business processes, makes it possible for its business leaders to take decisions in real-time with the help of data-driven insights, engages customers throughout the customer journey, facilitates a culture change in the organization, and helps respond to market changes quickly and effectively.
What does a digital core enable an organization to do that it would not be able to if it had taken a piecemeal approach to digitalization? Here are three key differentiators.
Simplified, integrated processes: Digital transformation offers Chief Information Officers (CIOs) an opportunity to simplify the organization’s IT landscape with fewer applications, technologies, platforms and operating systems. Simplification is in fact the greatest attribute of the digital economy – cutting down layers, breaking through siloes and helping an organization move towards an integrated set of systems and processes to unlock true value.
Without an integrated approach, the hundreds of processes running in the organization will operate independent of each other and not provide scope for innovation or real-time visibility for effective decision-making. Here’s an example from the insurance industry. By deploying robotics in the form of chatbots, an insurance company can significantly bring down costs and improve efficiency. But to truly unlock value that comes it needs to integrate digital communication with advanced data analytics to understand customer needs, and robotics technology for data processing with data from Internet of Things (IoT) and sensors attached to vehicles and buildings to improve underwriting and predict behavioral trends.
Business decisions based on data: Business critical data resides across the company’s Enterprise Resource Planning (ERP) system, accounting systems, sales force reports, business operations, points of sale at merchant sites, social media sites, syndicated industry reports and more. Collecting, harmonizing and drawing insights from this data, and most importantly, making those insights available on time for business leaders is a daunting task. A digital core that provides a homogenized framework to manage these disparate data sources and enables real-time data analysis is critical to succeed in today’s digital economy.
Customer centricity differentiates a digital enterprise and that is made possible because of its data-driven approach. Let’s take the example of the retail industry. An apparel company gets its digital footprint by launching a website to take customer orders online. But turning that into a sustainable revenue stream means using data from across channels to understand customer needs well, track requests, personalize the experience, manage inventory and enable smooth checkout. Companies are now using data to find innovative ways to blend the online and offline worlds, provide users a seamless experience, continuously engage and excite customers, and thereby cement their presence in the digital world.
Connected ecosystem: One of the biggest advantages of the digital economy is its connectedness – no company operates in a silo and no market stays unaffected by developments in other parts of the world. This business-to-business and business-to-consumer ecosystem enables an organization to anticipate changes, stay agile, understand trends and take swift corrective action.
A digital core enables us to extend the digital experience across the value chain. Let’s look at the automotive industry. An automobile company can now provide the buyer of a connected car a personalized driving experience complete with customized entertainment features and telematics to track engine performance and record incidents – thereby creating an ecosystem that brings together consumer electronics players and insurance providers alongside automotive companies. The company can utilize real-time data to optimize manufacturing and after-sales, and move to resource planning that meets actual demand as opposed to perceived demand.