Nearly every company today must decide exactly how to digitally transform itself for what we call a Business 4.0 world. It’s a world in which cloud computing, AI/automation, analytics and the Internet of Things will recast the landscape of industry after industry, especially those whose products and services can be digitized.
But you might be asking this: Transform our company into what? Manufacturers like GE, French tire maker Michelin and Swedish industrial giant ABB1 are making in-roads as service providers, using IoT sensors to monitor their products from afar and fix them before they go down. Media distributors have been moving into content creation (witness Comcast and Netflix). Retailers have become technology suppliers (e.g., Amazon is the largest cloud service provider), and information suppliers are selling other wares besides data (check out real estate information provider Zillow’s recent move into mortgage lending).
Once they decide what businesses they must be in, the next issue is how to provide a superior digital customer experience for their chosen businesses. That experience increasingly must be personalized. The marketing pitch that Sam gets for a sport utility vehicle must be different than the pitch for Sarah (who wants an SUV but for different reasons).
This kind of digital transformation is best accomplished when leaders take what we call a machine-first approach to rethinking their business. By this we mean determining how these groundbreaking technologies – cloud computing, artificial intelligence, analytics and the Internet of Things – could redefine virtually every aspect of their business. That includes the product and service offering, demand- and supply-creation processes, and support processes such as HR, IT and finance. It also includes a company’s fundamental business model – essentially, what it is selling, and how that generates value to customers.
It’s important to stress that machine-first does not mean downsizing a company and eliminating jobs by automating labor (production and knowledge work). In actuality, the companies that will do this best will be those that create a vast number of whole new jobs that they now see to be essential. And the leaders of these firms will work hard to retain and retrain the people whose work is being automated or assisted with AI.
These kinds of opportunities excite our clients. And they excite us at TCS. However, a bit of caution is in order. It’s about a vital but usually underplayed element in the digital metamorphosis of big, global companies: digital data.
Business model change is fascinating: manufacturers morphing into service providers; distributors turning into product makers. Business process change is also intriguing: retailers issuing personalized email marketing messages to millions of customers, especially when they are in or close to their stores.
But digital data? Less tangible. Less exciting. A bit squishy, even tedious, I might add.
Yet senior executives cannot overlook digital data because everything their company must do digitally is based on the data it collects from its operations and the data it buys from outsiders. In turn, their proficiency with such data will depend on how well they can process, analyze and act on it. A week or a month later is no longer acceptable. For many companies now, it means the same day or even the same hour.
Digital data is the blood coursing through the veins of digital companies. Data is digital destiny.
Data on website clicks and website content is what enabled Google to build a huge online advertising business, one that in 2017 generated $95 billion in revenue from selling ads to firms that need to reach a specific audience (e.g., auto garage shop owners who need a new lift, or drug clinical trial companies looking for people with a certain disease). ABB believes the market for capturing, selling and using digital data to improve plant operations could be a $20 billion market. Those who have the data, can manage it, and turn it into value for customers have the gold.
But most companies are not there yet, according to research firms that benchmark them. For example, a 2018 Gartner survey2 of about 200 organizations found the majority rated themselves as average or below average in using and analyzing digital data. It’s no surprise: Some 90% of the world’s digital data was generated in just the last two years. And it will grow exponentially because of the proliferation of digital devices.
It’s only going to get more difficult to manage and leverage all this data. But it can be done. We’ve found it requires four things: assessing your current capabilities in managing digital data; determining what data you need (especially external data that you aren’t getting today), and the processing power, tools and skills to manage it well; identifying where in your business to apply your analytics tools to increase revenue, boost profits and reduce risk; and then acting on those decisions. An important thing to note: The teams managing your digital business processes and increasingly digital products and services must be organized as agile teams. If it still takes days or weeks for them to get the go-ahead from above to make key changes that your analytics show are important, they will not be nearly agile enough.
Capabilities in collecting the right data, and then digitizing, processing, analyzing and acting on it rapidly will make or break companies in the years ahead.
It’s why digital data is now an issue for the C-suite, not just for the keepers of data in the data center. It needs to be treated as such.
- 1 ABB 2017 annual report, page 24, accessed at: , http://new.abb.com/docs/default-source/investor-center-docs/annual-report/annual-report-2017/abb-group-annual-report-2017-english.pdf
- 2 “Gartner Survey Shows Organizations Are Slow to Advance in Data and Analytics,” press release, February 5, 2018, accessed at: , https://www.gartner.com/newsroom/id/3851963
- 3 3 IFL Science, July 26, 2017, accessed at: , http://www.iflscience.com/technology/how-much-data-does-the-world-generate-every-minute/