Digital transformation initiatives have been underway for decades. The goal is to leverage new digital technologies to improve products, services, and/or processes. It’s a never-ending process as the potential of the tools keep improving. Initially, it was enough to convert analog products into data, but the real opportunities lie in business model changes.
For example, digitizing videotapes into DVDs offered businesses and customers several benefits, such as improved fidelity. However, transforming DVDs into streaming services represented a far more significant opportunity. Streaming services deliver much more value. Customers can access a large catalog of content, from anywhere, on any device, and resume viewing content from wherever they left off.
The benefits of digital transformation became abundantly clear during the pandemic. Work processes that required physical hand-offs stopped and even included inherently digital processes. For example, wiring funds is inherently digital, but some banks still relied on the customer to initiate the transaction with a branch visit. Evidently, that wasn’t a problem before the pandemic closed the branches.
Digital transformation is two words, and both are equally important. Unfortunately, many of the processes we consider normal got established in a physical world. For example, I borrow digital books from my local library. The borrowing process is very similar to that of physical books but gets performed remotely. Many of the books I want have a waiting list, which is also accessed and managed remotely. It all sounds reasonable until it hits: why wait for a digital resource?
The issue is the library bought x copies of the book, so it can only lend x copies out at a time. That’s just the way libraries have always worked. It’s not the way most digital processes work. Can you imagine trying to stream content on a streaming service and being told there was a three-month waiting list? Streaming services pay creators per viewing.
It would be a major economic shift if libraries could pay per checkout instead of per copy. They could accommodate the initial demand on new releases, and the incremental cost dramatically drops as it ages, enabling a library to maintain a more extensive catalog. Realistically, this model change is being held back by the publishers, but my point is that the current model is generally acceptable. It’s a physical approach applied to a digital resource. The model only makes sense in the context of ‘that’s the way we have always done it.’
Books and movies are easily relatable. When switching to specific businesses, the predictable objection is that not all allow for digitization. Clearly, there are limits. The opportunity isn’t to digitize every task but to digitize every industry. We see fantastic changes in this from companies such as Ikea and Tesla.
Ikea has simplified the process of furniture shopping with its new augmented reality-powered app. Shoppers can now place furniture in their actual rooms and view the piece from different angles. It’s on the path to making furniture shopping from home more effective than in the store. Tesla cars are highly integrated systems that enable the manufacturer to deliver upgrades, including entirely new features, via over-the-air software upgrades.
Grocery stores responded well to the pandemic and quickly embraced remote shopping, but there’s considerable room for improvement. At my local store, about one-quarter of the products I purchase online require text interactions and substitutions. Two important observations: the grocery app works because communications and transformation are an ongoing journey. I understand that the pandemic has caused some supply chain issues –but I don’t understand why the store that knows my location continues to offer out of stock products to shoppers . I assume this will improve after the pandemic.
All businesses are software businesses—cars, groceries, libraries, and everything else. Digital transformation is the process of creating value and differentiation through digital tools. The result can be a competitive advantage via a user interface, contextual awareness and intelligence, and speed.
The silver lining of this awful pandemic is that digital transformation has moved from lip service to priority. We’re going to reimagine entire industries over the next several years. It’s already started – consider what Disney
announced last month. While its competitors in films, parks, cruises, and hotels struggled, Disney doubled-down on streaming. When the Disney+ service launched in 2019, Disney predicted 60-90 million subscribers by 2024. Last month, Disney announced the service hit 86.8M subscribers and then revised its 2024 prediction to 155M subscribers.
This idea is more than just starting a new division; Disney has “Imagineer-ed” a direct-to-consumer shift that leverages its existing assets and brand equity. The company will bypass numerous intermediaries and take its content directly to customers. Another notable takeaway is that Disney avoided the incumbent pitfall of simply digitizing existing products and instead created a new, on-demand personalized service.
Enterprise communications can play a big role in digital transformation. It enables employees to work and communicate everywhere. It can provide a richer and more efficient customer experience through self-service and proactive, contextual services. Communications-enabled applications at the office can reduce app switching. Communications-enabled mobile apps can provide improved contextual awareness.
Over the summer, I had a customer support matter that was difficult to describe. I sent the support agent a meeting link, which allowed me to show the problem with my phone’s camera. The issue got resolved so rapidly that I wonder why live video is so rare in customer support.
The key to upcoming personalized experiences will be the smartphone because in-app communications can provide contextual information. A smartphone has a keyboard, camera, microphone, and display. It knows where it is, and it can authenticate the user. It can derive things like motion, speed, and direction. It can offer different functions based on location. Nothing says obsolete more than asking a customer ‘to ring an (800) number.’
During the pandemic, many businesses focused on survival and operations. Digital transformation is already critical and will take over for several years post-pandemic. CPaaS and CCaaS will be the primary tools of this journey.
Dave Michels is a Contributing Editor and Analyst at TalkingPointz.
