The world is changing quickly - and here is how it looks:
Artificial Intelligence will continue to drive even more automation into businesses and feed processes and engagements that will deliver new levels of efficiency, and products that are tailored to business outcomes and individual customer preferences.
Traditional paradigms will be redefined (like vehicle or white goods ownership) and ethical, moral and societal norms will be challenged as genomics and advanced DNA profiling influence healthcare directives, insurance premiums, and spousal choices. Entertainment will literally be transformed before our eyes as virtual reality technologies transport us into new digital realities and augmented reality will dramatically change the service industry as we know it today (IDC, The Digitisation of the World from Edge to Core).
With this evolution, customer expectations will change.
Today, more than 5 billion consumers interact with data every day – by 2025, that number will be 6 billion, or 75% of the world's population. In 2025, each connected person will have at least one data interaction every 18 seconds.
According to the IDC research, the process of digitisation is often referred to as digital transformation, and it is profoundly changing the shape of business today; impacting companies in every industry and consumers from almost all parts of the world. Digital Transformation is not about the evolution of devices (though they will evolve), it is about the integration of intelligent data into everything that we do. Consumers are addicted to data, and more of it in real-time as companies increase the digitisation of their business and drive consistent and better customer experiences.
But are companies ready for this digital evolution?
Research by Harvard Business Review, based on results from McKinsey’s Global survey of 1,600 companies worldwide, found that there are still a large number of companies who are nowhere near digital ready, and worse still are losing out on vital revenue as a result.
The Research found that only a minority of companies are fully embracing digital today: only 15% of firms have digital technologies entirely embedded in more than half of all their businesses. At the other end of the spectrum, about 20% of firms are barely leveraging these technologies at all. The remaining two-thirds of firms generate only 10% to 15% of revenue through digital.
47% of companies haven’t started their digital transformation yet.
The research went on to find that low digital penetration typically squashes the top- and bottom-line growth of traditional companies, as digital attackers take market share and competition increases. In order to take this share back, companies are having to adopt a digital reinvention strategy that includes investing faster and more in digital than incumbent peers and re-balancing the product portfolio on new digital products and services, to tap into new sources of growth.
The research estimates that companies which follow this strategy of digital reinvention increase revenue growth by 0.9% and add 1.8% to their EBITDA growth annually on average compared with peers.
Failure to embrace digital can result in EBITDA shrinkage of up to 8% annually.
The latest research shows that revenue and especially earnings growth are largely negative for companies that neglect, fail, or refuse to embrace digital innovation; EBITDA can shrink by as much as 8% per year. This is a very large decline — and the main reason for it is that those companies not engaging in digital business transformation are often responding inadequately. Companies late to market are also insufficiently agile; they tend to take two to three times as long to make key digital adoption decisions versus more digitised competitors. They are also centred on themselves, with limited interest, or even resistant, to cooperating with other digital native players.
In their State of Digital Business report, Progress revealed that 47% of companies haven’t started their digital transformation yet – while 59% are worried that it might already be too late for them.
And there’s good reason to worry: The same study found that 55% of businesses believe they have less than a year before they start to suffer financially and lose market share.
Recent research across the sphere shows that some companies are experiencing the full benefit of digitalisation by responding proactively and fully to the opportunities presented to them, whilst others are taking small or no steps at all.
Digital transformation is more than minor adjustments to a customer access channel.
The reality is that the digital era is here to stay and digital transformation is more than minor adjustments to a customer access channel or tactical changes; it requires a fundamental shift in the business operating model and value offering, without which businesses may struggle to sustain their growth in the rapidly changing digital era.