Digital Transformation Trends reshaping in 2020 and beyond
“We went from being the Flintstones to the Jetsons in 9 months.”
— Dan Schulman, PayPal
2019 had been an amazing year of change – with companies embracing digital adoption within as well as facing external headwinds with competitor’s ever changing business models as well as the start-ups innovative capabilities. I personally attended multiple digital conferences in the last year and felt that all key stakeholders are trying to move at break neck speed – but what amazes me is that small portion of that realise “Where are they heading ?” Why are they under so much of pressure – has customers demanded such drastic change in service levels, has competition pushed to evolve faster or is it just #metoo ?
Following are my views of how Digital Transformation will create new business opportunities and re-shape and evolve in 2020 and beyond.
1. Dominance of digital eco-systems
2018 and 2019 saw a dramatic rise of digital eco-systems (or some may call them Super Apps era). Every market has few dominant unicorns who have created diverse eco-systems for customer to consumer the services. Few examples in Asia – Ant Financial / Alipay, Tencent / WeChat, Grab, Go-Jek, Traveloka, Paytm, Ola, Coupang, etc -where customer has platter of services at a “highly competitive rate” and they are consuming the services across the eco-system. These Super Apps are well funded now and demand to flex their wings to challenge the mainstream companies (even in financial services).
Dominance of these digital eco-systems will expand, it is quite evident that for the mainstream companies to stay relevant, they will partner and collaborate into the eco-system (bundling of products and services). Partnering will be a matter of survival, for some.
2. Customer loyalty hanging by thread
Customer of today’s era are young, mobile, social and active. They are relatively well researched now – though not able to understand the holistic needs. Customer loyalty to a brand, product or service is decreasing with the increasing digital platforms as the option of consumption increases. Example in the Insurance industry, with the emergence of financial services aggregators, customers are doing the window shopping well in advance and have made their mind to map a product or service with the price point. Why would he take a term insurance at $5 a day for $1 million cover, when he can get the same cover at $2 a day ?
Modalities of measuring customer loyalty is up to the companies (Net Promoter Score, Satisfaction surveys, etc), but it will be relevant that the product or service has to meet customer needs with (a) faster fulfillment (b) competitive price (c) quality service levels post the sale. Measuring customer sensitivities and sentiments will be key to craft new business opportunities.
3. Product or services micro-moments
Standalone or complex products and services are keeping the sales cycle at large as well as customer at the edge. CIOs, Digital Officers and Product Officers has been painstakingly put under pressure to innovate hard and fast to come with “moment of life” product or service, which can very well fit into customer persona, and quickly moving away from one-shoe-fit-all strategy.
Product complexities will get into bit-size propositions and complex sales experience will evolve into 3-steps buying journeys. We have seen the evolution of how Super-Apps are delivering the financial services products (few cents and few clicks experience), where customers can chose and buy the service on the go. Entry (Buy) and Exit (Opt-out) experience will be seamless.
4. Data into the mainstream play
How we have seen in last few years data played through the enterprise jungle – being a back-office junkie to front-office business strategy orchestrator. How the organization has realised that data can no longer be shoved into Datawarehouse platforms for reporting and mining purposes, but data coming into the mainstream to drive business strategy. Example, data is now combined / aggregated – both structured and unstructured and put to business use cases – social analytics, negative sentiment analysis, geo-location fraud analytics, deep customer segmentation, lead scoring, channel profitability, etc.
With the cloud and processing platforms at much affordable costs - data aggregation, propensity modelling, deep learning will bring critical business insights and business KPIs being linked through the data stream.
5. Digital operating models become mandatory
“There is no alternative to digital transformation. Visionary companies will carve out new strategic options for themselves — those that don’t adapt, will fail.” - Jeff Bezos, Amazon
CEOs and the board are not being given option to think if the digital operating model is required. 56% of CEOs KPI are now being linked into building digital operating models and measure the adoption. Digital operating model have become mandatory – and they can no longer be resisted. CIOs and Digital Officers are being asked to deliver or delivering these operating models. Models can be in multiple forms – hub / spoke, in-country, shared services, innovation hubs, etc, but operating model has to deliver business value (rather than just a nice showcase of technologies under one roof !)
Digital operating models will evolve product innovation and design at faster pace and execution can be delivered through agile or hybrid.
6. Digital transformation driving regulatory changes
Service consumption offered by Super Apps, Virtual Banks, Neo Banks, Digital Insurers, InsurTechs, etc, are transforming the digital platforms and service models. Seamless experience and product delivery is critical for these companies to bring the services to their customers – which means that they would have to be different from the legacy barriers and adopt newer technologies faster (cloud based product innovation, marketing automation, service automation, data analytics etc). This is putting the regulators under similar pressure to co-collaborate with them in removing the necessary roadblocks (regulations around digital sales, digital contracts, payments, client on-boarding, KYC / AML, risk management, reg reporting etc).
Markets like Singapore, Hong Kong will pave the way to offer simpler regulatory environments and jointly evolve business models (Virtual bank licenses)
7. AI takes the center stage
Even once all that data is wrangled, making sense of it at scale in a usable way will require some help from our machine friends. In fact, say digital experts, AI will be the key to delivering business outcomes with digital transformation. “AI is one of the technologies that will help standardize the digital transformation market and turn the wildly loose use of the term ‘digital’ into tangible business results,” the TBR analysts wrote in a Sep 2019 Digital Transformation Insights report. AI will permeate all functions, from sales and marketing to HR and finance.
Machine learning and AI can also be leveraged within modern data architecture paradigms to automate and mitigate the data governance problem – from aggregation and cleansing all the way through to extraction in an analytics-ready format.
8. M&A shakes up the consumer landscape
Merger and acquisition activity across the region is getting accelerated as traditional service providers are acquiring engineering and digital marketing firms to bring new capabilities to their clients. Three-quarters of the 2,200 tech acquisitions made in the last year were analytics firms, digital solutions providers, engineering firms, or digital agencies.
“The M&A activity will be a major source of disruption for CEOs.”
M&A activities will emerge more and more and will drive digital operating models to evolve faster. Global digital enterprises (Alphabet, Amazon, Microsoft, Google, Salesforce etc) or smaller or regional digital eco-player are bringing multiple products and services under the eco-system umbrella, which will provide wider service consumption choice to the customers.
9. New digital transformation allies emerge
Traditional companies are finding allies with companies they would have never thought of allying with. Insurance companies are buying or investing in digital payments, Banks are investing into InsurTechs, Retailers are investing into social marketers. Landscape is evolving much faster in 2 years that the partnership eco-system have become much wider (outside the traditional business boundaries).
Similarly, large companies like insurers will be playing their cards and collaborating with platform or product providers to provide bundled service solution to their customers.
10. Measurement metrics will change
KPIs for CIOs and Digital Officers are moving away from traditional measurement like service availability or service delivery to newer KPIs which are closely linked to CEOs or company’s performance. This has become possible since digital transformation has able to conjunct relevant functional silos and data playing crucial role to fuel the insights and company performance dashboards.
Example of newer KPIs may look like this:
- Adoption rate
- Better customer engagement rate
- Higher customer affinity
- Higher Cross-sell / Up-sell rate
- Better self-service capabilities / robo automations
- Direct business portfolio
Conclusion
Last year had been a great year of change and innovation, but hope we will see more visible and dominant changes in 2020 and beyond. Customer will keep pushing the bar for companies to bring bite-sized products and services, at affordable price points – which will keep only one room for the companies – TRANSFORM.
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2yShashank, thanks for sharing!