- Category: February 2016 - Digital Transformation
The objectives of digital transformation can be clearly described by now, namely process optimization, focus on core competencies and growth. But considering how fast digital technology disrupts industries, it’s important to pay attention to be constantly prepared to change and adaptations.
The focus in process optimization is operational improvement. It is about Web-based applications that can be expanded modularly and grow according to the needs and knowledge of the company, besides enduring broad transparency: For instance, process costs could be dramatically reduced with web-based procurement or though flexible, situation-specific adaptation of processes.
Focus on core competencies
The concentration on core competencies is another central part in the economy. Companies wanted growth at any price and in any direction, and for quite some time there was barely something that could go wrong. Whenever something new got established it boomed.
Today, however, we suddenly realize that we have often overextended ourselves and burden us with things that do not belong to our core competence, realizing that these unprofitable sideshows have a negative impact on the company's results. Consequently, activities get shut down, which means in turn that opportunities where given away, such as reconfiguring supply chains. Digital transformation offers the possibility here to preserve the chances of focused growth through efficient and simple in- or outsourcing.
Focusing on its strengths, clearly forces the company to redefine its role and there are essentially two ways to go: One is that of specialists, e.g. those who focus on a few or core competences, which means mostly on a separate segment in the value chain. On the other hand, there is something we call virtual integrators, such as those that focus on the management of the whole value chain of suppliers. The company Dell is for instance a good example of a virtual integrator that has linked an army of suppliers, distributors and partners, in a skillful manner to each other that it has become a highly profitable virtual company. Concentration on core competence therefore serves in each case the objective of increased competitiveness.
The third element applies to the development of new growth options, such as new e-Services that provide more opportunities to place specialized knowledge at the disposal to others. Many great success stories of recent times have been posted by companies who have gone this route. IBM, for instance, has succeeded in recent years to invent themselves completely anew as a service company.
Other ways to advance through digital transformation in new growth areas are the offers of digital services: A mechanical engineering company, for example, could serve external customers with its very own expertise in the area of monitoring and remote maintenance of equipment via the internet. Workpiece-related services or in-process tests would also be possible that can be performed during operation of the machine, but above all, without the physical presence of a service technician. Without doubt it has growth potential for companies that operate in a completely different area, made possible through the consistent use of digital transformation.
Cisco, one of the digital transformation pioneers, has managed by its own account, to reduce the error rate in the order fulfillment by 90% with e-Enabling, resulting in excellent customer satisfaction and doubling of turnover. So, digital transformation means no vague promises for the future anymore but an awareness of profitability and healthy growth.
By Daniela La Marca