Digital transformation seems to be at the top of nearly every executive’s agenda. According to a recent study by the Economist Intelligence Unit, 80% view hyperconnectivity as beneficial, while two-thirds believe that it presents more opportunities than threats. However, the extent of their adoption has been rather limited – with 81% not expecting to reshape their business model to make room for these potential advantages.
As digital offerings from established competitors and startups alike threaten to disrupt every existing company, there’s pressure from customers, employees, and stakeholder to adopt a digital-first mentality. In a recent study conducted by the Economist Intelligence Unit, 59% of executives worldwide cite hyperconnectivity as an imperative for keeping pace with changing market demands, while 69% claim that considerable risk and lost opportunities are on the horizon if they do not adapt. And for good reason: Even 40% of the Fortune 500 are expected to no longer exist if they do not evolve soon.
What are they waiting for?
In a recent SAP Technology Executive Summit event preceding this year’s SAP TechEd conference in Las Vegas, we learned that several companies are hesitant to move toward becoming a digital business – and avoiding it out of their fear of the unknown.
People do not like change, especially when it comes to their technology infrastructure. For decades, companies have invested millions of dollars in creating a technology infrastructure that attempts to answer every known need of the enterprise. Unfortunately, the outcome is cumbersome, complex, and disparate systems that do not provide the information and insights everyone needs to help run operations. Worse, it seldom delivers the value executives seek.
Taking those first steps toward a digital transformation is akin to children learning to swim. At first, they may dip one of their toes in the water to test the temperature. Some run away from the pool, making the excuse that the water is too cold. Others decide to indulge their curiosity and trust a parent or instructor to help guide them into the pool. Over time, the swimming student becomes more confident and quickly discovers the majesty that lies in deeper waters – even as big as the ocean.
The same is true of digital transformation. The more profound the change, the greater the insights and opportunities. Here are four simple and beneficial ways to get started on the road to digital transformation, one toe dip at a time.
- Adopt a platform that supports the mechanisms of digital business. To evolve into a digital business and reap the rewards that come with it, you must let go of the traditional mindset of how applications help run a business. Consider this: More than 50 billion devices will be connected to each other by 2020, potentially bringing an annual economic impact between $3.9 trillion and $11.1 trillion by 2025. Capturing the data these devices generate does not bring value to your company. Instead, your IT infrastructure must be able to process, distribute, and analyze this information in real time, enabling decision makers to act on it and add real value to the company and its customers.
- Co-innovate to build solutions that fit new needs and initiatives. The pace of innovation is accelerating and, as Marc Andreessen stated years ago, “Software is eating the world – but now taking bigger bites than ever before.” Unfortunately, most companies do not have the technological prowess and, in many cases, the budget to support such innovation by themselves. By crowdsourcing the expertise of your valued IT and software partners or forming strategic partnerships, you can access the technical know-how, creativity, and momentum that would otherwise be a steep hill to climb!
- View “going digital” as a series of incremental steps. A digital mindset requires a fundamental change in how you run your business. At the same time, the world is moving at such a pace that it can be difficult to keep up while avoiding total disruption of your operations. By making incremental changes to move your company towards going digital, you can help ensure your company is aligned with customer needs while adding value to the experience.
- Embrace the Internet of Things. The Internet of Things is quickly becoming the interlock between physical and digital assets and a fundamental element of digital transformation. It not only drives significant improvements in operational efficiency before they break down and cause disruption, but also paves the way for entirely new business models.
With open discussion about digital transformation, the future outlook on technology, and SAP’s path to answer these needs, executives who attended this event left the room confident in leading their businesses through a digital transformation. They were able to sense a future beyond the matters of transactional processing and basic analytics, where they could embark on a journey of new and renewed business models and unprecedented agility. To maintain this spirit, it helps to stay connected with your peers. The SAP HANA Community (contact: Scott Feldman) serves this purpose as it provides a rewarding level of engagement. If any business wishes to dip their toe in the waters of digital transformation, then they can do so by reaching out to Customer Innovation & Strategic Projects at SAP (contact: Puneet Suppal) to explore co-innovation opportunities.
If you are thinking of these matters, feel free to reach out to us.
Still concerned? Alleviate your worries by watching the video Discover What’s Possible In The Digital Economy.