Build Your Business Model For The Digital Era

Bert Schulze

Digital transformation, the Internet of Things, and digitization are the harbingers of technology-induced change that enterprises/companies are increasingly leveraging to improve their profit levels, stay ahead in competition, and enhance the value of IT investments. However, many businesses still don’t understand the importance of digital transformation or they struggle to benefit from it – in such cases, they either stagnate or perish.

Change is inevitable (and coming fast)

Our environment is evolving at an unprecedented pace. In the past, a change took place over the course of years; now, it happens within months, weeks, or days. Change is coming in a way that no one can ignore.

Fast innovators are disrupting the established market. While their success is not necessarily or always fueled by better products, they can execute better customer service strategies like replacing some traditional channels with mobile apps and websites. Smart companies know that if they do not offer a great digital experience, their customers (particularly younger people) will simply move to industry competitors.

Bonus: Steam the Digital Dragon. Download the white paper “Optimize the Value of Your Business Model for a Digital Era.”

Business models are subject to regular threats of the three D’s – displacement, disruption, and destruction – like Coursera and EdX threatened business schools with their massive open online courses (MOOCs). All established companies were, back in their nascent stage, undoubtedly entrepreneurial in nature and performed phenomenally. However, achieving such success inevitably invites competitors. To maintain their hard-won position, market leaders shift their focus from creating the next big thing to conserving existing markets. Although this approach maximizes ROI, the creativity and zeal that previously propelled them to success are lost. So they adopt a smart survival strategy – transform while the business is in good shape.

The ultimate goal for most companies is now the unit of one. The good news is that it is revolutionizing shopping behavior as customers expect a seamless experience that is focused on their needs in the form of fully individualized services.

The three value categories of a digital core

Because complexity hinders the ease and speed of digital transformation, core business processes need to be reimagined and modified. That way, companies can simplify their work processes and reap benefits in the long run, provided proper measures are taken to redesign their processes and migrate to the digital age.

In the fast-changing markets and environments of the digital economy, new competitors are always ready to disrupt existing markets. This is precisely the reason companies should embrace efficiency, effectiveness, and agility.

  • Efficiency is the ability to do things right by achieving more outcomes with the same input or less effort. This can be achieved, for example, by giving people the right information in the right context. With faster and embedded analytics through a digital core, they can make decisions more efficiently.
  • Effectiveness can be described as doing the right thing. Simplification enables businesses to focus on fundamentals and scale them accordingly. They can now spend time on value-adding tasks since many processes are automated.
  • Agility is a mix of flexibility and speed. The pace of adoption to change defines a company’s success. It is only possible with a digital core and the flexible extension of a modern platform.

Companies need to live up to the change and make the impact measurable

Today’s digital economy, with its disruptive technologies and trends such as the unit of one, is pushing forward and forcing organizations to transform. However, complexity prevents a quick and easy road to transformation. Thus, in order to unburden employees and processes from complexity, a digital core is required to utilize disruptive technologies well and give customers the experience they deserve. The real values of a digital core are performance improvements and business outcomes. With such solutions that support enterprises in every process, employees have the time and possibility to develop and push their ideas forward and transform the organization inside out. A conscious optimization model goes a long way in boosting a business.

 


About Bert Schulze

Bert Schulze is VP Product Management & Co-Innovation SAP S/4HANA at SAP