Digital Disruption: Impact of Digital Transformation on Established Industries
Human society has been permanently changing in every aspect. It has experienced several challenges, including financial systems collapse, political conflicts, and wars. We live in a world where technology can blur the line between the digital and the physical. This always-on environment offers emerging companies the possibility to break long-held monopolies. It is a world of innumerable pitfalls and incredible opportunities. As technology is transforming the way humans behave and live, brands need to change with time.
To survive society and improve things, it is important to invest in communications, production, market, and technological progress. In this fiercely competitive environment, “innovate or die” is true for all brands. Flexibility is the only key trait to stay ahead in this competition. In the digital space, disruptive trends are emerging. It not only affects business operations but also transforms the way we market to and communicate with customers. IT impacts almost all the technologies and layers of society- social, health, education, forecasts, analysis, management, production, communications, and medical security.
Global spending on digital transformation has touched $1.59 trillion in 2021, up over 20% from the previous year. Adapting existing IT solutions using cloud extensions was a common approach to digital transformation in 2022, with the worldwide public cloud market estimated to reach more than $490 billion. As of 2022, around 90% of organizations have implemented cloud technologies with the highest adoption rate.
Digital Transformation refers to the alteration occurring when new business models and digital technologies spot the value proposition of the prevailing services and goods. The swift rise in the usage of mobile devices for work and personal use, a shift referred to as the consumerization of IT, has enhanced the potential for digital disruption across several industries.
Digital disruption generally happens after a digital innovation like the BYOD movement, the Internet of Things, machine learning, and big data. Digital innovation affects how customer behaviours and expectations evolve, resulting in organizations shifting how they create services and products, evaluate feedback, and produce marketing materials. This shift in digital strategy occurs at the societal, industry, organizational, and individual levels.
Examples of Digital Disruption
- The digital camera business disrupted the photo processing and film photography industry
- On-demand services like Uber have disrupted traditional services like taxis.
- Freemium products like Dropbox, LinkedIn, or Spotify, which enable users to sample a basic item with the option of paying for the full order, emphasize developing a well-known brand behind a service or product.
- The subscription economy business model used by companies like Netflix, Hulu, and Amazon caused a disruption in the entertainment and media industries by changing how content can be monetized by advertisers and accessed by customers.
- The rise of electronic reading has now redefined the publication and print industry.
- Giants such as Nokia and Xerox were driven out of the business by newer technologies and newer players.
Impact of Digital Transformation on the Process of Business
To remain competitive and adapt and improve new business processes, existing businesses must set up efforts while engaging in complementary and strategic cooperation. With various modern technological solutions, the optimization and improvement of the activity can be accompanied in various ways. Data integration throughout the organization is a strategically important decision. The biggest advantage of storing data in the centralized database and corporate systems is the chance to increase the ability to transmit information all over the organization and to reduce costs.
In the process of the digital transformation of any business organization, the organizational structure, business processes, and business models are changing.
Improved organizational structure: A much more disciplined approach to business all over the company irrespective of the physical place and/or location in the organization structure
Customer-driven business processes: Every operations department can put more emphasis on the customers and more effectively respond to product demand.
Management models: More informed management decisions with full information regarding the effectiveness in every division of the business organization.
Digital Transformation, in some sectors, involves production processes primarily. For manufacturing companies, this is particularly typical. Reducing costs while digitizing the development, testing, and production of new items is of paramount importance. Mobile applications have become more important to improve the internal communications of employees and production processes than to interact with customers, mainly not end-users. Information processing and large databases are more focused on production. The digitization of production procedures opens up several opportunities to develop industries and for globalization and internalization.
In the agricultural sector, digitization is being prepared, and transformation needs a change in training and education. During a pandemic, global supply chains are severely hampered or disrupted. Using global supply chains, the business problems associated with are-
- Cultural differences
- Foreign government regulations
- Varying performance standards
- Additional costs for local taxes and fees, inventory, and transformation
- Greater time differences and geographic distances
Implementing the web-based supply chain management systems gives every participant a way of making information and data available more easily through portals and browsers. The Internet allows the move from sequential supply chains to simultaneous supply chains. Implementing a Supply Chain Management (SCM) system enables the move from sequential, push-based models to concurrent, pull-based models of production, allowing the business to be driven by customer demand and efficient customer response.
Impact of Digital Transformation on Customers and Employees
Digitization transforms any business and its way of work and changes the boundaries of consumption, distribution, and production. These trends are opportunities like the emergence of new products, techniques, and processes and threats to employees and employers who have to adapt to the organization of work and the distribution of skills and work. The overall effects of the labor market are dominated by the worldwide pandemic, which requires telecommuting for digital company managers and employees.
Digital transformation changes organizations from within, influencing management strategies and organizational structures as it influences their interaction with competitors, partners, and customers externally. Increasing dependence on innovative business models and developing new technologies redefines business processes in trade, reduces transaction costs, and optimizes business organizational structures.
Digital transformation, along with related business platforms, intensely alters the work of organizations. This leads to significant variations in labor force specialization and job retention. Digital transformation pursues maximizing capital assets by enhancing the intensity of labor in the mainstream. Digital business transformation is fundamentally a driver of organizational alteration, enabling more systematic control and monitoring of the work in the homework or the office of the employees. It provides new opportunities for external and internal cooperation.
The impact of Digital Transformation on the IT Business Infrastructure
The introduction of one single integration platform for business that supports every type of business integration between different Business to Businesses (B2B), from Business to Government (B2G), between different applications Application to Application (A2A), EDI (Electronic Document Management), Integration with external software solution offers through electronic invoicing, API management, and other services ensure a competitive advantage. An integrated platform ensures seamless integration of every system in cloud services, data storage, application, and company
The big IT companies like IBM, SAPO, and Oracle offer in their portfolio of products and services, database management technologies and cloud services. DBaaS (Database as a service) is an operational and architectural approach that allows IT vendors to offer database functionality as a service to users. Data usage is the largest business in the world. Around 1.4 trillion dollars from Facebook and Alphabet come from consumer data as well as their use by companies.
Competition Through Innovation: The Modern Crucible
Digitization has improved competition in the world of business. Even if your business is operating in a niche market, now you are competing globally. It has never been more important for companies to study the strengths and weaknesses of their rivals. Companies are now stuck in the never-ending game of innovation.
Here are how the major players have been investing in innovation without toppling their overall business model.
Employees of an organization do not sit at their desktops the entire day. They are on the go, collaborating on slides during their networking lunch or checking email between meetings. Fierce TechExec’s study conducted found that 71% of workers spent more than 2 hours a week accessing information about the company via mobile devices. Embracing mobile technology in day-to-day operations and using mobile technology to our advantage has become very important. Mobile technology like voice assistants and smartphone helps employees to work more efficiently. When you move quickly, innovation can only happen, and mobile is the best way of iterating with speed
By collaborating with a startup, established brands can augment their agility. Large companies are recognizing the enormous predictive potential of startups for new customer needs and market trends. Startups recognize that market knowledge and specialized focus are keys to success. Large companies, however, cannot invest in micro-interests as startups can.
A PWC Global Fintech report found that 88% of the legacy banks were threatened by new financial technology. Thus, 82% of the legacy banks said they would collaborate with emerging fintech startups. It is evident that to create more innovation, even in conservative markets, organizations have been partnering with startups.
Empathy maps are referred to as tools to predict the changing behavior of people. They help determine what customers think, say, do, and feel in response to the marketing. Empathy mapping is used to identify the pain points, perceptions, wants, needs, and beliefs of customers. With innovative messaging, resolve these pain points that help them overcome their blockades to your brand.
IoT, or the Internet of Things, is on fire. IoT has transformed the way what we refer to as ‘phygital’ phenomenon. Phygital technology has been merging the digital and physical into a cohesive experience. Usually, Phygital technology is implemented in a retail setting. For instance, a retailer can integrate brick-and-mortar locations with the eCommerce experience, such as smart mirrors. For optimizing businesses with phygital technology, you do not need to be in retail.
Boeing, for example, used AR (Augmented Reality) to help its employees interface more safely with equipment. Consider what PTC has been doing to shake up the manufacturing and industrial world through the use of AR in the workplace.
The worldwide AR market size was valued at $42.20 billion in 2022, and in 2023, it is projected to grow to $62.75 billion. This technology is going to alter the world for the better. Also, Phygital technology bridges the gap between customers willing to shop online and those who wish to shop in-store. Embrace the phygital and get creative with how you conduct business, train employees, and sell to customers.
Today’s customers are more impatient, more demanding, and more curious. So, innovation is everything while competing with impatient customers. Especially in the fast-paced digital environment, future brands need to understand the customer’s mind. While exceeding their expectations, this helps you to meet customer needs. Using these tools helps in digital innovation that can deliver on customer expectations.
Online Collaboration Tools
You need to hear information from the customer directly. This is the reason why some web design companies are successful. They conduct real user testing to determine whether UX (User Experience) is up to snuff. Use online collaboration tools to glean feedback from your employees and customers.
A list of practical tools that help businesses transform digitally include-
- Digital Marketing
- Transformation Storytelling
- Two-Speed IT
- Digital Twins
- Data and Analytics
- Quantum Computing
- Artificial Intelligence
- Cyber Security
- Modern Workplace
- Design Thinking
- Additive Manufacturing
- Internet of Things
In the swiftly developing digital landscape of today, transformation is not a luxury but has become a need for businesses to endure relevant and competitive. Transformation is not easy. However, the payoff can’t be ignored. While embracing technology, fundamentally, you are changing how you look at your customers and how you do your business. By embracing modern practices, trends, and tools that complement your business practices, you become a brand of the future. To gain a competitive advantage, companies must embrace digital disruption. When an industry experiences digital disruption, we can say that consumer needs are shifting. Therefore, understanding the disruption aids businesses to keep the existing clientele happy and create opportunities for new customers.