Converting digital disruption into a competitive advantage

Companies that cannot adapt to the current trend of digital transformation will soon be left in the past, feels Clifford de Wit, chief innovation officer at Microsoft South Africa.

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Disruption

Technological development is outpacing the evolution of business processes. In the past, manufacturing and operations were linear processes and companies focused on the customer at the end of the sales cycle only. They lacked the ability to centre the entire manufacturing process around the customer and support an ongoing relationship.

Now, the proliferation of the cloud and big data has freed manufacturers to recast their processes and produce smart, continually connected products that deliver real value and strengthen customer engagement.

Across Africa, however, the benefits of this transformation is not reaching every business in every sector. Market research company IDC’s recent study, called State of Digital Transformation in South Africa, looks at how local companies and other African companies from Nigeria and Kenya are leveraging new business, technology, and operating models to disrupt their competitors, customers, and markets in pursuit of business performance and growth.

According to the research, only 48% of South African businesses are engaged in the digital transformation process, compared to 44% in Nigeria and 39% in Kenya. Moreover, only around 44% of local companies are planning or evaluating digital transformation initiatives, while 8% are not engaging, as a result of the lack of funding to do so.

The companies around the globe that are turning digital disruption into their competitive advantage, are doing so because of their measured approach. They are not using technology for its own sake or as a knee-jerk reaction to an initiative by a competitor, but instead, they tap into the power of new technology to gain actionable insights from big data and use these as the foundation of better business decisions.

“Not doing so means leaving the business exposed to competitor and market disruption and the business unable to respond quickly to these forces or changes in customer demands.”

These decisions have a real and significant impact on their business, helping them transform their products and services, enhance and personalise their customer service, streamline their operations, and empower staff to become more productive in every aspect of their job.

Not doing so means leaving the business exposed to competitor and market disruption and the business unable to respond quickly to these forces or changes in customer demands.

Driving the business to transform

There are four market needs that are driving organisations to transform themselves digitally, namely increasing innovation, moving faster, staying connected and getting personal.

Chief amongst these is the need to increase innovation, as companies like Kodak can attest to the cost of not doing so, while digital disruption brands like AirBnB and Uber continue to irrevocably disrupt their respective markets. Traditional businesses must increase the quantity and quality of innovation or risk being crushed by the next digital transformation in their industry.

Next up is the need to move faster, because the pace of change is accelerating at previously unfathomable rates. From sales to operations to customer service, cycle times are ever shorter.

Now more than ever, leaders need speedy access to reliable business intelligence to improve their decision-making. They need actionable insight at the right place at the right time and to the right people.

Read more: Platform companies will drive growth and jobs across Africa

In addition, there is the need to get personal because one size now fits none. Even as our use of technology soars, customers and employees are expecting companies to tailor offerings (and career paths) to their unique needs and to deliver those experiences in a more intimate, personalised one-on-one manner. The true goal is to “co-create” relationships with customers or employees.

Furthermore, there is the need to stay connected with customers, colleagues, suppliers and partners. Collaboration and communication anytime, anywhere, using any platform or device is paramount in the “Peer Economy,” which is characterised by the need to partner with other expert service providers in order to co-create value as well as the rise of the Internet of Things (IoT). The latter means that we are now interconnecting as much around common resources as we are around relationships.

In fact, data analytics firm Gartner forecasts that there will be around 8,4-billion connected things in use globally this year and about 20,4-billion by 2020. The latest development in IoT is the fact that these devices are starting to run cloud intelligence locally, in which case they are referred to as “IoT edge” devices.

Turning data on the Edge into Intelligent insight fuel for your business

Advancements in data analytics and intelligence have enhanced our ability to draw value from the data – transforming information into insight that can be acted upon, even pre-emptively and at the point of business processes to maximise impact.

For example, a factory needs immediate response times to stop operations in the event that an equipment failure is predicted by local intelligence, or to protect worker safety following an accident.

Moreover, the ubiquity of cloud computing puts this disruptive power in the hands of organisations of all sizes, increasing the pace of innovation and competition. Businesses such as hospitals, construction sites and manufacturing plants, where safety and security are paramount can utilise existing commodity cameras together with Azure IoT Edge.

Doing so will enable these devices to recognise people and make sure that staff do not gain access to unauthorised sections or equipment, for example, ultimately turning these areas into AI-driven safety zones.

Cost should not be a barrier to digital transformation

For the majority of businesses, it would appear that the associated cost of digital transformation is too high. In fact, IDC’s research shows that the biggest barrier to digital transformation is lack of funding to invest in the transformation needed (80% of respondents), while 20% have more pressing business matters. Moreover, 20% view digital transformation as not relevant for their businesses.

Remember that no business or industry will be immune to disruption from more innovative competitors. Every product and service— indeed every aspect of every business—will be affected. And the time to act is now.

Additionally, digital transformation is not something that happens overnight, nor is it a traditional large-scale, one-off transformation process. Rather, it is pivoting to a mindset of ongoing innovation, iterative updates, and continual growth. To better manage that cost, companies can adopt the approach of ‘rapid incrementalism’, which involves looking at what defines success and changing existing structures to make the most of what they have.