The Pareto Principle likely applies as much to digital adoption as it does to most things in life. What’s the saying? Eighty percent of the revenue is delivered by 20 percent of your customers. Research shows most digital transformation studies over the last 12-24 months and generally speaking, that around 20 percent of organisations proudly admit to having a comprehensive digital strategy in place. The remaining 80 percent are either in the process of implementing a digital strategy, or have no plans whatsoever.
And while hard statistics don’t exist on it, what are the chances the 20 percent with a digital strategy in place, account for 80 percent of digital revenue too? Surely that’s a good incentive to move to a digital business model?
Stuck in the middle
Like many organisations in the mid-market, you’re likely in the process of adopting digital and working your way through a strategy. But while many vendors profess to making digital ‘simple’ and ‘easy’ - we understand it’s not.
Transformation is hard. And, it’s hard because it means sizeable changes with big challenges along the way. However, coming through the other side can deliver big rewards. Sometimes, your biggest weaknesses can become your greatest strengths in the long term. Here we look at three challenges you’re likely to face on your digital journey, and how turning them around can place you in that top 20 percent.
1. It’s all about the customer
Ask most organisations why they’re digitising, and more often than not you’ll get one of two responses. They’re either focused on creating greater efficiencies. Or, there’s a deep desire to drive revenue and value, through better customer experiences. Here in Australia, many organisations are focused on the latter. A recent study from Microsoft Australia uncovered nearly half of organisations (44 percent), say that between 60-100% of their digital transformation projects are focused on improving customer experience.
But, you can’t improve the experience if you don’t know what you’re trying to improve. And, even before that, many organisations (not just those in the mid-market) struggle to gather and store customer data effectively. Over the years, different departments have collected and stored customer data on a whole host of siloed systems. A problem you’re probably very familiar with. And, when it comes to understanding and making use of this data, there’s little idea as to how to pull it all together.
At this point, you can travel one of two directions. You can spend a lot of time and money trying to sift through what you’ve got. Or, you can start afresh. Whichever path you choose, first understand what you’re looking for to help create those brilliant customer experiences. Are there standout customer traits that help you define what your customers desire?
Once you’ve figured this out, map a strategy for gathering and storing data in a centralised location, easily accessed by customer-facing employees; the very people who need the data to make informed, real-time decisions.
As you become increasingly proficient and skilled in data collection and analysis, you can move towards more complex chambers of customer data to personalise the experience further. What started as likely a dozen or so trends or rules can move into the realms of hundreds or even thousands of data points to target each market of one. In many respects, starting afresh could be a blessing in disguise. It provides you with a clean slate to analyse customer trends, which if we’re honest, constantly evolve almost daily.
2. A continuous state of iteration
Unless you were ‘born-digital’, a big barrier to digital progression is outdated core systems and processes. This will severely impede a successful digital execution if your organisation still operates via waterfall methodology. As opposed to a more agile, test and learn approach. The days of monthly development cycles should be laid to rest if you’re serious about digital.
Instead, in their place, implement a more iterative approach that sees a constant cycle of development. That is, taking customer feedback and the subsequent data on a near daily basis to constantly measure, add to, refine and adjust new features to meet ever-evolving customer needs. Great digital results are delivered by agile processes and technologies that support almost continuous and integrated releases.
Trying to build flexible and refined digital experiences on top of out-dated technology stacks is a waste of time. And, while it’s not a case of starting from scratch, a revamping of your core systems could play significantly to your advantage. It could place you in the ‘born-again’ business category of digital-first.
Once again, the forced nature of evaluating and revamping your entire business model could turn into a considerable game-changer in your market.
3. What’s your risk appetite?
According to BDO’s Middle Market Digital Transformation Survey, 33 percent of executives cited cyberattacks and privacy breaches as their number one digital threat. Not only that, look at any digital transformation survey over the past few years and the notion of a secure organisation is the highest priority.
When it comes to revamping your infrastructure to a digital platform, a full evaluation of its impact on corporate risks is essential. By opening up the organisation, risks can, and will arise from anywhere. And, you may not even realise it. The Ponemon 2017 Cost of a Data Breach Study found it took an average of 206 days to detect a data breach. By then, the damage is done.
The complexity of organisational structures also adds further challenges to the risk management process. The advent of ‘rogue IT’ has seen departments across the organisation implement their own technology with little to no consulting from IT. This presents all manner of security issues for IT, leading to more points of entry for would-be cybercriminals to exploit.
However, it’s not often security is discussed as a competitive advantage. Yet, with the advent of digital transformation, comes the chance to re-evaluate your risk profile. While many organisations will talk about risk minimisation, those at the forefront of digital greatness are talking about risk appetite.
Risk appetite looks at how important certain ‘risk factors’ are to achieving your transformation goals. How much of a risk do these factors pose and then, how confident in your people, processes and technology are you in achieving these goals within the acceptable risk scope? By looking at risk with a different mindset, the parameters of the discussion shift considerably. From an issue previously considered a major hamstring to something that could really make your organisation stand tall.
Opportunity over fear
Digital transformation is hard. There will be issues along your journey. But so often, the very things that could potentially cripple your organisation are precisely where huge gains can be made. And while there maybe mountains to climb, quite often starting afresh, or taking a new mindset to an old challenge could prove to be the distinguishing factor for your organisation.