A wide-ranging survey of digital transformation in corporations offers a mixed takeaway.
The good news: A growing number of corporations are accelerating their embrace of digital technologies as they focus on what matters most to their customers. The bad news: A surprisingly large number of corporations are still failing to consider customer needs when it comes to digital transformation strategies.
That’s the broad conclusion of “The State of Digital Transformation,” the fifth annual edition of a report produced by Brian Solis, a principal analyst at the Altimeter Group. But embracing the customer point of view is often critical to making digitization efforts successful, Solis said.
“When you look at all of the initiatives that companies are spending on under the flag of digital transformation, most of the top 10 initiatives are related to customer experience,” Solis said. “You can see that the customer is front and center in a lot of this stuff. And that’s interesting, because it’s giving digital transformation a purpose. And it’s also showing that companies’ intents have shifted to actually be[ing] relevant to the customer and delivering a better customer experience.”
For this edition of the report, Altimeter surveyed 554 professionals at various levels at brands, consulting firms, and other organizations with at least 1,000 employees. Geographically, the focus was on North America, Western Europe, and China.
The report notes that corporations are undertaking digital transformation programs for a variety of reasons. About 51 percent say they were motivated by potential growth opportunities, while 41 percent cited competitive pressures. Another 38 percent also mentioned regulatory standards, like Europe’s GDPR privacy protection standard.
In terms of technologies, investment in cloud-based services ranked first among priorities, followed by cybersecurity, artificial intelligence, big data, internet of things (IoT), analytics, mobile, and ecommerce. The problem, Solis said, is that in the past companies too often jumped on the latest tech trends without fully understanding how that would improve the experience for their customers.
But more and more companies are now investing heavily in understanding the entire journey a customer goes on, from discovering a product to researching a solution to making a purchase. The goal is to make sure any digital investment improves some or all of that experience.
Indeed, the survey found that 59 percent of companies had put the customer at the center of their digital transformation efforts, up from 35 percent in the previous survey.
“That’s a dramatic swing in a positive direction,” Solis said. “Because before customer experience was so prevalent, you were making these investments without understanding why you’re making them. And so now, we’re starting to see a much more positive investment in really understanding the differences between customers and how to add value for them.”
Solis said the shift to that customer focus is being driven by a range of factors.
“The message comes in a variety of forms, whether that’s the loss in sales or market share,” he said. “And at the same time, data is becoming much more prominent within the organization. So data strategies are really starting to rise. And that’s all in the name of customer experience, as well. And those two things sort of force people into examining the customer journey. So I expect that number to grow year over year. This trend is inevitable if you want to compete.”
Increasingly, customers also expect seamless digital experiences as a result of their use of products and services that may not directly compete in the same market. Likewise, employees are also demanding improvements when it comes to the tools they use for themselves and to serve customers.
“Once you use Uber and maybe date on Tinder, and then you go try to use your corporate tools for communication, it’s just night and day,” Solis said. “And that’s becoming more and more important. The broader trend here is that digital transformation is a very human story.”
The challenges that impede such changes are often the traditional ones: culture, organizational structure, and finding the right talent.
“If you have a very rigid culture, if you have a leadership team that’s very much subservient to stakeholders, if you have an outdated board of directors, these are things that will affect the pain threshold,” Solis said. ” And that will define how fast this plays out. The customer doesn’t care how your business is structured. The customer just wants to get what they want done, and they benchmark you and whatever industry you’re in against someone like Uber.”