How COVID-19 Accelerated Digital Transformation
COVID-19 has shown businesses the hard way that digital transformation is essential to both surviving something like…well, COVID-19, and engaging customers the way they want to be engaged.
Let’s go back in time to right before COVID-19. In early February, companies were announcing their fourth quarter earnings and guidance for 2020. If we were to listen to some of the calls or read the transcripts, the challenges that were top of mind for management teams across the cable and telecom industries came down to: How do we increase the ways to monetize our customer base? How do we create a customer-centric business model? How do we grow revenue while reducing capital expenditures and related costs?
The introduction of new digital native operators into the communications and media ecosystem were not only capturing market share and revenue, they were doing it with tremendous scale and at a dramatically lower cost. Traditional providers needed to transform and keep pace in order to survive.
Fast forward to today, and you will find these challenges are still top of mind. With the onset of COVID-19, the race to transform business models in a rapidly evolving digital world has never been a more critical driver to survival. The pandemic has also forced a lot of businesses to rethink how they engage with their customers who increasingly demand a digital customer experience.
The notion of digital transformation is not new. At face value, it is a fundamental business concept in today’s world. However, when you actually start putting the pieces together, many organizations become overwhelmed at the sheer size of the initiative and the ability to convey how it impacts their bottom line in terms of ROI. Another problem? Not everyone agrees about the definition of digital transformation. Look online and you will find a plethora of articles trying to explain what it is and how to successfully achieve it.
The fact is that many organizations have tried to digitally transform their business but ultimately foundered. According to McKinsey, 83% percent of transformation projects fail. Many underwent campaigns with huge investments with the hope of transforming their business model, but instead ended up spending hundreds of thousands of dollars on changing a bunch of systems.
Digital transformation failure has been caused by two things. First, many companies have treated it like a one-shot project with a beginning and end—believing that once completed, the business would be positioned for success in tomorrow’s hyper-competitive landscape. But consumer demands are constantly evolving, and digital transformation must be approached as a journey with no end—an iterative process that evolves over time.
Second, many companies equate digital transformation to a simple process change, such as digitizing a piece of the business. In doing this, companies are likely missing four key elements to their digital transformation projects.
- Customer experience: Digital transformation begins with how you engage with your customer. During COVID-19, this has never been a more important factor. Not only has the use of digital channels increased, but the ability to leverage digital and traditional channels to meet ever-evolving, fluid customer needs is just as important. This brings about a need for a partner with a solid experiences practice that can help a company analyze its CX and ensure their frontend is in order.
- Backend operations: An effective frontend is only as effective as its back-end, and this involves analyzing the network systems in place. It’s necessary to put in place a fully data-driven BSS and OSS with lower touch systems to address the full network stack. This includes elements such as the ability to properly manage revenue, billing systems, and further monetize the customer base and operations, as well as the ability to quickly launch new products and services.
- Partnerships: Companies face strong headwinds in terms of identifying new revenue streams and fending off competition; COVID-19 only increased these challenges. Companies have to be nimble and focused on their business portfolio, what they offer, how they offer it and how they differ from their competitors. Partnerships help with these challenges. Done right, partners can help deliver the scale and transparency needed to drive profitable growth and obtain market share. The ability to diversify products and offer complementary services through partnerships helps customers to obtain comprehensive solutions to complex problems that may require relationships with multiple sources—a key differentiator in and of itself.
- An interoperable cloud-based environment: Companies need to enter into their digital transformation effort with a cloud-first mentality. Moving network operations to the cloud brings a plethora of benefits, including reduced network costs, scalability, enhanced security, control and a competitive edge. However, an effective cloud strategy needs to properly address interoperability—especially when partners are involved—to ensure the network is working in tandem and in sync.
Many of the same business challenges pre-pandemic still exist—COVID-19 just expedited the need to address them, and as a result, created a competitive gap between companies that continually invest in innovation and those that do not. Successful companies embrace the fact that digital transformation is not a project that lasts a few years. The challenge now exists to accelerate this evolution during a crisis and avoid falling behind in today’s highly competitive landscape. Those companies that embrace the challenge and prevail will become the leaders of tomorrow.
This article originally appeared in Disruptive.Asia.