Digital for many, refers to technology encompassing SMAC (Social Mobile Analytics Cloud) or IoT (Internet of Things), while for others it may refer to a new strategy or even setting up of an adjunct IT or online marketing department. While none of these definitions are incorrect per se, these initiatives on digital transformation could lead to a rather piecemeal approach, thereby losing the intended ability to generate significant and sustainable ROTI (Return on Technology Investment) for a company. While you are reading this article, the transient borders of the digital world are getting pushed at a rapid pace.
Top strategy consulting firms sometimes define digital as an entirely new way of doing things. And for an enterprise ‘things’ should translate into future value business. It also means creating and delivering customer value, at new business frontiers by changing the way business was done earlier – for example digitizing the entire supply chain right from factory to POS by using RFID tags and having all actionable analytics in place. Though the digital industry is in a rapid evolution phase, how can you be sure that an investment does not turn out bad? Let us look at another angle more popularly known as PPT – People, Process and Technology – all to be finallytransformed into digital bits and bytes to drive digital businesses. But does a digital engagement apply to all your customers? The answer as you have probably guessed is No. What can be a litmus test for this, when you go for a customer meeting and start talking about your digital solutions or a capability? One thing you can always consider is whether it makes long-term business sense for your customer, even when they could be keen to complete their KRA by getting into digital/social/analytics/cloud/info sec. You can ask yourself three basic questions:
1. Can your customer address the needs of their customers at lower costs by going digital?
2. How will customer service be aligned in this case?
3. Does your customer have a potentially larger base to address digitally? It does not need to be necessarily an e-commerce or travel company; it could be insurance or a banking firm as well.
When you have decided it makes long-term sense for your customer by going digital, you may note that the notion of digital engagements often gets confused with an inexpensive push channel for marketing engagements. The two primary conditions of going digital should be long term and sustainable business benefits. Let us refer to a recent research conducted by CMO Council in APAC region, which shows the top challenges to digital execution below:
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While you cannot handle all of the problems, a few of them can be. Quite surprisingly, 39% of the marketers in APAC region identified making a business case to justify their digital spend. This means not many marketers are sure that it does help them to get digital. This takes us somewhat back to our initial topic that even if digital confidence grows, how do we ensure that the value or ROTI (Return on Technology Investment) is well understood by our chosen customer.
However, there is no right or wrong approach for this, but developing a business case for a customer would be a logical step for both you and your customer. It is incremental and cyclic, meaning that we are approaching our customers’ case in a process oriented and logical way. So what do you need for a business case? For a business case, it could be in terms of a multi-stepped process starting with:
1. Key Business Objectives – It includes studying and summarizing the business strategies like Customer Acquisition, Customer Development, Cost Optimization and finally Automation
2. Opportunities and Challenges – It includes a market research of your customers’ business and benchmarking their revenues and costs against Industry Leaders. Challenges for example can specify regulations or supply constraints. Opportunities are the market gaps, which could be addressed by your customer. For example, Opportunity for an online travel portal could be New Product Launch, or differentiating facilities from the rest.
3. Best Practices & KPIs – The best practices for the industry has to be identified through use cases, case studies and research papers. KPIs should be again benchmarked against Industry leaders
4. ROTI or Return on Technology Investment – The purpose of any business is to ensure profitability. And profitability comes by increasing revenue or by reducing costs. In AGC we believe that business benefits can be quantified in terms Payback Period (or ROTI), NPV, IRR and Net Savings from a Solution Implementation over the Technology Timeline.
A logical approach like this would not only benefit you, but also your customer by realizing the business benefits by adopting digital. Finally, in my discussions I have seen that CxO buy-ins for any new business strategy is more important than ever and they agree to propositions that make long-term business sense. Again, while there is no right or wrong way, qualifying digital business benefits for a relevant customer, does help in your journey to become a trusted technology advisor.