Which sectors could thrive from digital transformation?

Historically, some sectors have moved towards a digital transformation quickly, while others have taken longer to progress. Here, we will look at how living in the per-digitalised age can be dangerous, as well as issues surrounding companies falling behind their competitors, and how and why traditional processes can be changed.

Digital transformation happens when companies shift away from traditional methods and introduce technology as a fundamental part of their strategy. This can take place through either digital technology being integrated into an organization or through a cultural shift within the business.

 There are numerous ways for digital transformation to be introduced, and there is a plethora of companies that showcase how to do this excellently. During the Covid outbreak in 2020, coffee chain Starbucks successfully performed a digital transformation, making changes throughout the organization. They revamped their loyalty scheme, resulting in the Starbucks Rewards app, and utilized technology to allow remote ordering and specific, pick-up-only outlets. This was something at the time that allowed the company to keep operating at a time when traditional methods would have resulted in many, if not all, outlets remaining closed.

Similarly, UK competitor Costa Coffee has overseen a change towards a more digital approach, again centered around a rewards scheme and app for customers to use. Their Costa Coffee Club Loyalty Program was revamped and allowed for mobile ordering and pick up, shifting away from traditional ways of ordering.

The app collects customer data and allows Costa to see what their customers are buying and what their preferences are, and means they can send rewards and targeted offers to the customer base, helping with customer loyalty in a highly competitive market.

A statement from Costa revealed that digital transformation was essential for them, as CIO Phil Scully stated that it "became clear that our legacy infrastructure could not provide the required connectivity, flexibility and responsiveness".

The dangers of falling behind

For all the successful digital transformations out there, there are naturally some companies lagging behind. Unfortunately, this can be a dangerous place to be for an organization. There are varying reasons why organizations have struggled to adopt a digital approach, and there are historic examples of businesses that suffered as they failed to innovate.

Video rental chain Blockbuster, once boasting 9,000 stores globally and revenue of $5.9 billion in 2004, ceased trading in 2010. Many contributing factors resulted in this but a key one was the failure of the company to transform digitally. Blockbuster simply did not see the need to introduce a digital side to the company -- until it was far, far too late. Famously, the company turned down the chance to buy now global giant Netflix in 2000 -- for $50 million. The rest, well, is history.

Who could benefit from the transformation?

There are a number of sectors that could benefit from a digital transformation. The finance sector, for example, continues to see the benefits of a move to a digital transformation. AI and machine learning has enabled banks to detect theft and fraudulent activities by using complex prediction patterns. This benefits both companies in the industry and customers and the positives for the finance sector do not stop there.

Digital innovations are allowing organizations to become disruptors, and businesses are able to see more collaboration for the benefit of the wider company. For example, the use of digital storage rather than physical copies has boosted security as well as practicality with important information.

It is of course not just the finance industry that has benefited from the transformation, and it is difficult to think of an industry that, where it is carried out effectively, organizations would not benefit from it. We have seen the dangers of not adapting to the times and keeping up with competitors, as shown in the demise of Blockbuster, and this is as valid as ever.

The manufacturing industry has seen benefits, and not just in terms of machinery and AI-enabling machinery being streamlined during times of need like the COVID-19 crisis. Benefits stretch to the development of 3D printing, the automation of work, and the use of cloud computing solutions -- all of which streamline processes and offer benefits across the board.

Overall

When handled and implemented correctly, digital transformation is something that can be invaluable to both a business and an overall sector. Falling behind competitors can ultimately be catastrophic for a business, and it is vital that a company can react to changes in the industry and disrupt when necessary -- as a digital transformation can allow them to do. The benefits of the transformation can pass on to customers too, with shorter lead times for products and streamlined processes being in place, and even simple things like enhanced loyalty programs and rewards.

Ultimately, the key to handling the transformation correctly is accepting that there will be initial outlays and costs, but the initial financial hit will be a lot less damaging than the decision not to make the leap forward.

Image credit: Alfa-Photo.yandex.ru/depositphotos.com

Barry O’Donnell is Chief Technology Officer at TSG.