Only 7% of companies have fully digitised organisations

28 December 2015 Consultancy.uk

While the benefits of digitalisation are increasingly clear, the road towards becoming a truly digital organisation is for many companies a difficult and long journey to embark on. Recent research by Capgemini Consulting shows that only 7% of global organisations have evolved into a truly digital organisation, with the majority (56%) of companies on the verge of starting their transformation. According to the consulting firm, to successfully transform, companies not only need to develop digital capacities, they need to be dexterous – allowing them to seize digital opportunities.

The need to digitise operations is more and more recognised by the business world, as an abundance of research pinpoint the advantages of digital technologies. According to Accenture, for instance, digital has the potential to add a combined $1.36 trillion to the GDP of the world’s top 10 economies by 2020. Whereas the benefits of digitalisation are increasingly known, many companies are struggling to find the appropriate way to transform their organisation. As a result of which, according to Arthur D. Little, 80% of firms are facing lagging digital transformation maturity. To weigh in on the question ‘how to transform’ into a digital organisation, Capgemini Consulting* recently released its ‘Organising for Digital: Why Digital Dexterity Matter’ report.

Digital organisations outperform their peers

The firm’s research, based on a survey of 274 industry executives from 135 companies across 28 countries, reaffirms other research as it shows that truly digital organisations – those that have redesigned their organisations to adapt to digital while investing significantly in technology – outperform their peers in a number of on key performance indicators. Digitalised companies perform particularly well when it comes to customer satisfaction (90% vs. 41% for all firms) and profitability (90% vs. 46%).

According to the consulting firm, in order to become a digital organisation, companies not only need digital capabilities, which allow them to improve the customer experience, boost employee engagement and enhance internal operations; they need to be nimble and flexible – dexterous – to be able to self-organise to deliver new value from digital technologies. “Digital dexterity allows organisations to seize opportunities – and respond to disruptions and changes – much more quickly than their traditional competitors,” the researchers explain.

Digital dexterity key advantage over competition

Firms with a high level of digital dexterity experience more ease in establishing sought-after partnerships than their competition, 80% vs. 17%. In addition, they are more responsive to customer needs (73% vs. 10%), better at finding talent (73% vs. 13%) and better at self-organising at speed (40% vs. 8%).

Transformation journey
Although the benefits of digital dexterity are substantiated by Capgemini’s research, the firm notes that very few organisations can be called a dexterous digital organisation. The firm has identified the four stages of the journey towards becoming a digital organisation, and finds that only 7% of the surveyed companies have made the full transition to this level of sophistication. The vast majority (56%) of companies are still in the ‘initiating’ phase and are mobilised to start their transition. According to the research, these companies are investing in digital expertise and initiate partnerships to leverage digital opportunities and develop digital capabilities. A small group (16%) of companies are stalling their transition, while 21% are in the ‘engaging’ phase and are well underway in transforming their organisation.

Journey towards digital transformation

According to Capgemini Consulting, any organisation has the potential to become a true digital leader, but it will require leadership, investment and persistence. In the report, the firm identifies four dimensions that are crucial to succesfully complete the digital transformation:

  • Digital-first mindset: the need to seek and prioritise digital solutions first and foremost;
  • Digitised practices: the need to digitise operations and encourage collaborative ways of working and learning;
  • Empowered talent: the needs to raise the digital IQ of the organisation by developing key digital skills and increasing employee engagement;
  • Data access & collaboration tools: the need to acces data and collaboration tools to drive innovation and to introduce these tools across the organisation.

4 key dimensions that digital organisations

Didier Bonnet, Senior Vice-President for Digital Transformation at ‎Capgemini Consulting, and one of the co-authors of 'Leading Digital', explains that the road towards full digitalisation might be long, but needed to benefit from digital technologies. “During electrification, productivity surged only after firms that had radically redesigned how they organised – from the physical factory layout to the introduction of the assembly line and greater job specialisation. This was a radical shift that did not happen overnight. It took some 20-30 years to evolve. Our conviction is that something very similar will happen with digital transformation. It will require major surgery to evolve our traditional industrial organisational models into digital ones. But we have no choice if we want to fully benefit from this digital revolution.”

* The research was conducted in collaboration with the MIT Centre for Digital Business.

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”