A new world order
Digital transformation is now a necessity for business, with a focus on meeting customer needs
Driven by the pandemic and technological disruptions, digital transformation is now a requirement for every organisation to respond to changes in customer behaviour towards the online realm as well as new labour patterns, according to tech consulting firms.
Advanced technology now makes it easier for organisations to gear up for digital transformation, while the "individualisation" customer service concept is being underscored as the new wave of digital transformation, said the firms.
Market research firm IDC said global direct digital transformation investments are expected to tally a compound annual growth rate of 16.5% from 2022 to 2024, up from 15.5% from 2020-2023.
During 2022-2024, digital transformation investment is expected to reach US$6.3 trillion, up from $5.4 trillion during 2020-2023. It is expected to account for 55% of all ICT investment by the end of 2024.
"For the first time, we see the majority of enterprise organisations [53%] have an enterprise-wide digital transformation strategy, a 42% increase from just two years ago," said Shawn Fitzgerald, a research director for worldwide digital transformation strategies at IDC.
Hype is high for digital transformation as organisations gear up for online customer engagement while remote work is gaining ground in many businesses.
Digital transformation 2.0
Thanachart Numnonda, executive director of IMC Institute, a local research and tech training provider, said in the post-Covid world likely starting this year, digital disruption should intensify but advanced technology would make it easier for organisations to prepare for digital transformation.
"We are entering digital transformation 2.0 where we can use technology to apply a digital transformation by ourselves. Organisations are applying digital technology to their operations," said Mr Thanachart.
Cloud service providers now offer artificial intelligence (AI) technology for clients that want to develop AI-based applications.
In the digital transformation 2.0 era, three organisational perspectives will change, he said.
The first is called "distributed enterprises" in which organisations will operate and serve customers from anywhere and anytime through the use of digital technology.
The second concerns the "total experience", providing customers and employees a better experience via digital technology, said Mr Thanachart. For example, bank customers no longer need to visit banks as they can complete transactions online.
The massive amount of data processing enables bank staff to deliver services in response to the needs of each customer, he said.
The final change features new innovative digital services businesses can deliver to customers. As the development of digital tech becomes easier, several new innovations are expected to pop up, said Mr Thanachart.
A new wave of digital transformation centres on individualisation of customer service.
One scenario could see AI accelerating digital transformation as it is embedded in hardware and software to offer intelligent services, he said.
According to Mr Thanachart, the world is entering a "datafication" stage where a massive amount of data is obtained and data analysis becomes easier. "Everything-as-a-service", which utilises cloud computing, will also drive IT system development, he said.
Another movement is called the "no-code revolution", where AI can be used to develop IT systems with less reliance on coding.
As the world moves towards Web 3.0 technology, it will bring together cryptocurrencies, non-fungible tokens, augmented reality and virtual reality on digital platforms, said Mr Thanachart.
"Companies of all sizes must move towards digital transformation to survive and stay competitive in this digital world," he said.
Manoo Ordeedolchest, a software business and technology expert, said the digital transformation can be used to drive value propositions for business services from "product-centric" to "customer-centric" to foster individualised offerings, which enables customers to achieve desired goals.
Businesses can offer services in response to customer demands by taking into account their context and expectations, together with an analysis of past cause and effect by using AI technology, to answer to customers' precise needs, he said.
This can foster customer engagement, where customers can co-create services together with providers, said Mr Manoo.
The first wave of digital transformation touches on personalised services, while the second wave moves towards the individualised level with value-in-self or value-in-life aspects, he said.
Individualisation centres on ways to improve customer relationships through cooperation with service providers. Customers can gain mental or emotional value through services fine-tuned to their development, said Mr Manoo.
For example, apart from receiving personal healthcare services from hospitals, he said patients can seek suggestions from doctors on changing their eating habits and consult with them on suitable exercise programmes to control weight.
Successful self-improvement would see patients feeling proud of themselves, leading to more confidence and happiness in their ability to achieve their goals, said Mr Manoo.
Mr Hara says the right digital transformation approaches must be identified to create value for the business.
Three key approaches
ABeam Consulting Thailand, which focuses on digital transformation support, unveiled three areas that support a successful shift.
First, businesses are encouraged to establish value creation organisations and functions that utilise deep digital.
Deep digital means going beyond transformation of just digital assets and taking a holistic view of how business works, including considering varied elements such as culture, human resources, organisational and business models, as well as IT infrastructure.
Companies can improve business processes and achieve digital transformation through deep digital or advanced technology utilisation, according to ABeam.
Second, businesses must refine their future-oriented management, said the firm.
According to ABeam, businesses need to take a digital view of the world as this is more likely to result in increasing returns, while the current operating environment is more likely to offer diminishing returns or linear growth.
An exponential growth pattern emphasises market capitalisation, backcasting and scale points. Many leading companies have already begun trying out a variety of management methods to succeed in this exponential drive, said ABeam.
Scale management is an ongoing process that identifies which business events or processes can be scaled. This helps monitor performance more accurately and better prepares firms to pivot, according to ABeam.
Cloud computing is imperative for the everything-as-a-service model.
Portfolio management is another approach. This requires understanding all investment situations across all business units, said ABeam.
In practice, that might mean viewing each business unit separately to understand which perform best and worst, then readjusting strategy.
The third factor to support a digital transformation is updating roles for top and middle management to a culture of challenge.
To enable success, ABeam indicated, senior management need to adopt a future-oriented mindset, looking at long-term goals and investment needs.
Human resources systems need to be remade to a more membership-like format, as identifying existing personnel who have the thinking style and skills to succeed in the digital world is essential, said the consultancy.
It is vital senior management are reflective and identify their own areas of digital literacy that need refining, said ABeam.
Middle management require a concrete roadmap that helps them understand how the future will look and ensures team members can join the journey, according to the consultancy.
"The right digital transformation delivers value to businesses," said Ichiro Hara, managing director of ABeam Consulting Thailand.
"This is essential in today's rapidly changing business environment, where customers are re-evaluating priorities and changing their habits post-Covid. No business is immune to these changes and it's vital they prepare to make necessary changes."
A concrete roadmap is needed for the middle management so as to ensure team members will join the journey.