COMPANIES are realising that digital technologies have become major tools in connecting with customers. Today's digital natives - that is, those born after 1980 into a world of digital technologies - want a physical experience intertwined with a digital one.
A typical example of this merger between the physical world and a digital one would be in the purchase of a movie ticket online and then getting admittance into the hall by displaying the virtual e-ticket on a mobile phone. Watching the movie in a cinema is a physical experience, while buying the ticket and displaying it at the counter is a digital one.
According to Satya Ramaswamy of Indian software services giant Tata Consultancy Services Ltd (TCS), this merging of the two experiences is one of the major findings of a global trend report prepared by the company last year.
The study, titled The road to reimagination: The state and high stakes of digital initiatives, notes that 70 per cent of global corporations surveyed see making major investments in digital initiatives as crucial to their business success in this decade, with enterprises across industries and regions already spending an average of US$113 million last year.
The report further shows that 80 per cent of survey participants already have plans in place for digital "re-imagination", that is changing their core business models, products and services, business processes and workplaces to cater to the shift to the digital consumer economy.
"In fact, 95 per cent of the companies we surveyed said that digital is a critical way to connect with customers. Whether it's connecting with customers via mobile, social channels and transformed Web channels or doing better customer segmentation using big data tools, digital technologies are having a big impact. This is all about re-imagining customer segments and channels," notes Mr Ramaswamy, who is TCS's vice-president and global head of digital enterprise unit.
The question to ask is, says the TCS official, if the adoption of digital technologies is so widespread, where does the differentiation come from?
Answering his own question, he adds: "We found that not all digital initiatives are the same. About 8 per cent of companies seem to have figured out the way to fundamentally change their businesses and even their industries using what we call the digital five forces - a process we call digital re-imagination."
The five forces or technology trends are: cloud, mobility, big data, social media and artificial intelligence and robotics. Companies are combining these five with each other to get differential competitive advantages, according to Mr Ramaswamy.
Companies are applying these technologies in six areas of the enterprise: business models, products and services, customer segments, channels, business processes and workplaces. "Data transparency enabled by a combination of pervasive computing devices and big data on the cloud can change capex (capital expense)-based business models in heavy machinery industries into opex (operating expense)-based models," Mr Ramaswamy observes.
He adds that crowd-sourced product design enabled by listening to the voice of millions of consumers from social media using big data is a breakthrough, compared to old-fashioned focus group-based product design. This is because for the first time in history, it's possible to tap into consumer-to-consumer communications on social media without the observer effect problem which is common in focus groups.
The TCS official says that as many as 79 per cent of Asia-Pacific companies in the survey expect to connect with their customers via mobile apps. This is the largest proportion of any region in the world.
"Mobile provides the physical context of the user by leveraging the physical sensors on the device such as GPS, camera, accelerometer, compass, and even altimeter. This physical context then allows companies to re-imagine customer service into contextual interactions.
"For example, we have done engagements for customers where we have used bluetooth low energy (BLE) beacon technology to identify the location of customers within large retail stores and serve them with promotions related to the particular area within the store where they are shopping, instead of bombarding them with irrelevant promotions from around the store."
Mr Ramaswamy adds that his company helps enterprises re-imagine their business models in four ways.
"First is the business consulting services we provide by using a combination of rich domain knowledge of specific industries, along with a knowledge of what the digital five forces can enable, to help customers re-imagine their business models by leveraging a number of patterns we have seen in engagements."
"For example, by leveraging data transparency provided by sensors and big data systems we help customers to move from a capex model to an opex model," he says. The services that TCS provides to customers help them to come up with a strategy to revamp their existing infrastructure and architecture so that the vision of digital re-imagination can be realised.
"We also help in change management consulting services that is necessary to manage such a massive change. Finally, these are fairly complex initiatives that, at the same time, have to be executed in an agile manner in bite-sized chunks with demonstrable results at every stage. We provide a comprehensive set of software engineering services and related software products to help our customers in their reimagination journey."
He cautions: "The digital journey is not always without pitfalls and challenges. One of the key things that companies need to be wary of is getting carried away by a fascination with the technologies, instead of focusing directly on the business benefits. Another is fragmenting the technology platforms, instead of adopting company-wide technology strategies. One more is trying to push through adoption of digital technologies without simplifying legacy infrastructure and business processes."
He observes that modern digital technologies are served well by modern IT infrastructure and simple business processes that are redesigned to take advantage of what the digital technologies have to offer. It would serve companies well to stay on the alert for the above pitfalls and challenges when they embark on their digital journeys, Mr Ramaswamy adds.