Digital transformation is a business priority for most organisations in most sectors, especially the larger, more traditional companies, etched into history — just like Nestle, which has already begun it’s innovation crusade with the deployment of Workplace by Facebook, amongst other initiatives.
Digital transformation is Information Age’s topic for January
The journey is necessary, but also daunting. Even companies that have already started their transformation into the digital promised land need help. That is why a market has emerged for digital transformation consulting. These are companies that specialise in supporting businesses on their digital transformation mission.
There are three main types of companies who are playing.
“It’s like a value chain and each type is marking out of a certain space,” says Nitin Seth, CEO, Incedo (who recently contributed to our headline article for the month: What is digital transformation in business: Everything you need to know).
The three types
There are strategy consulting firms like McKinsey and BCG who are helping organisation’s with the strategy, helping clients understand what digital transformation means for their business and what strategy can guide that.
Then, there are technology IT services firms such as Infosys, Cognizant, Capgemini and Accenture, who help organisations look at IT, or technology from an execution level: They will help clients understand how once the strategy has been outlined, they can execute it?
Finally, product and solution providers have emerged. These organisations provide the infrastructure and underlying technologies to support the digital transformation strategy and execution. So, there are companies who are providing automation technology, such as UiPath (whose exponential growth we covered in this recent article: RPA market with UiPath in the cockpit is taking off like a rocket) or Automation Anywhere. There are also companies that provide cloud infrastructure, such as AWS, Microsoft Azure and Google Cloud — the three public cloud giants are taking part in the Battle of the cloud platforms. As we said last year, AWS dominates, but disruption is on the horizon.
Strategy consulting firms, IT execution consulting firms and technology providers: these are the three main types of companies who are operating in the digital transformation consulting space.
In digital transformation consulting, there are also companies that operate across ‘type’: over strategy and execution, execution and provider, provider and strategy etcetera. Incedo and Wipro Digital, for example, are organisations that tend to operate at various intersections across the strategy and execution boxes.
Of course, the companies named above represent only a handful of those in the market. Click here to see the best consulting firms for IT strategy and digital transformation.
Digital transformation consulting: Overcoming the digital transformation challenge
The biggest challenge for large enterprises, “in my experience,” says Seth, “is organisation.”
“The number one challenge I see is the problem of who owns digital transformation and who will drive it. And I think that is a very big reason for failure of execution,” he continues.
The other big challenge centres around a failure of vision. When embracing digital, a new business model often results. This can mean cannibalisation of existing business models (think Hannibal Lecter, but less menacing).
See also: Cannibalise or be eaten, how to become a disruptor – How can companies avoid being disrupted: they need to welcome and anticipate change, they must learn to become a disruptor
“For example, if you are a bank or a telecom company, the majority of your revenues currently come from your branch network,” explains Seth. “But, once you start setting up a digital channel, there is a risk that as you push on the digital channel, you cannibalise the revenues from your branch network.”
This risk of destroying (or consuming…gulp) existing business models is a very big fear that large companies have — these business models are what these organisations are based on, in some cases for a hundred plus years. Digital natives are the new breed of start-ups, and they don’t have any such limitations — therefore, they are able to attack any market segment very, very directly.
So, take note: two main challenges that digital transformation consultants can help you overcome;
• who owns and drives digital transformation,
• and the fear of cannibalising (I am feeling eaten up by these cannibalising references – Ed) existing business models that embody an organisation’s history.
There are a number of other challenges as well.
One of the key ones surrounds data — the secret source of how businesses succeed in really offering something unique and personalised to the consumer. Most organisations are struggling to deal with data, because the volume, velocity and variety (any other adjectives) of data has exploded.
“The data organisation’s are dealing with is probably a million times more in scale compared to what you were dealing with earlier. But your processes, your infrastructure for dealing with that data has still not caught up,” says Seth.
In short, organisations are receiving more data, but they are not able to make sense out of it. Instead of data becoming an asset, it’s becoming a challenge.
Velocity of change represents another dilemma.
“Digital is moving so quickly that in the past your technology release cycle may have extended for six months, but with digital, you can introduce a new feature every day. And, competitive start-us are probably doing that. Large companies find it very difficult to move at that velocity,” says Seth.