An international mining company once ran 30 different applications throughout its business before eventually using the cloud to bring the applications together. By doing so, the company created a "single pane of glass," changing how it functioned on the back end, according to Accenture.
The organization then added machine learning and artificial intelligence into the mix, and gained insight into which areas of the company were working well, where bottlenecks occurred, and how it could streamline and improve different types of services while reducing costs.
That, in a nutshell, is digital transformation and the drivers behind it. Today, evolving technologies are challenging companies to reassess how they create value for customers and transform the way they work.
Digital transformation gives companies the chance to better serve current customers, acquire new ones, deliver innovative products and services and run smarter, more efficient businesses than ever before, according to Steve Elliott, CEO of AgileCraft.
It is poised to become a huge market, and quickly. International Data Corporation (IDC) recently predicted worldwide spending on digital transformation technologies is expected to reach $1.2 trillion in 2017, an 18% increase over 2016 spending. By 2020, IDC says digital transformation spending could reach $2 trillion.
But digital transformation is not an easy undertaking. Recent research from The Hackett Group found a wide confidence gap exists between the high expectations for digital transformation’s business impact and the low perception of the business’s capability to execute on a transformation strategy.
While 80% of business leaders agree digital transformation will fundamentally change their company’s operating model, few business leaders understand how to begin digitally transforming. Less than 40% of leaders have a strategy or competencies needed to execute that transformation, according to Hackett.
Challenges of going digital
For most businesses, harnessing and mastering "digital" is not an incremental undertaking. It requires both an upgrade in strategy and a significant investments in people, processes and technology.
"Few companies, outside of the obvious, are truly awesome at all the technology behind a digital transformation: the cloud, mobile, Big Data, analytics and security, for example," said Elliott.
In response, consulting companies are rushing to help customers digitally transform, creating new revenue streams along the way.
For example, Deloitte plans to launch a new practice Amazon Web Services-dedicated cloud practice to help businesses change the way they use business applications in the enterprise. And Accenture is working to open 10 new "innovation hubs" around the U.S. by 2020 to help serve clients in digital, cloud and security-related efforts.
Even companies like Hewlett Packard Enterprise (HPE) are getting in on the action. The company recently launched a new technology services group focused on helping companies fast-track digital transformation efforts through advisory and transformation, professional and operational offerings.
It’s no surprise consulting giants and other companies are shifting to address customer transformation needs. After all, taking on large, complex processes is a sweet spot for many firms.
"Leveraging technology to improve clients’ businesses is what firms like Deloitte, Accenture and PwC have always done," said Elliott. "Enabling enterprise agility through digital transformation represents for them one of the most exciting opportunities to deliver measurable, impactful value to their customers … ever."
Doing the dirty work
Businesses often turn to professional services firms for help on undertakings that are difficult to do on their own, and digital transformation fits that bill.
At Accenture’s Innovation Center in Houston, clients and potential clients can model different ways to reimagine business models or capabilities.
"Businesses come because they may be under certain stress, or they need to drive greater efficiencies and they are trying to look at how they can automate large swathes of their business to drive their cost points down," said Brian Richards, managing director and Houston innovation lead for Accenture.
"Others want to change how they interact with customers or consumers," Richards said. "They want to look at how they develop more personal relationships with them through new channels and things of that nature."
At Accenture, the idea is to co-innovate with clients rather than just deliver solutions to them. Once the customer and Accenture determine the direction they want to go, Accenture helps the company develop and scale the solution.
Deloitte, meanwhile, is focused on collaborating with Amazon Web Services (AWS) and SAP to help clients redefine their business models, according to Jagadish Bandla, principal, Deloitte Consulting LLP, and North America SAP Analytics Leader.
Working with AWS "allows us to take a more holistic approach to our clients’ business model and infrastructure transformation that doesn’t just center around the technology, but the strategic planning and execution needed across compliance, governance, data and analytics, and C-suite issues to be successful," Bandla said.
While bringing in experts can create a more fluid adoption of new technology, the downside is consulting services don’t come cheap. Even though companies could go it alone, a solo approach can be risky.
"A better approach, at least in my opinion, is to partner with firms who are specialists and can deliver immediate and mid-term impact," said Elliott. "Over time, companies can become self-sustaining, as they absorb the knowledge in practice."