Digital Transformation refers to the evolution of an organisation’s processes and models as it utilises the latest digital technologies and innovations. There is never an ultimate end to Digital Transformation – rather, it is an ongoing journey that unfolds alongside the rapidly changing nature of technology in all its guises.
It is no secret that in recent times the likes of social media, the cloud and mobile have disrupted the globalised marketplace like never before. The challenge that the modern enterprise faces (and will always face as technologies and consumer expectations continue to evolve) is how to keep pace.
This is the ongoing problem that Digital Transformation solves: keeping an organisation at the cutting edge of digital solutions using the cloud, social, marketing, mobile, analytics – even the products and services that it sells – in order that it remains competitive in the marketplace.
How Today’s Businesses Are Succeeding with Digital Transformation
The secret behind Digital Transformation success lies with the business’s ability to remain agile in all its processes in order to deliver on consumer expectations quickly. Established companies with legacy business models need Digital Transformation more than ever..
Innovative startups are sprouting up in all industries, digitally disrupting how things are “supposed” to be done. We’ve now got Uber that has transformed the taxi industry, Airbnb that has reinvented travel and accommodation, and the Pearce brothers behind Purple – a company that sells mattresses – not only using the latest technology to improve their product, but introducing a direct-to-consumer business model. Who would have thought that buying mattresses online could work? Surely you need to go to a store to test it out? But Purple runs off a generous returns model – customers are able to purchase a mattress and try it for 100 nights. If they don’t like it, a refund is issued and the mattress picked up.
When new companies start shaking up industries like this, their existing competitors have to wake up and adapt, for big shifts in consumer expectations are coming.
Satisfying the Internet-Driven Consumer of Today
Of course, there are established companies that are succeeding with Digital Transformation. One example that is never out of the limelight in this regard is the Spanish clothing and accessories retailer Zara. Headed by founder Amancio Ortego (the richest man in Europe and the wealthiest retailer in the world) Zara has an inspiring business model that continuously wins over new customers across a huge demographic on every continent.
Here is the scenario: Zara identifies a new fashion trend – often based on what a particular celebrity has been wearing on the weekend, or the latest catwalk offerings – designs a new line, gets it manufactured and offers it in both physical and online stores, marketed, and selling like hot cakes in a matter of days.
Traditionally, there have been two primary seasons for the fashion industry – summer and winter – with two ranges produced a year to cater for each. But Zara’s model blasts that out of the water, and, by doing so, creates a sense of urgency within the consumer that if they don’t buy now, they may not get the chance to buy at all.
Zara creates 500 or more new short-lived, fast fashion designs like this each month, appealing to the “I want what he/she’s wearing now” internet-driven consumer of today. And it is able to do so because it embraces the latest digital technologies that streamline everything from its analysis of the market, to its manufacturing, its supply chain, its marketing strategies and sales points. This is a business at the very peak of ongoing Digital Transformation, and one that reported an 8% increase in net profits in the first six months of 2016 to €1.26bn (£1bn), beating analysts’ expectations, with total net sales over the period increasing by 11% to €10.47bn.
They Don’t All Get It Right
We can compare Zara’s ongoing success with rival Bonmarché’s recent difficulties. Just this month, Bonmarché issued a profit warning after “reporting ‘extremely poor’ sales of its autumn range in September because of the recent hot weather.”
Shares in the company have dropped 22% since the firm announced its full year profit before tax will most likely fall between £5 million and £7 million in 2016.
The firm is reported as saying in an article for the BBC:
“The hot September has prevented us from gaining a representative measure of the strength of the autumn ranges and our perception is that the clothing market generally has become more challenging,”
The spokesperson is right – the clothing market, just like all markets, is becoming more challenging. Not because of the unreliable British weather, but because the likes of Zara are innovating the market and bringing new fashion lines to stores as the wind changes.
So How Can My Business Unlock The Value of Digital Transformation?
In order to keep pace with ongoing industry disruptions, intelligent investment in Digital Transformation today is the only way to maintain healthy growth and healthy profits in the future.
In our whitepaper – DevOps: Unlocking the Value from Digital Transformation – we describe the full details of the transformative journey that companies and organisations across a wide range of industries will need to take to stay competitive in today’s evolving markets.
In our opinion, DevOps, is the key to success of any Digital Transformation initiative, for the two are intrinsically linked when it comes to taking transformative measures at scale.
Not 100% clear on what DevOps means and does? That’s okay – look out for next week’s post where we delve into the DevOps concept and consider where it fits into Digital Transformation. Look forward to catching you there.