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Seventy four percent of companies are going through some form of digital transformation. With percentages that high, there must be value buried somewhere in these initiatives, right? From my perspective, having worked as a strategic advisor and Global CIO for over 20 years, the value comes to those pursuing transformation.

Successful transformations generate new interactions with customers and support your employees with new digital capabilities. Even if the upside potential does not materialize, digital transformation is now a new cost of doing business. We reached a point where you will lose your customers if the convenience of a digital channel is not present. Without digital capabilities to support your employees’ experience, it has become hard to recruit and retain your teams. Seventy four percent of companies are undergoing transformation initiatives because they hope there is an upside, but know for certain there is downside if they do not pursue transformation.  

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Here are a couple of cases I’ve advised on that demonstrate this point, along with recommendations I’ve provided to help my clients move the needle on their business transformation.

IoT for equipment manufacturing: ROI analysis

I am working with an equipment manufacturer that is now opening a digital channel so that the internet of things (IoT) data can flow from the equipment, up to the cloud, and then down to mobile devices. This IoT data will now enable the owners of the equipment to monitor energy usage, equipment performance, and anticipate outages. It will also now be able to directly contact the repair company when a variance in any metric on the equipment occurs. This will prevent outages and likely increase the life expectancy of the unit.  

You would think that it is obvious that the equipment manufacturer would profit from this capability. However, it is unclear whether their customers will pay an incremental service fee for this new capability or if it will simply be expected to have these digital channels available. Honestly, they are hopeful that they will be able to charge for the service or, at a minimum, cover the costs of providing the service and increase sales. But in reality, once all the manufacturers have this ability, the competitive advantage will be lost, and it will be tough to charge more. In fact, for manufacturers that do not have the capability, they will likely lose most or all their customers.

Digital channels for sales employees

Another client is opening a digital channel to their sales team that is distributed across the U.S. They have thousands of sales representatives that manage their customer base, and the sales representatives are expected to maintain and grow existing customers and also find new customers for their product set. The product they sell is fairly complex, and for about half the sales team there is fairly high turnover.

The idea is to open a digital channel that will help facilitate the sales process. The digital capability will be able to suggest how to manage existing customers, how often they should be talking to these customers, and what potential products could be offered to each customer. It will also suggest new contacts in their geographic areas that could be potential future customers. In theory, they believe that this will help to grow their sales, however, in reality it has not yet been proven; the channel has only been open for about six months, so the upside is still hard to measure, but one could argue that even if it does not grow sales, without the digital capability to support their sales team, would it become even more difficult to hire and retain new talent. I would suggest that new sales representatives consider this a foundational capability, and that they would not consider taking the role without this type of tool in place.  

3 key insights to take with you

Time will tell which companies will end up with sales increases from their channels or if it does just end up being a new cost of doing business that they somehow have to roll into the cost of the product or service they are selling. My guess is that it will be a bit of both.

For those in the midst of transformation, my advice is to keep going, but to try to build your new channels in the most cost effective and efficient manners. I have three areas of advice:

  1. Make sure you have a clear view of what channel and capability will result in the largest impact to your company. Also, don’t try to do everything in the first release – what is the minimum viable product (MVP) that will result in value?
  2. You have to get your architecture right. Adding new front-end channels that integrate to your back-end systems is not trivial. You will need a solid integration platform like MuleSoft’s Anypoint Platform that will allow you to leverage your legacy applications while you create the new digital capabilities for your customers or your teams.
  3. Have a clear view of the future of the new digital capabilities. MVP is just your first release, and you will need to have clearly defined roadmaps of how you will expand the capabilities in your first channel and how you will add subsequent channels. As you grow, the architecture may need to evolve, but ensure that your integration platform remains constant so that you can keep leveraging the productivity improvements you get from reusing the APIs you create.

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This blog was written by Frank Liberio, Founder and Managing Principal of Strategy2Execution Advisory LLC.