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Enterprise products, solutions & services
With a career that spans over four decades, Alex Siow is well-known as Singapore's first Chief Information Officer (CIO) in the 1990s. He is the author of Leading with IT: Lessons from Singapore's First CIO, which is written for the next generation of CIOs, Chief Technology Officers (CTOs), and other executives who work closely with technology. It offers practical tips, case studies, and personal insights that shed light on the central competencies required of CIOs.
There are many reasons why a business is set up. It could be because the founders have an innovative product or service that they feel they have to share with the world. Or maybe they want their business to be of service to the community or society. Perhaps there is simply a need to generate financial resources for economic survival. Whatever the reasons for setting a business up, the fundamental goal, however, remains the same — to generate revenue and maintain a profit.
That simple goal of making a profit is always easier said than done, because there are many factors that may affect a business' ability to make a profit. Today, a common reason cited by businesses that are failing is digital disruption — business disruption brought about by emerging technologies and emerging innovation. And the prescription for overcoming digital disruption is digital transformation.
That said, although digital disruption and digital transformation are becoming buzzwords that people are familiar with, many do not really understand what they actually mean.
When we say a business is disrupted, we mean that they are losing customers to competitors, or their customers are buying less from them. The net effect is that they are losing their market share, which translates into lower revenue and lower profits. And they are often losing market share because someone else has come up with a better product or better service, which its (now former) customers prefer. That someone has come up with a better product or better service because they have employed an emerging technology to innovate a new product or a new way of serving the customer.
To remain a leader in the marketplace, your organization must transform itself in order to meet the competition. In the face of emerging and disruptive technology, there is a need to transform your business processes and your interaction with your customers digitally. This is the essence of digital transformation — to become a digital leader.
Digital leadership begins with the strategic use of a company's digital assets to achieve business goals. The goals of business have not changed, namely to maintain or expand market share, and to maintain or increase profitability. Digital leaders explore how technology can be used to help their business become much more responsive to the needs of their customers and ever-changing business requirements.
To be a digital leader also requires an agile mindset. But we also need digital agility. This is defined as the ease with which an organization can rapidly enable, update, change, or adapt their business processes. It is a specific type of business agility that encompasses the processes, tools, and software an organization uses to perform basic business functions in order to serve its customers.
The principles of agile digital transformation are fivefold.
Transformation can only succeed if there is buy-in across the organization. Members must believe that transformation is necessary if the organization is to survive. Hence, it is vital that management communicates the vision for digital transformation throughout the organization and motivates all members of it to be involved.
It must be remembered that the motivation to transform is to achieve greater customer satisfaction through products and services. We achieve this by employing our digital assets, to remodel our business processes so that we can better engage our customers digitally. In the digital era, whoever can give the customer the best digital experience, wins.
In the process of trying to better understand our customers and their needs, we collect a lot of data about them. The privacy of customers is very important and therefore we need to ensure that all data are well protected. Should there be a breach in confidence in our ability to keep customer data secure, we can be quite sure that many of them will not want to continue doing business with us.
But the data that we collect from our customers will be absolutely useless if we cannot derive insights from them. And visualization tools help us to make sense of the vast amount of data we have collected: a visual dashboard assists management, supporting rapid and accurate decision-making concerning the business.
Finally, agility is very important in this era of Volatility, Uncertainty, Complexity, and Ambiguity (VUCA). Change not only needs to happen, it must also happen fast, because the business, economic, and technological environments are all rapidly changing. An agile mindset, combined with digital leadership, is a powerful weapon against the competition in business.
Let us turn our attention to the customer. Today, customers are spoiled for choice. There are many companies competing for the same set of customers. The availability of emerging technologies has allowed a vast number of innovative products and services to be offered to the customer. Often, these products are cheaper and better in quality than what traditional incumbent companies have to offer. Plus, the newer players in the market are mostly fully digitalized and they can give customers the digital experience that they now expect.
In order to protect their market share, incumbent companies need to practice customer centricity. Customer centricity means putting the customer first and at the center of everything you do. Why is it important? If customers are not happy, they won't stay with your brand. And if you lose your customers, you lose your revenue — you no longer have a business.
Customer centricity can only happen if we are agile, responsive, and have the processes and tools to understand the customer and give them the best experience and satisfaction, to keep them coming back for more. That can only happen if we are an agile digital leader.
Let's now return to business disruption. Many people believe that business disruption has only happened in recent years because of emerging technologies. Actually, disruption has occurred ever since the invention of the steam engine brought about the first industrial revolution. Mankind has always come up with new technologies to make workers more productive and to improve the standard of living for everyone. Companies have always innovated, looking to increase their revenue and profitability. The difference today is the rapid pace of technological changes brought about by computerization and digitalization.
The key emerging technologies that are making an impact on the business world are
• Artificial Intelligence (AI)
• Machine Learning (ML) and deep learning
• Blockchain
• Cloud computing
Many of these technologies have been emerging for some time, but they have only been able to have a real impact on business and society because of the availability of a vast amount of data in all sorts of formats: structured and unstructured, textual and graphical, pictures and videos. The availability of data has made it possible to gather business intelligence and insights about customers. Companies, therefore, can only make use of these technologies if they have the right processes and tools in place. So, it all boils down to becoming digital as we emphasized earlier.
The COVID-19 pandemic has been a big game changer in the world of business. The pandemic caused many countries to impose a complete lockdown of their cities, making the movement of people impossible and many traditional businesses ground to a halt as a result, because they were unable to transact with their customers digitally.
Companies who were already conducting their business through e-commerce, in contrast, assisted by digital payment systems, faced far fewer challenges during the pandemic. In fact, some of them actually fared very well, compared to companies that were, pre-pandemic, not digitalized. Indeed, many people have said that the pandemic has proved to be the biggest catalyst for digital transformation.
Many innovations have been introduced by businesses, to help them overcome the limitations of movement imposed by governments everywhere. For example, in healthcare, tele-medicine and tele-consultation have become popular among those unable to travel to see their doctor. In education, remote teaching technologies have become almost compulsory for education establishments. In retail, online shopping, including grocery shopping, boomed. In food and beverage, too, restaurants and food outlets resorted to food deliveries. Some online food delivery companies even established cloud kitchens to compete with established food outlets.
We are not sure when the pandemic will end, when life can return to normal — or, perhaps, a new normal will emerge. Because one thing is certain: people have become used to digital experiences and a digital lifestyle. And more and more emerging technologies will only make the digital experience more exciting for consumers. Virtual Reality (VR) and immersive media technologies, for example, will give people the opportunity to experience things they are unable to experience in the physical world. Elsewhere, wearable devices and virtual gyms will help us to monitor our health around the clock.
Whatever the future will bring, the focus on customer centricity will not change. Whether people accept the new normal or harken back to the life they knew before everything changed — some, for instance, may want to continue a hybrid style of working, while others will look to return to the physical office space — they will not accept anything less than being put right at the center by all of the companies they interact with.
