Learn about the digitization megatrend and how it is affecting businesses on the supply and demand sides.

Thanks to digitization, companies across industries are racing to migrate "analog" approaches to customers, products, services, and operating models to an always-on, real-time, and information rich marketplace.

Some leaders are redesigning their capabilities and operating models to take full advantage of digital technologies to keep step with the "connected" consumer and attract talent. Others are creating qualitatively new business models — and tremendous value — around disruptive digital opportunities. In doing so, these companies secure not only continued relevance, but also superior returns.

The Digitization megatrend

The Digitization megatrend

By the year 2020, an entire generation, Generation C (for “connected”), will have grown up in a primarily digital world. Computers, the Internet, mobile phones, texting, social networking — all are second nature to members of this group. And their familiarity with technology, reliance on mobile communications, and desire to remain in contact with large networks of family members, friends, and business contacts will transform how we work and how we consume.

The phenomenon of digitization is reaching an inflection point. The effects of an increasingly digitized world are now reaching into every corner of our lives because three forces are powerfully reinforcing one another:

  • Consumer pull: Consumers, and particularly Generation C, are already fully adapted to the digital environment. They naturally expect to be always connected, are willing to share personal data, and are more likely to trust referrals from their closest friends than well-known brands.
  • Technology push: Digital technology continues to expand its influence. The infrastructure backbone of the digital world is bringing affordable broadband to billions of consumers. In parallel, low-cost connected devices are being deployed in every industry, and cloud computing, and the vast information-processing machinery it requires, is developing quickly.
  • Economic benefits: The economic benefits to be captured through digitization are real. A wave of capital has poured into the new digitization technologies and companies, and the public markets reward early movers with unprecedented valuations

Digital strategy and capabilities to win in a digitized world

Every company in every industry will be dramatically affected by the digitization megatrend, and it will be the responsibility of the top teams to lead the charge by building the right capabilities for their companies to remain relevant in the digitized environment, achieve growth, and fend off competitive threats.

New technology deployments and related investments will add up to more than even the largest and wealthiest enterprises can afford. Trade-offs will be required, and the risks of making the wrong choices will be high. The basis of competition will be set by the companies that embrace and deploy digitization in the right places at the right time. To not only survive the digitization megatrend but also use it to their advantage, companies need to be clear about their digital strategy and focus on the digital capabilities they are going to build along the value chain.

  • Digital
  • Digital innovation and
    product development
  • Digital supply chain
    and operations
  • Digital marketing, sales
    and service
  • Workplace and
    enabling infrastructure

Companies will need to be clear about their digital strategy. All CEOs and their executive teams must answer four key questions:

  • How will digitization affect our current business model and positioning within our industry’s value chain?
  • How can we identify and enter business areas where value is being created, both inside and outside our industry?
  • What areas of our business model are vulnerable to disruptions from new entrants, and how can we best address them?
  • Which capabilities do we need to build to be a leader in the field?

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Digital strategy

Digitization is changing the way companies innovate and develop products and services. In order to achieve sustainable differentiation and earn a right to win in the marketplace, executives should answer these questions:

  • How must our products and services change to fulfill the needs of Generation C?
  • How can we open up our product development process and build digital/social capabilities that allow us to better listen to our customers and involve our customers in co-invention and co-creation?
  • How can we take advantage of digital technologies throughout the R&D and product development process, from digital prototyping to virtual labs and collaboration to data-driven testing and simulation to digital factories?

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Digital innovation and product development

Supply chain and operations executives are experienced in using technology to improve efficiency and control. But digitization demands a new range of questions:

  • How can we build an always-on, networked procurement capability and unlock additional sourcing benefits? Should we invest in dynamic pricing or real-time bidding?
  • What additional efficiencies can we gain from a paperless supply chain and real-time, online manufacturing control?
  • Which digital capabilities (e.g., in planning, simulation, or real-time alerts) do we need to build to manage the risks stemming from natural disasters or other unforeseeable supply chain disruptions?

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Digital supply chain and operations

The impact of digitization on marketing, sales, and service is more obvious than on other business functions. The retail, e-commerce, and call center world we know today will, however, continue to evolve rapidly. Executives need to answer three questions:

  • How can we respond to the mobile and socially empowered consumer in a way that allows us to meet customer needs while creating value for the business?
  • Which capabilities are critical to create a seamless customer experience in physical stores, in e-sales, and on service platforms across all sorts of end-user devices?
  • How can we apply real-time personalization of marketing messages and offers, real-time decision support for sales and service agents, or dynamic pricing to protect and create value?

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Digital marketing, sales and service

The next generation of workers — both white and blue collar — will demand a workplace that looks very different from what we know today. To continue to attract the best talent, executives must prepare by asking themselves:

  • How can we design and govern workplace infrastructure to allow our people not only to “bring their own devices,” but also to create a workplace that brings out the best in them?
  • How will we provide the collaboration and communication tools to bridge geographies (from daily commutes to long-distance business travel)?
  • How can we use intelligent technologies to improve workplace ergonomics to achieve greater employee satisfaction, health and safety, and productivity?

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Workplace and enabling infrastructure

The suppliers of Digitization

A Strategist’s Guide to the Internet of Things

Digitization affects not only the demand side. The supply side — the collection of industries and companies, including traditional IT service providers, telecom companies, and the hardware, software, and Internet players that are creating the technologies for this brave new world — is undergoing a parallel transformation. The market for information and communications technologies is booming. Long-standing information and communication technology (ICT) players face increased competition from any number of non-traditional players offering new services in response to ever-changing demand. What’s more, the boundaries between market segments are becoming increasingly blurry. Players both old and new face real challenges in meeting the demand for new products and services in the age of digitization, and the challenges aren’t just technological. New business models are emerging, as are new modes of innovation, both of which are roiling what used to be a relatively stable business environment for the old-line ICT service providers.

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How we help our clients

We have supported leading Fortune 500 clients in assessing the impact of the digitization trends on their end-to-end value chains, determining how their strategies need to evolve in light of the digital ecosystem, and identifying the capabilities they need in order to outperform competitors. The design of these capabilities is unique to each company and contributes to differentiating it in the market place. We finally help our clients build those digital capabilities, by working alongside them on the key processes, systems and tools, knowledge, skills and behaviors, as well as organization that enable them to gain and sustain essential advantage in an increasingly digitized world.

Digital health check

We help our clients establish a clear perspective on how their current digital capabilities compare to international industry standards. The analysis looks at all dimensions of the business: customer-facing, products/services, back-office/operations, and shared services/overhead functions. It is based on a catalog of industry-leading capabilities and proficiency-level scales so it provides a benchmark-based, outside-in, candid perspective. The health check may reveal potential gaps in a company’s competitiveness or in its responsiveness to changing customer needs, and thus helps identify priority investment areas.

Digital strategy

We help our clients establish a clear, actionable, and quantified perspective on how they should develop digital capabilities to enhance customer intimacy, innovate in products/services, and digitize their processes and relations for greater effectiveness. The recommendations are tailored to the client’s strategic intent, industry dynamic, consumer behavior changes, and technology opportunities. The digital strategy will help you identify and build the required digital capabilities for sustainable differentiation in your market. It will also provide you with a clear investment focus, which will help you reallocate funds from less essential initiatives.

Digital transformation

We help our clients identify and master their best migration path from an analog to a digital world. This may consist of focused interventions in specific functions or a more comprehensive shuffle of many company activities. Based on a clear view of your company’s digital health and your chosen way to play, we work with you to understand your goals and identify the capabilities required to achieve them. The resulting road map details the skills and behaviors, processes, systems, partnerships, operating model, and products and services that will be needed. The implementation phase includes change management support.

Digital business models and propositions

We help our clients develop new or adapt existing value propositions for the digital world. This work includes such dimensions as product/service characteristics, customer acquisition and care concepts, and communication and loyalty approaches. Based on a clear understanding of your current positioning, your customers’ changing needs, and the competitive landscape, we help you determine the right responses to your evolving ecosystem. When necessary, we identify, develop, and implement new business models enabled by digital technology and behavior.

Digital innovation management

We help our clients modify their innovation management to take advantage of new digital models. We work with you to develop digital customer insight and feedback through changes in your operating model, using new tools such as global virtual collaboration with internal and external parties and virtual prototyping. We can also design and implement new business models supported by digital technologies, economics, and behavior.

Digital supply chain

We help our clients establish an end-to-end supply chain perspective, linking demand-side activities driven by the digitized customer interface with the supply side of their business. This shift often requires developing or expanding capabilities to translate real-time market demand into operational requirements.

Digital manufacturing operations

We help our clients realize a seamless integration of enterprise resource planning, manufacturing execution, and shop floor systems. We leverage digital planning and simulation to design optimal shop floor layouts and to build efficient manufacturing operations ecosystems that provide comprehensive real-time information about the status, process, and output quality of manufacturing operations.

Digital service operations

We help our clients build world-class service operations by enhancing key digital capabilities such as state-of-the-art workflow control, innovative knowledge management, and tailored KPI reporting. We work with you to develop strengths that set you apart from the competition, including systems that provide comprehensive real-time information about operations status and process quality as well as a seamless integration of multi-channel customers.

Digital customer insights and analytics

We help our clients create value from information available throughout the enterprise by using four main tools: Data sources, incl. the creation of consumer-centric digital identifiers, the identification and qualification of data sources, the integrated mining of unstructured and structured data; Insight, incl. the analysis of data and identification of value-creating levers across the business; customer value management, incl. the definition of required processes, skills and behaviors, systems, and structures to mine data sources, identify opportunities, and execute campaigns; technology, incl. the definition of required digital data management (“big data”) capabilities within the specific industry and strategic context, and the assessment and implementation of relevant solutions.

Digital marketing

We help our clients identify and develop the marketing capabilities that are key in the digitized world. These are essential to maintain the edge in customer conversations and avert threats from new competitors. The main levers are: the development of digital propositions, with an understanding of the evolving requirements of digital consumers and clients for products/services and channels; the management of digital channels (online, social, mobile) throughout the customer life cycle, including the effective allocation of budgets across online and offline channels; the transformation of traditional marketing departments to digital, data-driven organizations; the identification of relevant technology and business model partnerships to support capability changes.

Digital commerce

We help our clients transition their sales capability to digital channels, thereby increasing both share and relevance to their customers. The digital commerce concept includes: a baseline of your current capabilities; identifying your target capabilities based on industry, customer, and strategic considerations; defining the implications for your company’s processes, especially the definition of the product and service catalog, inbound and outbound logistics and supply chain, cross-channel steering, and pricing; defining the technology requirements and creating a technology road map; identifying relevant technology and commercial ecosystem partners, and negotiations with those partners; a business case for recommended changes.

Digital workplace and infrastructure

We help our clients make their employees more effective by using digital tools and support them in evaluating their enabling infrastructure. We analyze the workflows in a client’s company, compare it with best-in-class benchmarks, and identify opportunities for increasing effectiveness and efficiency by using state-of-the-art digital tools. As a result, you get a clear recommendation for changes in processes and in the underlying office infrastructure that could help your employees increase their effectiveness and at the same time significantly reduce costs.

Digitizing shared services

We help our clients build the required capabilities to digitize their internal shared services for efficiency and effectiveness. Based on our Digital health check, we determine how your company’s HR, finance and accounting, controlling, legal, and procurement practices compare to best-in-class and best-in-industry standards. We support you in prioritizing the areas where digitizing your internal services will have the biggest impact, in establishing the road map to build the prioritized capabilities, and in implementing this improvement program.