Digital transformation: a future-proof solution in turbulent times
We are currently in the fourth industrial revolution, with digitalization at the heart of this period of rapid change. Digitalization is not a 'thing', but a description of the world today. Exponential technological progress has allowed the lines between the digital and the physical to merge, giving digital disrupters a free rein to experiment and create value. The impact of COVID-19 and the emergence of several recent business trends show that digitalization is no longer a superfluous luxury.
This is the era of the constantly evaluating customer. Achieving continuity is therefore primarily about both external and internal customer needs. Companies therefore need to establish a good digital and physical customer experience if they want to survive in these turbulent times. For digitalization to have impact, it’s best to put the consumer at the center of the transformation process. Daring to experiment with data and technology plays an important role in this, providing your organization with important insights. KPMG's Connected Enterprise methodology places the customer at the heart of business transformation with an integrated approach that can help you to align your entire organization as you guide it through the current period of change.
Digital transformation is a concept that, according to Wim Ilsbroux, Partner - Strategy at KPMG, is still too often misinterpreted. "It’s wrong to reduce digital transformation to technological innovation only. There is often a strategic problem at the basis of any digital transformation and it’s usually about the future security of a company. Companies ask themselves how they can adapt their structure and strategy to an ever-changing environment in order to provide an adequate answer to a new reality".
Today, this new reality is mainly reflected in the fourth industrial revolution. Although this revolution has only just begun, it already presents exciting opportunities and challenges. Companies that are not ready to adapt may find it difficult to keep up and survive.
KPMG believes that companies need to look at a digital transformation from four strategic perspectives in order to safeguard their future.
First and foremost, companies need to look at what is happening in their sector and which new developments are on the horizon for their industry. The hard boundaries between sectors are blurring, particularly due to the emergence of more prolific and complex startup ecosystems. These sector disruptions are not necessarily negative and offer many opportunities.
Second is the impact of data and technology. The value of data is growing enormously; however, many companies sometimes do not know how to monetize this data.
Thirdly, compliance and regulation will become more important in the future. This means that organizations will have to comply with more and more legal requirements.
Finally, we see that customer behavior is changing drastically. The way we live, work and consume has changed with unprecedented speed. Customer behavior and decision-making have become very important determinants in directing business strategy.
"Continuous digitalization is above all an answer to these changing customer expectations. We live in a digital age and customers are adapting to it. They buy in a totally different way than they did, for example, five years ago. It is therefore essential that a company understands which products customers are interested in, which forms of interaction they prefer, and which experiences customers want to have," Ilsbroux explains.
The future of an organization stands or falls with the customer. Customers are better informed, better connected and more demanding than ever before. In order to provide customers with good service and customer experience and remain relevant as a company in today's digital age, it’s critical to put the customer, customer expectations and customer behavior at the heart of every business decision.
Öztürk Taspinar, Partner - Digital Transformation at KPMG, gives the recent COVID-19 situation as an example. "We found that organizations that had already implemented digital channels, such as e-commerce platforms, were better able to respond to the unexpected disruption compared to competitors that only had a physical channel. In addition, they have much more data at their disposal to measure and track their customers' behavior. For many companies, COVID-19 has been a clear wake-up call in that sense. Digitally mature companies are usually more profitable than their less mature peers. Digitalization is a continuous process of measuring and experimenting if you want to continue to meet customer expectations," says Taspinar.
KPMG believes that digital transformation and change that enhances an organization’s resilience can only be successful if the front-, mid- and back-end of the organization are connected: from customer service, to efficient operational processes, to HR and IT – with the customer at the center of every decision.
Based on this experience, KPMG has identified eight competencies which are outlined in a Connected Enterprise Framework. Research has shown that companies that invest in these eight competencies perform up to twice as well.
KPMG supports numerous organizations worldwide in their digital transformation. We make use of a multidisciplinary team with extensive knowledge and expertise in the field of strategy & operations, data, emerging technologies and change management. In this area, we always work closely together with an ecosystem of partners in various domains.
KPMG's Connected Enterprise model is a customer-focused, enterprise-wide approach to digital transformation with practical tools, methods and frameworks to support every step of your organization's transformation path. Our integrated approach and methodology can help you better align your entire organization to respond appropriately and positively to the 'new normal'. By investing in the eight skills described in the Connected Enterprise methodology, companies can be more responsive to customer expectations in order to create effective value and growth.
In addition to changing customer expectations, there are other reasons why continuous experimentation on new issues is desperately needed within organizations. Through co-creation, collaborations and the development of ecosystems, companies can enter into innovative partnerships to develop new products. Digitalization can enable and promote such partnerships.
"Companies are increasingly having to collaborate with other partners to create better insights, better understand their customers and make more correct decisions. This can be done, for example, by exchanging even more data with each other or by co-creating with other companies and startups. Fragmented digital infrastructure and poor connectivity between front, middle and back office functions can make it difficult for an enterprise to deliver a seamless, brand consistent customer experience and ensure growth. A 'customer first agenda' is therefore crucial as a more positive customer experience can generate higher economic value," says Taspinar.
Data is the key to a good customer experience. According to Taspinar, the second trend will be the emergence of data and insight-driven companies. A data-driven company invests in the various data strategies where there is an explicit place for people. "If you want to become a truly data-driven enterprise, you have to focus on your employees and ensure that they are given the responsibility and tools to experiment with that data," Taspinar explains.
Customer preferences are changing rapidly and customer expectations are increasing, particularly when it comes to their digital experience or your business. This includes everything from their first visit to your website, to their interactions with customer service, to order tracking, and ease of use of communication channels throughout, to name a few. If the way you communicate and interact with your customers doesn’t include a smooth digital experience, chances are you’re already falling behind your competitors. The digital customer experience is here to stay, and there’s never been a more important time for you to prioritize digital transformation for your company.
For many organizations, digital transformation starts with placing your customers at the center of your organization, simultaneously connecting them with internal employees, the partner ecosystem and the front, middle and back office.
We can help you build that truly customer-centric and digital “connected enterprise” based on our multidisciplinary and holistic perspective on customer-led enterprise transformation. Our expert team can support your organization throughout your entire transformation journey, from formulating your digital and operating model strategies to implementing the different stages and components needed to bring your business up to speed.
Leveraging our full set of Advisory and Tax & Legal capabilities to your advantage, you can count on the support of KPMG's Connected Enterprise methodology. It’s a customer-focused, enterprise-wide approach to digital transformation with practical tools, methods and frameworks to support every step of your organization’s transformation journey. Our integrated approach and methodology can help you better align your entire organization to better meet rising and changing customer expectations to create effective value and growth.