The Future is Here, Are You Ready?

//The Future is Here, Are You Ready?

The Future is Here, Are You Ready?

By | 2019-07-12T16:47:51+00:00 July 12th, 2019|

The second keynote speaker was Dr. Rittavee Matungka, Project Leader at Boston Consulting Group, on the topic of getting ready for the future. In his session, Dr. Rittavee addressed the perspective of organizations on digital transformation and their approach on preparing for its progression.

Our world has changed immensely today to the point where every single business is now driven by digital progression.          Dr. Rittavee presented five different causes of digital transformation:

1.Data Explosion,where there has been a huge explosion on the amount of data and information. Take running a coffee shop for example. Many years ago, the only data and information associated with a coffee shop may be the bills and receipts of when a purchase is made. Today however, coffee chains like Starbucks are beginning to use their applications as a mean for their customers to make purchases. The data and information involved in this case is not just on the transaction of money, but we are providing Starbucks with information such as the items that we buy from their stores, our preferences, our habits, etc. These data can be used to shape marketing strategies that are personally catered to your needs.

This explosion of data fundamentally influences businesses and organizations. Many businesses and organizations are now currently collecting an immense amount of data that currently may not be useful, but in the future, could open up doors to many new opportunities and possibilities.

2.Pervasion Digitalization,where mobile applications and digitization is becoming more prevalence in people’s lives today.

3.Enabling Technologies,where new possibilities that were once impossible are now obtainable through the uses of technologies.

4.New Consumer, Digital Natives,where the behavior of our consumers is starting to change with the new generations that are increasingly more dependent upon digital devices and mobile phones.

5.New Market Forces,the constant forces of change that keeps driving our businesses and organizations forward.

Dr. Rittavee gave an example of an industry that appears to be less relevance to digitization yet affected by digital transformation none the less – the Real Estate Industry. One of the biggest real estate developers, who once perceived themselves as working with physically tangible products like houses built out of bricks and cement as far away from digitization as possible, now realize that there are new forces that comes into play on how their customers are making purchase choices. The new generations are now more interested in smart home technologies, automated car parking systems, and even whether the property has any supporting applications. These are the forces that cannot be ignored.

There are five key technologies that are currently playing an important role in driving digital transformation.

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  1. Quantum Computing, before, the questions concerning computing tasks may be what are the sizes of servers we need to store information, what are the costs associated with those storage, but today, the more prominent question would be – what data or information do we want to store, and what are we going to do with those data. Costs are no longer the main concern, as the cost of storing data, especially with Cloud Computing coming into the picture, is much cheaper than before.
  2. Artificial Intelligence, in the past, the tasks around intelligence may be conducting reports and dashboards, but today, those two things no longer suffice due to the influx of extensive amount of data and information. Static equations could no longer be used to process those information, which is where machine learning and artificial intelligence comes into play.
  3. Blockchain, where new potentials are now possible in the realms of financial transaction, particularly in fraud detection and prevention. Financial services could not operate in a much more secured manner, at increased efficiency with minimal paper work.
  4. Internet of Things, where the more prominent examples would be connected home devices. In fact, the concept of Internet of Things has been introduced many years back.
  5. Augmented/Virtual Reality, where marketing experiences and strategies could be enhanced.

Many businesses and organizations realize they are now facing digital transformation, but the question is, what do they do, and how should they cope with the change. Dr. Rittavee then went on to present the digital journey of companies and the key questions that arose at each phase.

Digital Starter

In the first phase of their journey, digital starters often have unclear vision of where they are headed, their initiatives are isolated, and their organizations are not yet digitally enabled.

Digital Literate

The next phase is becoming a digital literate. With a clear vision or strategy, a roadmap could then be defined. This is when digital governance are now in place. At this phase, companies may wonder whether or not they are ready to move forward with digital transformation.

Digital Performer

The third phase of the digital journey is – the digital performer. At this stage, key digital capabilities are in place, where processes are mostly digitalized. The organization should now have a strong digital mindset and adopt an agile culture.

Digital Leader

The final phase of the digital journey is – becoming digital leaders. Digital leaders are essentially digital visionaries, with purely digital business, where most revenues are derived from digital business model.

For a company adopting digital transformation, the most important step is to realize what their vision is. This could be – I want to be the first player in the market – for example. Digital Transformation does not define the direction of your business. It is your business’ vision that should be driving the direction you are headed with digital transformation in the next 3 or 5 years. Then, you would be able to identify what digital tools could be used to support that vision, whether you are looking to improve your current working process, or you are looking to improve your productivity.

Many companies when embarking upon the journey of digital transformation take the technology-led approach, where they would first start with a new technology they would like to adopt. From there, they would then probe for ways they could use the technology to unlock business value. This could lead to the risks of high investment that could eventually turn out to be misalign with business priorities and KPIs.

The key to success for businesses adopting digital transformation is to take the value first approach. You should first consider what values you are trying to achieve with digital transformation. What are you trying to achieve with your business, what is your vision? Then, you should identify your core problems and hindrances, whether it is your team, your market, or your process. Once your problem has been identified, you would then progress on to select the best digital tools available to address this problem. This would allow you to have a clear digital transformation strategy with a clear forecast of your investments and returns.

The next question many companies’ executives like to ask is how do we know the current digital maturity of our companies. Dr. Rittavee presented the Digital Acceleration Index (DAI) as a mean used by BCG to measure digital maturity in companies, utilizing six building blocks and 35 DAI dimensions.

 

From each of these dimensions and building blocks, a score of 1 to 100 is assigned to determine the maturity level at each angle. Once we have determined the digital maturity level of our business, we would then need to compare our stance with that of our competitors. The DAI assessment serves as a self-assessment to help companies understand their own position relative to other players in the market. The first block assesses the business strategy and business vision. The second block conduct an assessment across the whole business value chain. The third block assess the capabilities of the companies in leveraging technologies from external parties to enable new digital growth. The bottom three blocks are the fundamental building blocks of the business. The fourth block assesses the business openness to changing the way of work or the business agility. The fifth building block assesses the capability to leverage the power of data and technology to drive digital transformation. Lastly, the sixth building block assesses the level of which the business is integrating ecosystems. This is because it is difficult to be able to maneuver yourselves through the process of digital transformation without the collaboration and integration of other players in the market.

There are four stages of digital maturity based on the digital transformation journey discussed above. The DAI assessment is a self-assessment process, and therefore, it is important that companies first assess themselves and identify which stage they believe they are at in terms of digital maturity.

Each dimension of the DAI is also assessed using these four stages of maturity. Once we have obtained the maturity level, we can use the heatmap to benchmark where we stand at each angle in comparison to that of our competitors and other major players in the market. Companies in different industries may have different focus for each level or dimension based on the fundamentals of their business.

Dr. Rittavee then presented a success story of a refinery undergoing digital transformation. Although refinery businesses may appear to be irrelevant in the digital realm, digital transformation could be applied to the refinery business throughout the whole business value chain, from procuring supplies of crude oil, to the production operation of refining the oil, and eventually to the marketing activities. After adopting digital transformation into their business, the refinery was able to augment their digital maturity level from level 2 to level 3 or 4.

The refinery began by applying digital transformation strategies to the beginning of their business value chain. From the crude selection process, digital tools assisted the refinery to make better decisions by analyzing the possible yields of different kind of crudes. Once the crude selection process is completed, digital tools such as Spend Cube were used to determine which purchase would be most cost effective by considering three different factors: what is being purchased, from where are purchases made, and from which vendor. Digital tools also assisted in improving the working process of the procurement department, where the procurement department would have to deal with multiple purchases for multiple refineries, while at the same time helped conduct demand planning tasks.

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Digital transformation could also be applied to the production or refinery process. Digital tools were used to optimize refinery parameters to obtain the best quality product. Digital sensors could also provide predictive maintenance to prevent unplanned plant shutdown.

Digital tools were also applied to marketing activities such as conducting demand forecast, managing customer relations, and even to determine the pricing algorithm using Advanced Pricing Algorithm. Advanced Pricing Algorithm could help refinery companies determine the most optimal price point, where in times of low demand, the price not be dropping too low, and in times of high demand, the price would not be raised too high.  Advanced Pricing Algorithm could extract over 300 data points from the market in order to propose different price points that is best for each condition of demand.

This is an example of how digital tools can be used to generate increased values, to leverage negotiation powers, and to increase sales of a business. Towards the end of his session, when asked which industry is perceived to be slow towards adopting digital transformation, Dr. Rittavee responded that the Manufacturing Industry is often one of the slowest industries to change. Although at the fundamental of the business, many engineers are involved, they are more reluctant to adopt digital solutions as they are more focused on their own realms of engineering. It is not until they realize that their competitors are on the move, that they would eventually start to move towards a transformation. Dr. Rittavee stressed that it is important to start from envisioning where you see yourself in the future, and then craft your business strategy to create that future.

Source : TMA_ Digital Transformation Forum 2019

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