Real digital transformation: Future-proof your business model
The Digital Transformation of Asia Pacific’s massive manufacturing sector promises to deliver a $387-billion leap in regional GDP within three years.
This finding, in a Microsoft commissioned survey and authored by analysts at IDC, throws a spotlight on the importance of rethinking traditional business models in this technology-driven age.
The survey, of 615 manufacturing firms in 15 economies across Asia Pacific, identifies managing costs as the biggest business concern among CEOs in the region. And, it is through that lens that they view digitalization largely as a way reducing expenditures. In its analysis, IDC agreed that while rising costs represent a real worry, it is a backward way of looking at the power of digital transformation. The good news, however, is that the CEOs rightly grasp the imperative of developing new business models to beat the rise of disruptive competitors. It is here that true Digital Transformation holds its greatest potential for success.
“In other words, manufacturers are trying hard to balance priorities. They want to keep traditional revenue streams ticking along while keeping a fixed eye on the fast-approaching future. We believe that change is not coming as quickly as it should. Manufacturing companies have to accelerate on truly transformative measures otherwise they run the risk of being lagged behind,” said Victor Lim, Vice President IDC Asia/Pacific.
Balancing the present and the future
Digital Transformation initiatives bring tangible results to manufacturing companies
The survey identifies five top benefits, three of which relate to the present bottomline—improvement in productivity, profit margin and cost reduction.
And two others—revenue from new products and services along with improved customer loyalty— represent long-term sustainable growth and are truly transformative initiatives. They demonstrated the highest impact of all five last year, from 16% to 17%.
Moreover, revenue from new products and services along with customer loyalty show the most promise for improvements in the lead up to 2020, at 23% and 28% respectively.
Start the journey
Simply put it, Digital Transformation is about reimagining how organizations bring together people, data, and processes to create value for their customers and maintain a competitive advantage.
So how does an organization start? The answer is gathering data—lots of data.
“Broadly, an organization should go through a three-step process,” Lim said. “ Firstly, the data that you collect can help improve decision-making and leads to insights. Secondly, those insights feed the development of better products and services. And thirdly, that will lead to new business models to monetize sets of data directly or develop new commercial digital services.”
A great example of a manufacturing firm gathering data on old processes and using that data to develop new business opportunities is Toyota Industries, which moved from being simply a maker of forklifts to a company that also sells complete digital warehouse management solutions around the world.