Digital transformation is the modern-day Gold Rush. To reach new markets and grow revenue, business leaders across industries are flocking to embrace new technology and digital processes. And it’s no wonder why! The digital economy offers a myriad of benefits to businesses and consumers alike. While consumers can expect mobile-optimized and personalized experiences, businesses will appreciate having better insight for decision-making and product innovation. However, digital transformation also brings its own set of challenges, from external regulatory hurdles to internal technology limitations.
We were eager to understand the drivers and challenges organizations face related to their own digital transformation efforts. So we surveyed 500 businesses in the U.S. to get to the bottom of it, and here are the top five digital transformation trends we found:
- Businesses estimate that revenue attributed to digital activity will grow by a compound annual growth rate (CAGR) of nearly 11 percent in the next two years.
Digital transformation is a hot topic today among business leaders—and for good reason. Organizations across all industry verticals are seeing a shift in revenue tied to traditional and digital channels, with the bulk of it gravitating towards the latter. According to our study, organizations today estimate that 45 percent of their revenue is directly or indirectly attributed to digital channels, and this number is expected to grow to 55 percent by 2020. This will mark an important milestone at which revenue from digital channels exceeds that of all other channels. Organizations that want to maximize revenue potential will take steps proactively to ensure they’re embracing digital channels.
- 90 percent of organizations say that embracing digital transformation is critical to their ability to provide an excellent customer experience.
At the forefront of many digital transformation efforts is the notion that customer experience needs to be centerstage. In this digital world, businesses are facing increased competition on a growing global stage. That’s why customer experience is increasingly becoming a leading differentiator for many businesses, helping to attract new prospects and retain existing relationships. To deliver superior experiences, businesses will need to meet and exceed their customers’ expectations, which today means being mobile-responsive, cloud-based, and personalized. And to do that, businesses will need to rely on an awful lot of data.
- 86 percent of organizations believe the ability to govern data directly affects their customer experience.
We know that data is the cornerstone of digital transformation efforts. However, that data needs to be managed and governed appropriately to continue to be used effectively over time. Whether you’re dealing with customer data, transactional data, or financial data, your ability to put the right people, processes, and tools in place to govern your data can have far-reaching implications. Our study found that a clear majority of businesses believe that being able to govern their data can have a direct impact on their customer experience, for example. The right governance strategy can ensure consumer data is maintained appropriately for better communications, targeted marketing, and customer service—all of which can make the difference between a good experience and a poor one.
- 96 percent of organizations experience at least one challenge with their digital transformation efforts.
Despite the numerous advantages of the digital ecosystem, fully embracing digital transformation can be a complex and, frankly, painful process. That’s because it often involves a rethinking of traditional business models and processes, and it requires specialized resources. Plus, those working with legacy mainframes or old technology will need to migrate to more modern systems before they can even begin the process of offering digitized services and solutions. Our study revealed that the biggest challenges businesses face when it comes to digital transformation are a lack of data insight, a lack of strategy, and a lack of skilled staff.
- 75 percent of organizations say that poor data quality has made it challenging to achieve digital transformation plans.
Bad data is the natural-born enemy of a data-driven business, especially in the era of digital transformation. As a growing number of organizations are turning to their data to power analytics and drive decisioning models, a lack of trust in data assets is undermining progress. And bad-quality data is at the heart of that problem. Data that has been deemed poor-quality by the business can have serious consequences, leading to increased risk exposure and wasteful spend. Even worse, however, is the bad data that organizations don’t see due to the siloed nature of their systems. To fully embrace digital transformation, businesses will need to have a clear and holistic strategy around data quality that breaks down silos and focuses on empowering business users.
As organizations continue to experiment with new technology and adopt digital processes, one thing is certain: having high-quality data will be essential for success in the future. In fact, it already is today! Digital transformation is not an abstract future state, like the world of the Jetsons. It’s happening all around us today, and it’s been happening for several years now. Organizations that are looking to grow revenue and compete in the digital economy will want to consider whether their technology and business processes are optimized for the digital age. And the readiness of their data is a big part of that story. Business leaders will want to work quickly to fill in the gaps, improve their data quality, and invest in scalable technology that will bring them into the new era.
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