Digital disruption is the threat to existing business models that occurs when new digital technologies give rise to new business practices and/or new goods and services that dramatically alter the competitive landscape.
Effects on business and the way we work
Digital transformation demands new and different investments across the enterprise, including the areas of talent, technology, resource allocations, marketing technologies and programmes, business process improvements, and much more. Suffice to say, digital transformation isn’t just an IT project, it’s the future of business, and as such requires widespread collaboration across all business units in the organisation.
Considering millennials are expected to account for 75 percent of the global workforce, organisations need to address human capital and next-generation workforce requirements to fuel business growth. Organisations must re-think their relationship with digitally-literate workers and retool their businesses to attract, connect and empower this next-generation workforce via cloud, mobile, analytics, and other enabling technologies.
Millennials can and will work from any device, anywhere - work, home, public transport, for example. Retaining millennial talent in the workforce hinges on the organisation delivering a seamless digital experience that meets existing and future expectations.
Challenges raised by digital disruption
Most organisations know there is no such thing as ‘business as usual’, as the sheer velocity and the invasive nature of digital transformation can be overwhelming. Digital disruption is a major issue in every industry’s C-suites, and senior execs are looking over their shoulders and wondering if they will be next to be ‘Ubered’ or ‘Airbnb’d’.
Thanks to the internet, we now have a situation where manufacturers and wholesalers are getting closer to the end consumer–upping the ante for customer engagement and experience. Customers now expect the same type of interaction they have with any of the other brands they regularly connect with. Also, with a heavier reliance on virtual business, competitive barriers to doing business on a global scale have fallen away. Competition is just as likely to come from overseas as down the road.
To this end, even a company that has been around for 100 years is no longer guaranteed to stay viable. As proof of this, Constellation Research analyst R Ray Wang says 52 percent of the Fortune 500 have been merged, acquired, gone bankrupt, or fallen off the list since 2000.
Organisations must therefore retool to support a faster response and improved ROI, without sacrificing integration, integrity or good governance. As businesses look to reinvent themselves for the digital age, things that were previously considered optional extras are now essential, such as eCommerce and data analytics.
In the early days, commerce was simple – orders were entered into the business system. However, with all the various commerce channels opened up by digitalisation it has never been more important to have a single source of truth to provide a consistent user experience, regardless of channel.
What’s more, the new requirements of today’s digital age go beyond driving transactions – they require organisations to make sense of business data quickly to understand the greatest opportunities and threats that must be addressed to support growth and profitability, for example:
- How are we doing on sales (up/down, month over month, by territory)?
- What is happening with our inventory (top mover, lagers, dead inventory)?
- What is the status of our outstanding AP, AR, cash flow?
- How are we tracking: time shipment performance, supplier/procurement scorecard, waste/cost on the manufacturing floor, etc?
This enables organisations to continue to fine tune their omni-channel go-to market strategies, customer management (identify the profitable and not so profitable customers) and inventory management (change the assortments and weed out items that are not selling) and financial health (better AP/AR management).
What’s more, the use of data and analytics is a powerful force in helping organisations anticipate and prevent disruption.
Impact of digital disruption on business models
Digital disruption is causing organisations to think differently about their business models. For example, manufacturers are now selling direct to consumers in addition to their distribution network. Distributors are therefore offering new services to their clientele.
A growing number of products today have an increasingly digital component–this “digital tether” can give organisations the opportunity to go beyond “sell it and forget it,” to establish an ongoing and more personalised customer relationship that can provide opportunities for new business models, as well as cross-selling and up-selling.
Moving forward, enterprises must learn how to use digital disruption and adapt to it. Unlike digital upstarts who look to make inroads into an industry, established organisations have a significant advantage - an established business to build on.
Anish Kanaran is channel director (Middle East, Africa & India) of Epicor Software