Have you ever wondered why some companies soar on a technological wave, while others sink, despite billions of dollars in software and infrastructure investments?
Harvard Business Review statistics hit the mark: in 2018 alone, an incredible $1.3 trillion was invested in digital transformation worldwide. However, the lion’s share of this money was simply wasted. Why? Because most players perceive digitalization as the purchase of an expensive tool, forgetting that without readiness for change, the tool itself is just a liability on the balance sheet.
Why traditional business is history
Today, digital transformation has finally left the category of plans for the future and moved into the category of survival strategies. This is not just a software update or the launch of a mobile application. This is a complete reformatting of the business model under the pressure of a technological landscape that changes every second.
According to IDC, global spending on digitalization will reach $3.9 trillion by 2027. This is the price of entry into a new economic reality.
But what exactly is pushing us into this abyss of change? Let’s analyze the main drivers.
- Seamlessness and Personalization
According to Salesforce, 76% of customers demand consistent interaction between all departments of the company. However, more than half of them feel that sales, marketing and service in many companies exist in parallel universes.
- Technology
AI, the Internet of Things (IoT) and cloud computing are no longer buzzwords from conferences. Today they are fundamental tools. If your company does not use these technologies to optimize processes, you automatically become less efficient than competitors who do.
- Big Data
We live in the era of Big Data, but data itself is just noise. Transformation allows you to turn this noise into Data-Driven solutions. With advanced analytics, businesses can now know exactly what their customers want and where the problem will be tomorrow, instead of guessing.
- Pressure from all sides
72% of CEOs believe that the next three years will be more important for their industries than the last half century (KPMG). Startups and tech giants like Amazon are disrupting entire industries in a matter of months.
Transformation is impossible without people. 74% of organizations are already reviewing job requirements, as remote work and digital collaboration have changed the very structure of work. In parallel, the role of cybersecurity is growing. In the digital world, customer trust is built on the security of their data.
The price of ignoring
Refusing to change in the digital world is a direct path to financial disaster. As the experience of retail shows, the consequences of resistance to technology are felt by everyone: from shareholders who lose money to ordinary employees who lose jobs.
Retail clearly demonstrates that digital transformation is no longer an option. The consequences of ignoring these changes are severe: loss of market share, financial difficulties, or even bankruptcy. This hits not only the companies themselves, but also investors, employees, and the entire market ecosystem.
Artem Lyashanov
The Ghosts of Kodak and Sears
The most famous example is the story of Kodak. It sounds ironic, but they were the ones who invented the first digital camera. However, the company’s management was so afraid that digital would kill their profitable film business that they deliberately slowed down the change. When they finally decided to catch up with the market, it was too late. The result was bankruptcy in 2012.
A similar fate befell the giants of American retail, such as J.C. Penney and Sears. Once these chains were titans, but they missed the moment when shoppers massively switched to online. In 2019 alone, more than 9,000 stores closed in the US, a 59% increase from the year before. While they were holding on to their old shelves, Amazon and Walmart were building digital empires.
The story of Kodak and Sears proves that it doesn’t matter how big you are today. If you’re not ready to change, you may simply not exist tomorrow. Digital transformation is not an expense, it’s an insurance policy for your future.
Conclusion
To prevent this path from becoming a waste of budget, it must be based on transformation:
If top management doesn’t just sign bills, but actually participates in developing the digital agenda, the chances of success increase by 1.6 times (according to McKinsey);
- Technologies will not work in a conservative environment. You need a culture where people are not afraid to experiment, learn quickly from mistakes and be flexible;
- Cloud services, analytics tools and AI are the foundation. Without a solid technical foundation, a business simply won’t be able to scale;
- It’s not enough to buy tools, you need to train people to use them. You either need to hire new professionals with digital experience, or constantly improve the skills of the current team;
- There is no finish line for transformation. It is a constant process of adapting to new trends, which should become part of your company’s DNA.
What awaits us in the next decade?
The future will bring even more challenges and opportunities. The Internet of Things (IoT) will become ubiquitous, from factories to hospitals, everything will be connected into a network, giving us real-time data.