One lesson all businesses tend to learn the hard way is that change is inevitable, whether those shifts disrupt your customer base, your business model, your industry or your competitive landscape or, in today’s fast-moving market, it could potentially be all four sectors at once.
The challenge then becomes how can organizations ensure that they are able to move quickly enough to respond to or ideally to anticipate these changes for the mutual benefit of both their customers and themselves?
Given that most companies are in the business of selling products and/or services to one or more customer audiences, having a truly flexible digital commerce platform in place which facilitates innovation is one of the core building blocks to achieving an ongoing successful digital transformation.
Be the Digital Disruptor, Not the Disrupted
When thinking about digital transformation, it’s worth organizations pausing to reflect and understand that this reimagining of business focus, models, processes and roles is nothing new. Take the opportunity to learn from the history of companies who either transformed and thrived or who didn’t adapt and declined or closed up shop permanently.
It’s also not simply the case of transforming once and then you’re done, that kind of complacency can also lead to failure.
Instead, think of your digital transformation journey as a continual endeavor where the ultimate destination is not set. Instead, that end goal keeps shifting in anticipation of and in response to changes in customer buying preferences and market trends. In the process, you will be regularly redefining both your digital transformation purpose and destination.
Digital Transformation Isn’t Limited to New Market Entrants
There can be a tendency when talking about digital transformation to hold up the examples of Airbnb, Netflix and Uber for how those companies have disrupted traditional businesses with their fresh take on accommodation, media and transportation respectively.
By entering existing markets with new, more customer-centric business models, often with a focus on subscription rather than one-off purchases, new entrants can quickly establish a significant presence. But innovation isn’t limited to those companies who have the benefit of adopting and developing brand-new technology alongside their new business models.
Re-imagine Business Models
Established organizations shouldn’t be held back by current (and often long-standing) business processes and older technologies from engaging in their own reinvention and transformation.
For instance, take long-time SAP customer Kaeser Kompressoren, which was founded in 1919, and which manufactures, sells and rents compressed air products and complete system solutions to customers around the world.
In taking advantage of the Internet of Things, AI, machine learning, analytics and subscription billing, Kaeser has embarked on an additional business model, effectively selling ‘compressed air-as-a-service’ by the cubic meter.
By analyzing the data generated by the smart sensors on its compressors, the company is not only able to conduct predictive maintenance on its machines, but it can also offer its customers the ability to pay for the amount of air they consume when using a compressor. This is an alternative to a more imprecise equipment rental fee or the customer buying the machine outright.
Move into Additional Businesses
SAP customer New Era Cap has been in the business of manufacturing athletic headwear such as baseball caps since 1920 and has expanded over the years into offering ranges of clothing and accessories.
New Era Cap has predominantly been a wholesale business, selling its products through major retailers. However, the company has seen a massive change in its typical customer base in the last 15 to 20 years, according to New Era Cap CIO Lorenz Gan.
As well as traditional sports fans wanting to support their teams by wearing New Era products, another set of customers want to buy the caps more as a style statement. Recognizing this new type of customers, New Era decided to modernize its e-commerce platform so it could support both its existing global business-to-business operations as well as a new direct-to-consumer website.
Along with providing more personalized B2B and B2C experiences, New Era is gaining a consistent view of its customers across all channels. There’s also the ability to enable the company’s sports fan customers to explore more lifestyle products and vice versa through the use of dynamic product categorization. The company’s ultimate goal is to fully transform New Era into a lifestyle brand.
Build Out Ecosystems
Organizations need to cultivate a flexible approach to digital transformation since it’s likely they may go through a number of different iterations in their business focus and model.
For instance, an organization may traditionally have only sold products and then in response to customer and market needs, it may add in services to complement those products. Over time, the services side of the business may end up becoming the primary revenue generator so that the company may then decide to fully transition to becoming a services-only provider.
As we’ve already seen, manufacturers and wholesalers may also become retailers selling directly to consumers. In the process, they will gain more control over their own brands and products as well as benefiting from that closer relationship to customers. Expect continued blurring of the lines between different industry sectors, particularly those which are tightly related such as manufacturers, distributors and retailers.
TripAdvisor is an example of digital transformation success which may provide a pathway to emulate for other organizations. Initially, TripAdvisor’s founders had planned to offer a huge database of travel information to be used by other travel websites but its customer reviews section proved very popular. The site has evolved over time from a travel resource site into a full-blown travel online destination where customers can search for, read and provide hotel, restaurant and travel reviews as well as book their travel, hotel or rental accommodation and vacation activities.
By analyzing the trends in its customer base, TripAdvisor has the ability to then use that knowledge to develop future products, packages and services. Effectively, a company like TripAdvisor is continually building out an ecosystem of offerings, which complement its core business focus.
Direct Customer Connection Drives Digital Transformation
Ultimately, organizations who lack some kind of direct connection with their customers are going to be disrupted by their peers who do have that two-way communication in place. Customer knowledge enables companies to move more nimbly, to anticipate the kinds of products and services those consumers are hoping to find and to hone existing offerings so they’re a better match to customers’ requirements.
As customers expect more of a long-term relationship and personalized experience with organizations, the need to have a foundational adaptable and flexible commerce platform becomes ever more important to help enable continual innovation.
Innovation lies at the heart of every digital disruptor. The key to successful digital transformation is having the long-term technological flexibility in place before you need it so it’s ready when you are ready to take the next step in reinventing your business.
This article is part of a 5 part sponsored article series by SAP