What Comes with Rapid Growth of Digital Transformation Initiatives?
Jason Ng | Jul 7, 2021
As today’s average consumer becomes increasingly reliant on the internet and their mobile smart devices, many businesses have undergone either a partial or complete digital transformation of their existing infrastructure to meet this trend. The onset of the more than a year-long COVID-19 pandemic and the accompanying social distancing protocols further accelerated these efforts, with more and more businesses investing in digitization to keep up with their competitors or to even survive. However, while digital transformation will be beneficial for the most part, it will introduce a new challenge that digitized businesses must address.
Digitization… That’s Old News
It’s become common to attribute accelerated digital transformation initiatives to the recent COVID-19 pandemic, but that is merely the anchoring effect. Many companies had already been undergoing these transformations prior to the unexpected arrival of the pandemic. In a report from 2018, 55 percent of startups and 38 percent of traditional businesses had already adopted some form of a digital transformation strategy, while 89 percent of enterprises were planning to adopt one or had already done so. With regards to investing into these initiatives, estimates from 2018 predicted that digitization spending would exceed $2 trillion in 2019 while 40 percent of all technology spending would go towards digital transformation technologies. Although the COVID-19 pandemic did not set into motion the transformations toward digital business models, it did rapidly accelerate it.
Covid-19 Pandemic: Go Digital or Go Home
The onset of the COVID-19 pandemic rapidly accelerated most businesses’ transitions to be partially or completely digital. The ensuing mandatory social distancing protocols contributed to reported increases in consumer demand for online purchasing capabilities and services. While digitized businesses were able to do so, non-digitized businesses struggled to meet these demands and protect their revenues. To counter the financial fallout, these businesses began to invest more into digitally transforming their existing infrastructure. One report found that global IT leaders increased spending by a median of 5 percent of their existing IT budgets to counter the pandemic, while another showed that 45 percent of companies that faced declining revenues due to COVID-19 would increase focus on digital transformation. The result was the acceleration of digital transformations as the adoption by companies of digital technologies for customer and supply chain interactions sped up by three to four years, while their share of digital or digitally enabled products accelerated by seven years.
Digital Transformations Bring Home the Revenue
Digital transformations enable companies to increase revenues while decreasing costs. A McKinsey report found that B2B companies witnessed 10 to 15 percent revenue growth and 10 to 20 percent cost reductions after digitally transforming their customer experience processes, while another report showed that start-ups encountered a 34 percent revenue increase after adopting digital-first strategies. When placed side by side, company respondents with lower digital maturity reported 15 percent revenue growth, while higher digital maturity companies reported 45 percent. Given the positive correlation between digital transformation and revenue growth, adopting digitization initiatives would be in the best interest for any company looking to generate more value.
Apps, Apps, and More Apps
Companies undergoing digital transformations will encounter increasing demands for the development of mobile apps. However, there are a wide variety of challenges that are associated with the development and deployment of mobile apps that companies must overcome. For instance, consider the constant innovative nature of the mobile device industry. Flagship smartphones and laptop computers alone both undergo yearly hardware updates, which normally requires mobile apps to adapt in order to maintain compatibility and/or stability. This may include updating an existing version of the app to take advantage of new device capabilities or creating an entirely new app altogether. In addition, as the hardware regularly updates over time, so does the respective operating system, along with the introduction of new features, which are consumable via APIs. Mobile app developers need to not only ensure that their apps remain compatible with each iteration of the operating system but that they are taking advantage of these new features. These are only a few of the unique challenges encountered during the mobile app development cycle. There are also the activities that constitute the mobile app deployment process that companies have to maneuver through as well. To learn more, refer to What Makes App Deployment Challenging?
Value Stream Management is the Name of the Game
Value stream management helps improve the flow of value generated from the development and delivery of a software product and the resources involved while simultaneously providing end-to-end visibility of the entire process. The increased focus on mobile apps, as a result of business digitizations and consumer demands, is driving interest in value stream management that focuses solely on mobile. For instance, in the case of mobile app deployment, investing in a value stream management platform will position companies to better navigate the complex activity flow leading up to product delivery. Some key advantages include the access to valuable workflow metrics that will allow IT teams to make more well-informed decisions, the seamless integration of third-party toolchains to introduce automation and increase ROIs, and the assurance that the product is compliant with industry standards.