Source: https://hbr.org/2023/07/the-value-of-digital-transformation
In the fast-paced world of business, digital transformation has become an unavoidable buzzword. However, despite the vast efforts invested in digital and AI transformation, many organizations are left questioning the true value it brings. Is it worth the hustle? Can it create lasting competitive advantages? The answers lie in understanding where and how digital transformation creates value.
Hard Evidence of Real Value
To shed light on the real value of digital transformation, a study was conducted in the banking sector, a field with significant digital history. By analyzing key metrics, it became evident that digital leaders are achieving far more significant shareholder value than their lagging counterparts. Over the span of five years, digital leaders achieved annual total shareholder returns of 8.1% compared to 4.9% for laggards. This outperformance is attributed to revenue growth and efficient cost management.
Creating Value That’s Hard to Copy
The key differentiator between digital leaders and laggards is their approach to digital sales. While mobile app adoption rates remain similar, leaders excel in digitally transforming the end-to-end process from origination to fulfilment to servicing. They employ personalization analytics, omnichannel experiences, real-time approvals, and streamlined self-servicing. The results are evident in reduced contact center staffing for leaders compared to laggards.
The How Matters as Much as the What
Implementing digital transformation requires more than just knowing what to do; it’s about executing the “how.” A real-world example from a U.S. bank demonstrates the transformative power of digital. By reinventing their secured lending process, the bank reduced approval times from 28 to 7 days, increasing originations by 35% while reducing origination costs by 20%.
Capabilities Needed to Outcompete
To outperform, companies must undertake end-to-end changes across various customer journeys and core business processes. Successful transformations are powered by six core capabilities:
Ambitious Roadmaps: Align efforts on domains that matter to customers and generate value.
Digital Talent: Attract top-notch engineers and provide an environment for them to thrive.
Operating Model: Mobilize cross-functional teams to focus on priority solutions.
Technology Environment: Create a distributed tech environment for the whole organization.
Data Products and Modern Architecture: Enable easy data consumption across the organization.
Change Management: Ensure digital solutions are adopted and can scale.
At CSG Technologies, we are committed to helping organizations unlock the full potential of digital transformation and gain a competitive edge in today’s evolving landscape. Get in touch with us to embark on your digital transformation journey today!
