Gartner analysts explore digital transformation: what does it mean?

Speaking with Information Age, Gartner analysts explore digital transformation: the term and what it means for different sectors

In this article, Gartner analysts – in their own words – are g0ing to explain how they understand digital transformation; while delving into specific sectors, which include: retail, digital marketing and telecoms.

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Jorge Lopez, research VP at Gartner, calls digital transformation ‘ Digital Business Transformation ‘.

“It is the process of exploiting digital technologies and supporting capabilities to create a robust new business model,” he says.

“A ‘Digital Business Transformation’ is led by top management, and/or it can be led by the board of directors.

“We have found that some companies will approach digital business by incrementally improving many new and different functions in a company with no executive or industry focal point to the entire set of investments. The most successful ones will have a top level digital business industry vision, which defines how the enterprise will change how the industry is structured.

“An example of this would be how Amazon has changed the face of retail forever through its investments in digital technologies that also include artificial intelligence. Another example is BHP Billiton, who envisions the ‘fully autonomous mine’, that will leverage autonomous drilling, transport, processing, tunnelling and other machines to reduce the high cost of mining in remote areas. There are many other examples.

“Digital transformation matters enormously. Digital giants such as Amazon, who are overtaking rivals in multiple industries (retail, supply chain/logistics, media, etcetera), are succeeding through a business model designed to take advantage of the most advanced technologies to continue to change and disrupt their industry.

“It is driven by the rise of the Internet of Things, which is forecast to have a trillion things (machines, tools, automobiles, drones, etcetera) connected to the Internet by 2050. It is currently on track for that. Organisations that ignore this trend will find themselves unable to counter attack a rival who has successfully deployed new business models leveraging these technologies.”

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Garter’s role in digital transformation

Gartner is the leading research and advisory company. It’s position helps organisation’s reach their ambition of digital transformation.

“We provide senior leaders across the enterprise with the insights, advice and tools they need to achieve their mission-critical priorities and build the digital business organisations of tomorrow,” continues Lopez.

“So, a Gartner client can rely on Gartner to help answer many questions: What is a digital business? How do you build and operate a digital business? Who should we partner with to build our vision for digital business? What technologies are critical for success in digital business? Plus many more questions that drive for more detail.”

The comments below are from Christopher Ross, research director at Gartner.

How has the marketing sector changed?

At a macro level marketing continues to be transformed by data and technology in significant ways. Marketers now have the ability to more accurately target and engage customers and have an array of new tools and technologies at their disposal. The classic right message to the right audience at the right time idea is now driven by data and delivered with sophisticated technology.

At the same time, customer experience (CX) is increasingly important, marketers recognise they must have a holistic view of customers and go beyond just simply driving transactional, one-off interactions. There is a greater focus on the lifetime value of customers and the intersection of quality customer experience and long-term customer value.

Why is it so important that marketing digitally transforms?

Marketing must transform because customers are transforming. Customer behaviour, preferences, requirements are shifting and marketers must stay in-tune with those changes. We live in a digital world now and marketers must understand the new, and rapidly evolving, digital ecosystem and how to effectively establish and maintain customer relationships in this modern environment. Brands that fail to adapt will be marginalised and replaced by brands that best integrate into the lives of customers.

How can they embrace digital?

Marketing leaders have a big challenge. They must create teams that have a significant depth and breadth of skill that are also extremely fluid and flexible. This means hiring the right people who possess the right hard and soft skills, committing to continue educating and developing those people and creating an environment that makes this all seem very organic. It’s a tall order that many organisations are still working through.

What technologies are being deployed?

There is a vast continuum of technologies being deployed in the world of marketing. Technologies like blockchain, AI, VR and others are impacting marketing in the same ways they are impacting the world at large. What has become clear is that a command of technology is now a core marketing skill. Modern marketers must understand the new tools, how they can be applied and the new possibilities they open up.

What institutions are leading the way/ahead of the pack?

Many of the organisations doing some of the most innovative, successful work embracing the next wave of marketing are not the most visible, household name brands. Their success is also not always visible beyond the four walls of the organisation reflecting improvements in operational effectiveness, utilisation of marketing technology and ability to have better visibility and transparency to programs.

There is also significant diversity in terms of industry progression, brands across all industries and both B2B and B2C categories are successfully making the transition to a modern way of operating.

The comments below are from Tom Enright, research vice president at Gartner

How has the retail industry changed?

The continued growth of on-line shopping has required retailers to move away from the thinking that their stores and web offerings are separate channels, to offering a unified shopping experience to consumers. This experience now needs to be a seamless one for consumers so that they can purchase and return products across the physical and digital worlds without any negative impact on their experience. Another significant change is a re-adjustment of the number of physical stores, with even successful retailers closing less profitable stores, while discount and dollar stores in particular continue to open new stores.

Is the retail industry undergoing digital transformation? Why?

The retail industry is certainly undergoing a digital transformation, largely as the increasing role of mobile technology in the shopping experience from search, purchase, order tracking and returns. Consumers increasingly wish to use their own devices rather than dedicated in-store technology provided by retailers. Also, the volume of data that retailers gather on consumers through analysis of their shopping behaviours, their sensitivity to pricing and promotions and even their movements in stores has been made possible through digital developments. In turn, consumers increasingly expect a personalised experience with product and promotion suggestions that most closely match their personal choices and lifestyles.

How can they embrace digital?

Digital transformation within a retail organisation needs to be led at executive board level. Many retailers have created a chief digital officer role, tasked with developing digital capabilities across the entire organisation. Companies are hiring data scientists, statisticians and demand forecasting experts directly into business functions rather than into the IT department as was mainly the case in the past.

Culturally, leading organisations see themselves as digital-first, thinking, planning and acting with digital technology enabling improvements in algorithmic-driven decision-making. The role of robotics and the rise of the chief robotics officer is fuelling the introduction of robotics into warehousing, distribution and transport operations at an increasing pace.

What technologies are being deployed?

One core technology gaining a lot of interest and investment is Distributed Order Management systems. These are designed to automate the complexity of order fulfilment brought about by how consumers shop and wish to collect or receive their orders. These systems are operating in tandem with digital commerce platforms, Point of Sale systems as well as warehouse and transportation management systems in order to optimise the efficiency of the retailers ‘last mile’ order fulfilment capabilities.

What institutions are leading the way/ahead of the pack?

In North America, companies such as Home Depot, Kroger, Target and Walmart and in Europe, Carrefour and John Lewis are just some of the companies at the forefront of new retail innovations and customer service developments.

The below comments are from Ibo Sanz Castedo, senior research director at Gartner.

How has the telecoms sector changed?

Telcos are moving from service providers to infrastructure providers as services move into applications and software. We have seen how SMS are being replaced by text messaging applications for example. And how as a result CSPs are providing data/bandwidth to customers and mostly reselling other third party services. This is reducing CSP revenues and increasing pressure on margins.

Is there a drive to digitally transform the sector?

Customers, both B2C and B2B, are changing their communications related service consumption habits. As previously mentioned, customers are adopting digital services which are substituting CSPs’ core services or cannibalising its revenues. CSPs have invested in creating alternative digital products to respond to these moves. But at the same time, customers are increasingly adopting digital channels to interact with their service providers which is pushing CSPs to develop digital channel capabilities (Internet, Mobile, Bots, VPAs). Similarly, CSPs are evolving their networks towards virtual networks and with it creating new functionality, operations and products and services. And in order to cope with all of these changes telcos are embracing new ways of working such as Agile or DevOps.

How can organisations embrace digital?

At Gartner, we have categorised digital business Initiatives around two definitions: digital business transformation and digital business optimisation.

Digital business transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model. Digital optimisation is the process of using digital technology to improve existing operating processes and business models. The main thing is to understand which digital business strategy you need to apply to your organisation. This will typically lead to cultural change, new employees, re-skilling, or new methodologies. just to mention some.

What technologies are being deployed?

There are technologies which are specific to CSPs, e.g. Network Function Virtualisation, Software Defined Networks and 5G.

CSPs are heavily investing in virtualising their networks and starting to deploy 5G Networks. Most large CSPs have chosen network quality as one of their key differentiation, incentivising the investments in next generation networks. On top of these specific technologies, CSPs are deploying technologies like Blockchain, AI, VR and others which are impacting CSPs in the same ways they are impacting the world at large.

What companies are leading the way/ahead of the pack?

Different CSPs have taken different approaches to digital business and hence it is difficult to highlight one versus the other.

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