Digital is the Default

The Digital Consumer Economy has arrived, and companies are moving rapidly to transform their business models from the inside out to meet the rising demand. Forming a cohesive digital strategy, as well as leveraging new tools to interact with and understand customers, are quickly becoming mandatory parts of doing business. Tata Consulting Services' recent Global Trend Study revealed a disconnect where although 70 percent of companies surveyed recognize the importance of such digital initiatives in their near-term success, only 8 percent have started the process of implementing them in concert in a meaningful way. Dr. Satya Ramaswamy, VP and Global Head of TCS Digital Enterprise sat down with Consulting to highlight the survey's findings and explain why, in his words, "digital is the default."

Consulting: What did the study reveal?

Ramaswamy: This particular study came about following some observations we were seeing from our client engagements regarding how the 'Digital Five Forces' (Cloud, Mobility, Big Data, Social Media, Artificial Intelligence and Robotics) are combining with each other to give a competitive advantage compared to when they were used individually. We wanted to see if this was a significant global trend, what are the implications for companies, what concerns they had, what were the best practices and where does this lead to. What we found was quite interesting. We found that digital is the default—95 percent of the companies see these digital technologies as a critical way to connect with their customers. And 70 percent of the companies said that digital initiatives are either the most important factor in their success or is of major importance.

Consulting: How are companies digitally "re-imagining" themselves?

Ramaswamy: Companies are reimagining themselves by leveraging a combination of the Digital Five Forces in six areas of the enterprise: business models, products and services, customer segments, channels, business processes and workplaces. For example, crowdsourced product design enabled by listening to the voice of millions of consumers from social media using Big Data is a breakthrough compared to old-fashioned focus group-based product design. This is because for the first time in history, it is possible to tap into consumer-to-consumer communications on social media without the observer effect common in focus groups. Data driven business processes are leading to the elimination of the traditional workflow model—work simply gets done! Modern workplaces are becoming an engaging combination of the physical and digital so as to attract the talented digital natives.

Consulting: What are the big opportunities to arise from this changing landscape?

Ramaswamy: We see consulting opportunities in multiple dimensions. First is the business consulting opportunity arising from using a combination of rich domain knowledge of specific industries along with a deep knowledge of what the Digital Five Forces can enable, to help customers reimagine their business. Second is the technology consulting opportunity to help customers come up with the strategy to revamp their existing infrastructure and architectures so that the vision of Digital Reimagination can be realized. Third is change management consulting that is necessary to manage such a massive amount of change. Finally, these are fairly complex initiatives that at the same time have to executed in an agile manner in bite-sized chunks with demonstrable results at every stage. That is full of program management consulting opportunities.

Consulting: What is going to happen to companies who fail to make investments in their digital strategies?

Ramaswamy: The choice before companies is quite stark. It is either to join the leaders and thrive or be left behind and perish. The impact of the Digital Five Forces is far greater than that of the technological changes that happened in the late nineties. It has been found that nearly half of the Fortune 500 companies of the year 2000 vintage are not part of it any more. That was the impact of the Internet technologies of that era. We expect the impact of the Digital Five Forces to be even more severe. To illustrate this, consider the following questions: What do you do when your competitors are changing the established business models in your industry by leveraging data transparency? What do you do when your competitors are creating new revenue streams by creating new and better products with crowdsourcing or by creating new data products? What do you do when your competitors are serving your target customers in an individualized way when you are sticking to mass segmentation? What do you do when your competitors are using new channels to reach customers who were not reachable otherwise? The answers are obvious. Companies have no choice but to get on the bandwagon!