My editor, Shyamanuja Das, and I had an extensive conversation about selecting a cover story for this month that is highly relevant to tech executives in the current business environment, where companies are expected to achieve more with less. We previously discussed how organizations accelerated their digital transformation efforts during the pandemic to survive and keep their business running. Additionally, emerging technologies such as AI, 5G, and IoT gained significant attention. However, in the post-crisis phase, organizations face a new challenge – how to pursue growth. Maximizing the value and return on investment (RoI) from digital initiatives and extending their impact throughout the organization have now become a critical objective for technology leaders, although it has always been a focus area.
In its “The Keys to Scaling Digital Value” report, BCG underscores the importance of effectively scaling digital solutions during times of business volatility or economic turbulence. BCG’s analysis, which examined the digital proficiency and maturity of nearly 2,000 global firms, reveals that implementing individual digital solutions can boost revenue by 9% to 25% and reduce costs by 8% to 28% when compared to the relevant baseline. However, scaling multiple solutions can result in an enterprise-wide revenue increase of nearly 17% and a cost reduction of 17%.
Regrettably, only 30% of firms qualify as digital leaders based on BCG’s research, denoting the highest score in the digital enablement maturity assessment. These businesses have progressed beyond the pilot stage and can seamlessly integrate and leverage digital solutions across all organizational areas, as well as in their respective markets and regions. Conversely, the remaining 70% of organizations have not been able to scale their digital solutions beyond the pilot phase, or they have been unable to break down organizational silos. As a result, their digital transformations have not been able to realize their full potential across the entire enterprise.
Given this, it is not surprising that CIOs and technology leaders are placing greater emphasis on scaling digital value. Rather than just implementing new technologies or solutions for business continuity, the focus is on prioritizing alignment with business objectives and processes to achieve maximum value. The question is, how prepared are CIOs to lead this charge?
The key differentiators
In the present highly competitive era, there is no doubt that the rapid expansion of digital solutions can offer immediate benefits such as increased revenue, cost reduction, improved customer experiences, and enhanced long-term resilience.
The ability to quickly scale digital solutions is a crucial differentiator between companies that successfully undergo digital transformation and those that do not. For CIOs, keeping up with the constantly evolving digital landscape can be a significant challenge, as delays in action can lead to missed opportunities for effective scaling.
The question of how to measure the impact and success of digital transformation is a pressing concern for organizations and their boards, according to the majority of CIOs. What are the critical factors that enable companies to effectively scale their digital value and gain a competitive advantage?
Establishing clear metrics and KPIs: Establishing clear metrics and KPIs is crucial for measuring the success of digital initiatives and tracking progress towards business goals. According to industry experts, creating a metrics of success is a critical step for any transformation initiative. The metrics should measure productivity improvements, cost efficiency, higher customer satisfaction, or additional revenue opportunities. Digital technology enables organizations to drive multiple outcomes, such as customer growth, revenue growth, improved productivity, efficiency, and reduced instances of fraud. It is crucial for organizations to define these outcomes before embarking on digital initiatives to establish accountability and gain organizational buy-in.
Gyan Pandey, Head Digital/CDO of Voltas Limited, emphasizes the importance of thoroughly understanding business operations before utilizing technology for efficient practices. “Comprehensive digital adoption involving appropriate investment is crucial for attaining desired benefits, especially as IT budgets decrease each year. Selecting projects and technologies carefully guarantees a path to success, not just a “fail-fast” journey.”
Pandey adds that data plays a crucial role in achieving business goals, but its full potential has yet to be realized, and it must be curated for meaningful use cases. Data-driven processes accelerate innovation, leading to the creation of new technologies, better products, and enhanced customer experiences.
This helps CIOs identify areas for improvement and adjust strategies accordingly, ensuring that digital initiatives deliver value to the organization and identify new growth opportunities.
“In terms of measuring the impact and success of digital transformation, there are several methods and KPIs that we use to evaluate our progress. We also receive evaluations from external consultants such as McKinsey and BCG. For every initiative, there is a structured process in place where it must be signed off and evaluated by the CFO. Projects may aim to significantly improve cost efficiency, process effectiveness, customer satisfaction, product quality, or demand power, and we define the relevant metrics to measure success. At the end of the year, we conduct a rigorous review to determine where we are and what we have achieved,” says Dhiraj Sinha, EVP and Group CIO at JSW.
Manish Grover, Executive Director (Strategic IS & IS) at Indian Oil Corporation Limited, emphasizes the importance of starting small with a proof of concept and expanding horizontally. “In the upcoming year, the focus will be on expanding competencies to improve efficiency and socializing developed initiatives. The team will continue to adopt new technologies such as RPAs and core tools to drive automation across all divisions. Net Zero will be a significant focus, and the goal is to enable young minds to come up with game-changing initiatives in the transition phase of energies,” Grover adds.
India’s flagship Maharatna national oil company has already created a central data management platform, RPA platform, and a discounting platform using blockchain to drive better customer understanding, efficiency, oversight, better service delivery, profitability, and safer operations. Grover emphasizes the importance of providing top management with real-time KPIs affecting the company and their own performance.
To allow employees to work better and make data-driven decisions with accuracy and digital documentation, its focus is on creating digital twins and using PDMS during interruptions in pipelines.
Aligning IT investments with organizational goals: Deepak Sharma, President, and Chief Digital Officer of Kotak Mahindra Bank, emphasizes the importance of keeping a strong eye on every stage of a digital transformation journey to ensure it is in the right direction and aligned with organizational goals. He believes technology plays a critical role in building and scaling up core digital capabilities to drive transformation, build new business models, and create future-ready initiatives. “Everything created for customers, whether it’s an experience, product, or channel, has a dependency on how data is leveraged, privacy and security frameworks are built, and technology is used to deliver outcomes.”
BCG highlights the significance of C-Suite alignment, emphasizing that the entire C-Suite must agree on a common vision, strategy, and roadmap to stimulate action and facilitate execution throughout the organization. The study cautions that siloed CXOs will only hinder digital transformation by either being slow to digitize or not scaling digital solutions, resulting in finger-pointing and blame-shifting among executives.
Regarding financial services, Sharma emphasizes the importance of avoiding moving too quickly and risking accidents or clashes. It’s vital to understand the risks, have a collaborative approach, considers the relevance of the product or solution from the customer’s perspective, and assess business viability, scalability, and resiliency. At every stage of the transformation journey, the technology should meet industry-grade expectations, from pilot to production. Keeping these factors in mind, Sharma suggests taking measurements and determining how to run at scale and full production based on the outcomes.
“We have implemented a key strategy of establishing a set of metrics to measure the success of our transformation initiatives. These metrics include improvements in productivity, cost efficiency, higher customer satisfaction measured through net promoter scores, and increased revenue opportunities. Digital solutions enable us to drive multiple outcomes such as growth in customers, revenue, productivity, efficiency, and reduction in fraud instances. Defining these outcomes early on is crucial for creating accountability and organization-wide support for these initiatives,” Sharma explains.
As organizations strive to drive efficiencies and provide the best possible employee experience, they need to incorporate technology into every touchpoint that employees interact with to enhance their efficiency and experience.
Harnath Babu, the Partner, and CIO at KPMG, explains that digital transformation is usually a gradual process for organizations, where automation is initially introduced in specific areas such as sales, operations, and finance. However, KPMG’s goal is to leverage technology to transform the entire organization. To achieve this, KPMG has modernized its infrastructure to be cloud-native and scalable, built on microservices and APIs. This allows the company to efficiently provide services to clients, including compliance and statutory evaluation services.
“We have heavily invested in cloud technology, metaverse, and infrastructure modernization, as well as platformization, cybersecurity, and data management to ensure security and privacy for our clients. We have also introduced common data models, low-code/no-code platforms, and workflows to ensure seamless and integrated operations,” Babu explains.
Being a large organization with over 40,000 employees, KPMG places a huge focus on improving processes. The consulting firm has experimented with chatbots, including models that can go through all documents and provide clear write-ups for employees. It has also implemented chatbots for self-service, offering around 17 different services. These efforts have resulted in increased employee and process efficiency, as well as improved customer satisfaction with the services provided using technology.
Ensuring the right governance: The traditional approach for digital projects involves selecting a use case, deploying it, and then scaling it back. However, in large organizations with thousands of employees and multiple facets, scaling up presents a challenge due to the numerous processes, each with up to 20 variants, and the many exceptions that arise in the business.
Dhiraj Sinha, EVP and Group CIO at JSW, explains that in addition to the challenges posed by complex processes and variants, ensuring proper governance for long-term digital projects and staying on course can also be challenging. These projects cannot be completed over a short term and require ongoing attention and resources. While funding is not an issue, the ability to maintain the right skills and adapt to the changing environment can be a significant hurdle in achieving successful outcomes.
“Approximately five years ago, we began our digital journey, focusing on cost efficiency, process harmonization, and effectiveness. We have seen a significant return on investment of at least 10 to 12 times as a result of these efforts. Digital technology has proven to enhance efficiency and improve processes, and we are now taking steps to strengthen these processes further. For instance, we are currently in the final stages of a finance transformation project that will go live in April. We have integrated all processes that touch the customer or vendor partner and established global KPIs to enhance internal processes while keeping customers and partners at the core. While some organizations have already made significant progress in this area, every organization must focus on improving processes in today’s environment, where customer expectations are high,” Sinha explains.
Identifying solutions that can scale: Although building digital solutions may seem like a straightforward task, ensuring their optimal usage presents a challenge for organizations. Proof of Concept (POC) solutions may appear promising but the actual outcome in production may differ significantly. Pristyn Care, a data-driven organization based in Gurugram, relies heavily on digitally-driven solutions to optimize costs.
According to Gaurav Bagga, the CTO at Pristyn Care, building solutions is less challenging than ensuring their optimal usage and achieving a good return on investment (ROI). “One of the main challenges of using digital solutions is ensuring they can scale effectively. Solutions that work well in a POC may not be as successful in production. We experiment with different solutions, but we believe that it’s better to fail fast and learn from it, rather than sticking to safe options,” Bagga adds.
While emerging technologies such as blockchain, automation, and AI have a promising roadmap, Pristyn Care is currently focused on IoT and AI in health tech. Pristyn Care is currently using AI for price prediction and OCR for various types of documentation while exploring IoT. The organization prioritizes cloud security and cost control while using these technologies. Going forward, Pristyn Care aims to use all the available technology optimally and ensure the actual ROI of the different tools they use. They are building different categories and businesses, including a D2C brand that has grown significantly, thanks to technology. Bagga believes in learning from others and building new businesses, making the most of the opportunities presented by technology.
Charu Bhargava, VP-IT at Sheela Foam, emphasizes the critical role of data in making informed decisions. The organization does not merely use data for dashboarding or reporting purposes; they integrate it with AI and ML to gain deeper insights. By combining AI and analytics with their data, they can make informed decisions that align with their overall business strategy.
It is worth noting that Sheela Foam is not solely focused on manufacturing, but also has a retail division under the brand name of Sleepwell. This diversification enables them to leverage data across different sectors, ultimately aiding in making better-informed decisions.
While some companies are still in the process of exploring technology and tools to improve their digital solutions, others are encountering challenges such as cybersecurity concerns, governance issues, and resource constraints that hinder the expansion of their digital offerings.
Cybersecurity risks: The growing reliance on data as the primary driving force behind organizational growth in recent years has made it increasingly challenging for enterprises to protect themselves against a rising number of cyber-attacks.Furthermore, as businesses adopt digital technologies to pursue new business models and improve customer experiences, it has exposed specific vulnerabilities. The surge in digital transformation initiatives across organizations of all sizes has further exacerbated these vulnerabilities.
“Over the past year, we have prioritized digitization to address revenue concerns, leveraging AI and ML extensively. We aim to increase revenue and automate processes within the organization. These are critical priorities for the year ahead, as the market is becoming increasingly challenging due to the emergence of new technologies.
We have initiated several projects, and PNB is now on a different path. However, my concern is to ensure that we keep up with the curve and remain on par with our peers by adopting new and major technologies. We have a robust data warehouse system and offer segregation of duties. We are investing heavily in cybersecurity to strengthen our systems as any failure can cause a significant reputational loss,” says Hemant Verma – Chief General Manager, CIO & CTO, PNB.
PNB, serving 180 million customers, recognizes the need to enhance security across its platforms to provide top-notch customer service. To achieve this goal, the bank has created a digital banking transformation division led by three General Manager level officers. These sections are dedicated to fintech, digital journey, and digital products and platforms. In the last quarter, the bank has rolled out 20 new products and plans to give a new look to its banking platform apps by 2023.
Availability of talent and skillsets: A recent report by IDC highlights that a significant portion of Asia Pacific organizations, ranging from 60% to 80%, face challenges in filling IT positions such as security, developer, and data professional roles. This shortage of skilled professionals has far-reaching consequences, including increased workload for existing employees, higher security risks, reduced customer satisfaction, and the loss of crucial knowledge.
While large technology companies’ layoff announcements have garnered attention, they do not reflect the broader skills shortage prevalent in the job market. The difficulty in finding qualified candidates remains a top challenge for organizations across various industries, particularly those that rely on labor-intensive roles.
“In my opinion, the most significant challenge that organizations face today is the availability and continuity of skilled personnel. It is crucial to have individuals with a passion for the work and a long-term commitment to the organization. However, finding the right resource with the required drive and expertise is a significant challenge. It is essential to sustain the projects that we are building to ensure long-term investment success. Therefore, we need people who have the vision and passion with the right technological skillsets across different technology platforms,” says Edsel Pereira, Group Vice President – IT, Glenmark Pharmaceuticals