The case for digital transformation
After crunching data from nearly 30,000 firms across the world, McKinsey Global institute believes corporate profits tripled between 1980-2013, rising from 7.6% of global GDP to 10%.
That growth is the result of two key developments.
The first is a globalization of markets, and as a result, the reduction of costs. Shown by the expansion of a global labor force that has grown by some 1.2 billion since 1980.
The second is the decline of corporate tax rates that have fallen by half over the same period.
But with twice as many multinationals than in 1990, competition has never been fiercer.
One way in which large corporations are attempting to differentiate themselves and future-proof their existence is through digital transformation.
A process which can be something seemingly as simple as moving data out of silos and into the open, to be harnessed by an entire organization.
Breaking down silos
Gas and electricity behemoth British Gas did just that.
David Cooper, its CIO since 2011, wanted to make customer data more accessible to the company that supplies utilities to around 10.8 million British homes.
His aim of creating a unified view of identity across all its services began with a clear digital transformation strategy that he hopes will make the leading ‘Big Six’ supplier a key digital player in the future.
The process began by untangling the analogue mess that preceded it, where customer data sat in many different areas of the business.
“Digital,” begins Cooper, “is almost like a window into a company. It allows you to see the complexity that lies within the business, systems and processes.”
After all, the purpose of digital transformation is not only to provide a holistic view of customers, but a simplification of processes from top to bottom.
“I’ve rationalized a lot of our applications. We had separate businesses, separate billing systems, separate CRM systems,” explains Cooper as he discusses the antiquated siloed walls that used to characterize its IT infrastructure.
It is quite some overhaul. And one that many large corporations are contending with, because it was common for IT infrastructure to be built in a siloed fashion, each silo with its own systems, data definitions and business processes.
Naturally, this makes business processes requiring information from various parts of the company rather difficult. Without that common view of data, any advanced approaches to customer engagement or process optimization just aren’t possible.
This creates challenges for businesses wanting to engage in multi-channel marketing operations, which, in its simplest form means offering expanded choice to customers who today have more control over the buying process, and certainly don’t want to be restricted to one platform or medium.
For British Gas at least, this change was imperative; particularly because of the increased competitiveness of the utilities space and the number of different products it has.
From Hive (British Gas’ bet on IoT), to boiler fixing, the company invested heavily in systems to provide a consistent experience across all platforms.
Cooper believes that the changes gave British Gas an unprecedented organizational agility to respond to customer needs, share information about customers across contact centers, self-service and field channels, as well as helping to develop propositions that leverage products on offer.
“Imagine trying to give customers a digital view of their services whilst their data sits in multiple CRM and billing systems.” Suggesting, “it becomes impossible to provide a holistic customer view.”
A survey by Capgemini suggests that, “data integration when setting up new services,” is one of the biggest challenges faced by executives today. It was an obstacle Cooper and his team overcame by implementing a data lake.
Initially starting out as an interesting R&D project, British Gas executives fast realized that the technology would revolutionize the way data was exploited to create commercial value.
“The biggest problem that we had, and I’m sure most FTSE companies will also have is what to do with their data. All of it is so fragmented, so we took the approach of investing in new technologies. We have a data lake, a deep deploy. What’s more is that we have aggregated data to be able to look back in time too.”
Unlocking all of this data has had some profound consequences across the business, and also for the 8,000 or so engineers working out in the field.
“Now, when an engineer comes to mend your boiler, they can see on their iPhone the services you buy from us, how many times you have had your boiler mended previously and whether or not you have any outstanding complaints. They know everything about you, whereas before they went in blind.”
It comes to show the true power that comes from breaking down silos within IT infrastructure.
And the aim for British Gas is to, “digitize as much of the company, so customers are able to control their everyday lives.”