Accelerating digital transformation in the new normal

January 2021  |  FEATURE  |  BOARDROOM INTELLIGENCE

Financier Worldwide Magazine

January 2021 Issue

Business transformation through the application of digital technologies – whether it be social media, mobile, advanced analytics or cloud computing – is an essential weapon in the armoury of any company looking to innovate and grow in a world demanding greater operational agility and efficiency.

As the world continues to grapple with the devastating impact of the coronavirus (COVID-19) pandemic, the need to pursue a digital transformation agenda is more acute than ever. And while companies will undoubtedly face significant issues during the digital transformation process, slow progress is not an option, with business leaders needing to accelerate the digitalisation of their core operations.

“The pandemic has created an environment of sink or swim, and companies are having to accelerate digital transformation strategies to enable them to continue to connect to customers,” says Kevin Trilli, chief product officer at Onfido. “From the increased reliance on remote services, the need for fast and secure digital access has never been greater.”

Echoing this is a survey by Pegasystems – ‘Digital transformation & COVID-19: Driving customer-centric business change’ – in which 91 percent of respondents stated that they needed to make changes now to survive the post-COVID-19 world. In addition, 74 percent agreed that the crisis had exposed more gaps in their operations and systems than they originally expected.

Furthermore, 71 percent of respondents confirmed that the pandemic experience has forced them to accelerate their digital transformation plans, with 62 percent saying they will increase the priority level of such planning within their company, and another 56 percent indicating a desire to invest more in digital technologies. “COVID-19 has seen companies rapidly accelerate their digital transformation plans, condensing them from year-long projects into a matter of weeks,” says Steve Morgan, senior director of Financial Services Europe at Pegasystems.

In the UK, research by eFax found that 60 percent of IT decision makers have accelerated their speed of digital transformation as a direct result of disruption to their workforce caused by the COVID-19 pandemic. The research also revealed that the crisis has enabled many enterprises to get to grips with the need for digital transformation and combine the operational changes needed with digital applications. Even if this process began prior to the crisis, they may have previously lacked the required knowledge, expertise and focus to successfully achieve a change of this scale.

“Companies of all sizes have had their IT resilience tested to a significant degree during the pandemic,” says Vik Khurana, a partner at Bristows LLP. “They will now be enhancing their digital operations to meet the changing landscape they now find themselves in. And while data will already be at the centre of many digital transformation programmes, the COVID-19 experience will likely accelerate this trend.”

In its ‘COVID-19 Digital Engagement Report’, Twilio states that COVID-19 is “the digital accelerant of the decade”, the pandemic having brought forward companies’ digital transformation projects by a global average of six years. Additionally, 92 percent of those surveyed by Twilio stated that transforming their digital operations is extremely or very critical to address COVID-19 business challenges.

“When lockdowns hit, some very rapid changes had to be made under considerable pressure, not only to get operations back up and running, but to adapt to remote working,” affirms Nick Johnson, head of digitalisation at Osborne Clarke. “Inevitably, some shortcuts had to be made to the usual procurement due diligence and checks, where digital tools needed to be adopted very quickly. There was reassurance from some regulators – such as the Information Commissioner’s Office (ICO) which oversees the UK’s data privacy regime – that enforcement priorities would recognise the urgency of the situation.

“But now that the urgency has passed, it is important that businesses circle back and complete any unfinished work,” he continues. “Ways of doing business which were extraordinary in March have become run of the mill nine months on, so it is important to check that the normal rigour and discipline of compliance has now been established around new systems, processes and procedures.”

Benefits and challenges

While digitalisation can bring considerable benefits to companies, such as new revenue and value-producing opportunities, there are also numerous risks that need to be assessed and challenges to overcome throughout the course of a digital transformation process.

In the experience of Julian Ide, head of Europe, the Middle East and Africa (EMEA) distribution at Franklin Templeton, there are tremendous benefits for companies in digitalising – both internally and also for the end-client, as outlined below.

First, cost and efficiency. Perhaps the biggest benefit in digitalising is the decrease in cost and increase in efficiency. As more business is conducted or driven across digital channels, it will reduce the cost associated with previous methods of doing business and enhance relevant efficiencies. The ability to drive more communication online has reduced the cost of travel, while also ensuring the maximisation of speed of information and data movement, reducing the cost of delays and activity.

Second, productivity. It has been shown that workers are more productive when they are given the choice of working remotely, especially as they eliminate commute time, travel and related exhaustion, and can spend more of that time with family, being that much more productive. Availability has also become a key point in driving up productivity gains related to remote working.

Third, increased client interaction. The ease in which an employee can interact with clients, either through online meetings or digitally, has decreased some of the barriers to connect with clients, making it easier to meet with them.

Lastly, personal connections. While the initial thought suggested that COVID-19 would reduce connections when balanced well and executed effectively, video conferencing specifically has shown that personal connections have become deeper. Being invited into homes and personal spaces has increased the ability for people to better connect.

“Digital transformation can help to simplify operations which results in productivity gains and cost reductions,” notes Mr Morgan. “For example, companies may have hundreds of internal systems all running together at the same time, but by working from the centre-out on a customer journey and system that links both front and back end legacy systems, productivity levels are likely to increase.”

In Mr Khurana’s view, an uptick in operational efficiency will be particularly important in a post-pandemic environment. “Companies that digitalise their operations will be better placed to cope in terms of how they and their staff operate remotely, as well as in coping with changing consumer behaviour, such as the increasing preference for online avenues,” he adds.

That said, according to Mr Ide, in order to reap the rewards of a successful digital transformation, including greater market share, increased revenue and improved customer engagement, companies need to overcome numerous challenges, outlined below, as they progress their business to the next level

First, differentiation. It is important to ensure that companies have the right tools and services available to differentiate themselves in a digital world. The crowded digital space will only add to the noise that digital communications and mediums already face. It is therefore pertinent for companies to differentiate, reinvent and personalise their capabilities so that they may compete.

Second, work/life balance. In a post COVID-19 world, there is unlikely to be a full reversal of trends such as extensive remote working, so companies must be vigilant in how they manage the work-life balance going forward.

Third, human-driven relationships. Companies risk losing human-driven relationships if the quality of the content and the medium are not landing successfully with their customers. This also makes it challenging for companies in reaching and building relationships with new prospects, especially when physical forums and meetings are at a minimum.

Lastly, digital experience expectations. Any failure to provide a complete and consistent online experience that rivals what their competitors may offer jeopardises companies’ relationship with their customers.

“Companies also need to dedicate sufficient time to advancing their digitalisation and to cleaning up their automated processes to ensure they work properly,” adds Mr Morgan. “They must also factor in any recent policy changes made during the pandemic that need to be reviewed and updated accordingly.”

Regulation and compliance

With all the pressures that COVID-19 is placing on their business, no company wants the additional pressure of having to deal with a regulatory investigation or enforcement action. In order to mitigate this threat, oversight of and compliance with all relevant regulation is essential.

“It is important to evaluate whether digitalisation will alter the regulatory profile of your business,” says Mr Johnson. “For example, moving to online sales will involve compliance with e-commerce frameworks, as well as regulation around online payments. Additionally, if a company moves from selling via an intermediary to selling direct to the consumer, consumer protection laws will be engaged and the quantity of personal data being processed will increase significantly, upping the importance of compliance with data privacy regulations.”

Furthermore, with data at the heart of any company’s digital transformation strategy, data protection and cyber security are also key compliance areas. “Regulators are increasingly focusing on these areas,” confirms Mr Khurana. “The likes of the General Data Protection Regulation (GDPR) and the recent Networks & Information Systems (NIS) Directive aim to promote an overall higher level of cyber security in the European Union (EU).

“Therefore, companies looking to transform themselves through data must ensure they have the structures in place to ensure data protection compliance,” he continues. “Do they have the right legal basis to use data differently? What will regulators, customers and other stakeholders think? Companies must also manage the increased cyber risk that arises from a data-driven strategy, by investing in network security, conducting NIS compliance assessments and ensuring they are adequately insured.”

Digital for the new normal

Prior to COVID-19, digital disruption was already critical for business growth. Since the pandemic took hold – exposing companies’ digital gaps and compromising their operational effectiveness – the need to accelerate digitalisation has become even more acute. A critical transformation is needed if businesses across all industries are to survive and thrive in the new normal.

“The pandemic has put pressure on companies to move away from traditional, physical methods of service,” says Mr Trilli. “With so many customers deterred from heading to the high street to conduct errands and services in-person, offering a fully digital experience has become essential to many players, across many industries.”

For his part, Mr Ide does not expect to see any significant reversal of digital trends in a post-pandemic environment. “Certain trends will continue to evolve, such as digital savvy employees, increased digital integration, reduced customer reaction and response time, more deliberateness and transparency, and a globally sourced and dispersed workforce,” he contends.

As a different world takes shape, COVID-19 has accelerated the need for companies to transform and respond, with digitalisation a key enabler. Going forward, many will be looking at further investment in technologies – including analytics and automation – that can help them innovate, gain greater business insight, open up new revenue streams and, ultimately, ensure their survival.

© Financier Worldwide

BY

Fraser Tennant