The Future of Business: Data and Digital Transformation

While concepts such as data mining, data visualisation, and artificial intelligence might seem like something from the future, forward-thinking businesses are already well on their way to digitally transforming and safeguarding their businesses for tomorrow.

The past decade has seen a surge in the use of data science and analytics to inform business decisions, from sales and marketing through to operations and HR. With the arrival of Covid-19, experts estimate it accelerated global digital transformation by an average of 6 years.

Yet, for all the benefits to customers and the economy, New Zealand still lags behind on the data and digital transformation front. The Workday Digital Agility Index recently found 59 per cent of New Zealand organisations don’t have a strategy to develop their digital talents and 58 per cent don’t have a dedicated budget for digital transformation.1

Which is where this guide comes in. Inside, we’ll explore the potential data and digital transformation has to offer—both now and into the future.

Learn how businesses are already using AI and data modelling to enhance customer experiences and make informed business decisions.

Discover how digital transformation is the key to the Covid-19 recovery and will be essential for recovery from other crises in the future.

Most of all, this guide set thinking about how you can start leveraging this new paradigm for the benefit of your businesses and your customers.

There’s no time like now.

 

Want to jump to the next level? Learn how you can transform your business with transactional data.

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What is digital transformation?

Digital transformation is more than implementing the newest technology and software, it also includes evolving and connecting systems, processes and workplace cultures too to benefit consumers and businesses alike.

In short, it is about people and improving their experiences with your business. As the New Zealand Digital Government states, “it means doing things differently in an increasingly connected world—using new mindsets, skillsets, technologies and data to benefit people, government and the economy.”

The benefits of digital transformation are extensive, from better operational efficiency and customer experiences to reduced costs around new product development and poor quality products. Currently, the top technologies already in use are big data/analytics (58 per cent) (such as sensor technology and transactional data) mobile technology (59 per cent) (think the likes of Uber, Menulog and banking apps) and APIs and embeddable tech (40 per cent) (e.g. Shopify, Paypal, weather apps, log-in using Facebook/Twitter/ Google feature)2. However, future predictions indicate that automation, artificial intelligence (AI) and machine learning will revolutionise industries going forward.

Globally, the global digital transformation is projected to grow at a compound annual growth rate of 23.6 per cent from 2021 to 2028. With the global digital transformation market valued at USD336.14 billion in 2020, this growth rate could see that market value reach into the trillions by the end of the decade.

In short, digital transformation is coming. The sooner businesses start thinking about how to adapt, adopt and leverage the technology, data, analytics and experiences it can offer, the more competitive those businesses will be in the long term.

Read more: Businesses that embrace data are set to come out ahead

 

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The state of digital transformation in New Zealand

Despite our history as a highly innovative country, New Zealand is behind the rest of the world when it comes to digital transformation. As mentioned earlier, 59 per cent of New Zealand organisations don’t have a strategy to develop their digital talents and 58 per cent don’t have a dedicated budget for digital transformation. Further still, the same research also estimated only 3 per cent of organisations operate on a single autonomous digital platform fuelled by shared data and intelligence3.

As commentators have noted, we love the idea of innovation, but not its implementation.

However, it’s not all bad news. Since the start of Covid-19, digital transformation has accelerated 40 times faster in New Zealand. New initiatives are also starting with the government’s $20 million Small Business Initiative to help small businesses that may otherwise not have the resources to upskill and adapt to the changing commerce and consumer landscape.

 

Digital transformation is more than a good idea—it’s for survival

Digitally agile businesses are capable of adapting to change—whether it’s technological breakthroughs or a worldwide pandemic. A global study found that 72 per cent of companies that were the first in their industries to experiment with new technologies during the crisis reported a very effective response to Covid-19.

However, research closer to home has found over 50 per cent of New Zealand organisations were not able to adapt their business processes in response to COVID-19 and struggled to change financial plans, budgets and organisational structures4.

With the world shifting ever more towards the digital, consumers and customer expectations are set to follow. Remote working and online collaboration have become commonplace, businesses have shifted their servers to the cloud, demand for online services and product offerings is set to increase, technology is connecting machines and people in real-time—all these digital ways of working are helping businesses keep their cashflow up and their downtime, well, down.

Read more: Digital disruption: how to excel in digital customer experiences

Technologies that are changing how we do business

The Internet of Things (IoT)

Digital transformation is more than upgrading your systems. It is about connecting systems. By 2025, there will be 75 billion connected devices in the world—three times what there were in 20195 and the Internet of Things strives to have them “talk” to one another in real-time for greater efficiency.

IoT is just about everywhere, from Bluetoothing your smartphone to your car and sports watches that monitor your activity via an app, to sensor technology that allows one machine to “communicate” to another in a factory. Something as simple as integrating your social media, website and mail provider is IoT in action. In fact, IoT is so powerful, 60 per cent of executives say it will play a critical role in their digital business strategy6.

Its benefits include:

  • Time savings, and in turn, cost savings.
  • Greater supply chain efficiencies.
  • Better maintained equipment.
  • Higher quality products.
  • Improved customer experiences.
  • Fewer goods lost due to poor manufacturing.

Related content: Customer experience in an age of digital disruption

 

Big data analytics It’s being used to tackle climate change, map 1,000,000 genomes to improve our understanding of diseases, detect money laundering among millions of transactions, and that is just the tip of the iceberg. Big data analytics allows us to read, interpret and use data in the everyday.

Incorporated into the likes of automation, artificial intelligence and data modelling, big data analytics is the meat of our future technologies.

Learn more: Get Data Smart: your data science 101 guide

 

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Automation

Defined as making an apparatus, a process, or a system operate automatically7, automation is much more than robots. It can involve process automation, IT automation, workflow automation, content management, document management, and many more. It strives to remove the tedious repetitive tasks, freeing up staff to focus their energies on creative solutions and innovation.

From reviewing and updating millions of customer contracts to making accounts payable paperless, automation is not about taking people’s jobs—it’s about making them easier.

Its benefits include:

  • Eliminating tedious, repetitive tasks.
  • Reducing the risk of human error.
  • Reducing key person dependency.
  • Standardising processes.
  • Saving time.
  • Improving customer experiences.
  • Providing data insights.
  • Freeing up staff to look forward and innovate.

Related content: Digital disruption: how to excel in digital customer experiences

 

How will automation impact New Zealand? According to PwC, the world is set to go through three automation waves: the algorithmic wave in the early 2020s; the augmentation wave in the late 2020s; and the autonomy wave in the 2030s8. Each of these waves will have differing degrees of impact on each industry.

Overall, the industries that will see the most change are transport and storage, manufacturing, construction, and administration and support services. However, in the next few years automation is set to make major changes in financial and insurance, information and communication, and professional, scientific and technical services.

Read more: The beauty of customer experience automation

 

Cloud computing

Cloud computing not only makes information accessible remotely, but it also helps reduce reliance on equipment, aid data security (i.e. no hardware failures), and streamline efficiency. In New Zealand, workers lose an average of one to three hours per week tracking down information between tech tools. In a year that results up to 156 lost hours9. A New Zealand report also found that just a 20 per cent increase in uptake of cloud computing by small to medium businesses would result in an increase of GDP between NZ$3.5 billion and NZ$6.2 billion.

By having technology based in the cloud, employees are better able to collaborate and bring greater speed and productivity to their work.

Cloud computing benefits include:

  • Remote access for staff.
  • Enhanced collaboration ability.
  • Information stored in one place.
  • Reduced risk of information damage and/or loss (e.g. from a workplace fire, stolen laptop).
  • Improved data security (e.g. automatic updates to software).
  • The ability to outscale instead of upscale—rather than building a bigger on-site computer to handle data-intensive processes, cloud computing can utilise a cluster of machines in the cloud that work together to break down the data-intensive processes into smaller, bite-sized processes.

Read more: Transform with transactional data: Unlock a new level of business intelligence

 

Artificial intelligence and machine learning

Artificial intelligence (AI) might seem like a far-off future technology, but the reality is that businesses are already using it. In fact, 15 per cent of enterprises were using AI as of 201810 and its use is only going to grow as the technology becomes more accessible. Paired with automation, AI will help reduce the time it takes to perform complex tasks, from data analysis to product manufacturing.

Paired with the power of big data and its ability to find patterns that humans might otherwise miss, it has some truly exciting potential. Accenture research found that AI could boost rates of profitability by an average of 38 per cent by 2035 and lead to an economic boost of US$14 trillion across 16 industries in 12 economies by 2035. The same report also found the following industries set to see the most increases in profit from AI:

  • education (84 per cent increase)
  • accommodation and food services (74 per cent)
  • construction (71 per cent)
  • wholesale and retail (59 per cent)
  • healthcare (55 per cent).

 

Machine learning is a subset of artificial intelligence and is designed to give a machine access to data and let it teach itself how to use it, in a similar way to how humans learn—trial and error.

 

While this video is several years old, it is an excellent example of machine learning at work. Google’s DeepMind AI taught itself to walk without being programmed to do so.

With the help of machine learning, businesses have been able to create digital assistants and advanced chatbots, such as Siri and Alexa, which run off machine learning. It is being using it to speed up decision-making and processes by drawing on various data systems available to it, and is assisting healthcare (e.g. to read x-rays), manufacturing (e.g. predictive maintenance), agriculture (e.g. crop monitoring) and business (e.g. Adobe Sensei).

 

Data modelling

While similar to machine learning, data modelling has its place in the world of digital and data. At Perceptive, we define data models as advanced algorithms that utilise data to identify and predict relationships between various behaviours, attitudes, and outcomes—such as predicting customer churn (propensity modelling) based on a set of established variables, such as the how often a customer buys from the bran and the amount they spend per purchase. Some models can involve machine learning, a type of artificial intelligence that automatically adapts and learns depending on the task it has been set.

Data modelling can help businesses understand what drivers are causing an event (e.g. churn, decision to purchase) to happen. Businesses can then use this information to improve the drivers that increase performance, while always finding ways to reduce the negative drivers that lead to negative events, such as churning.

Modelling can also be used to assess marketing and advertising effectiveness and quantify its impact on various business objectives, such as trial sign-ups, purchase and repeat purchase. It can also help you predict the uplift in these objectives if you were to spend more, allowing businesses to optimise their marketing spend.

Benefits:

  • Identifies the most and least effective areas of your business.
  • Enhanced business processes.
  • Behaviour prediction.
  • Reduced workloads on staff.
  • Reduced errors.
  • Reduced risk.
  • Enhanced pattern-finding.
  • Trend analysis.
  • Improved customer experience.

 

Read more: What Data Science Can Do For You

 

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The next phase: Digital Experience (DX)

Currently, we’re in the age of customer experience and it’s a mix of face-to-face and online interactions. However, in the not too distant future, digital experience is going to come to the fore.

According to Shopify, COVID-19 saw eCommerce reach an “all-time high” with US eCommerce achieving 10 years’ growth within 90 days in 202011. And it’s not the younger generations driving this change either, much of this growth is attributed to older generations shifting their shopping online.

Read more: How digital innovation trends impact customer experience

 

This shift has, predictably, seen the demand for smooth, seamless digital experiences from customers. And as businesses have rapidly adjusted, eCommerce competition has heated up—good enough is fast becoming subpar as digital experience (DX) becomes the key differentiator between brands.

This trend is only set to increase as the global eCommerce share of retail sales is predicted to reach 21.8 per cent by 2024, up from 13.8 per cent in 2018 and 18 per cent in 2020[12].

In other words, the online retail space is set to get even more crowded. A strong digital experience will help you stand out from competitors both local and abroad.

Read more: 10 principles for customer experience transformation

 

The two critical components of superior digital experiences

Unified data

Customer data, product data, inventory data, sales data, you want it connected and operating from a single source of truth. Having all your data integrated the one place not only make your digital experience easier to manage, but it ensures your customers have a smoother, more personalised experience. From the system offering personalised product recommendations based on a customer’s previous purchases to monitoring your stock levels so customers aren’t left in the lurch if you run out of a certain item.

Read more: Why a CRM platform is critical for digital transformation

 

Mobile friendly

Three years ago, 31 per cent of New Zealand’s eCommerce sales were completed on a mobile device. At the time, mobile commerce sales were expected to expand at a compound annual growth rate for 21.9 per cent to 2021. With COVID-19 accelerating digital trends, the actual figure is likely higher.

With this in mind, businesses need to take a mobile-first approach to their eCommerce stores. Sites must be responsive, with a low bounce rate. Alternatively, consider creating a progressive web app for increased speed on mobile and access even when a user is offline.

 

What can businesses do to prepare for digital transformation?

It is easy to think of digital transformation as simply adopting new technology. While technology is a critical component, successfully transforming a business requires strong leadership, particularly in change management, a strong understanding of your customer and what they need, and a willingness to upskill and change your ways of working.

As Spark’s Chief Executive, Jolie Hodson, once wrote on Spark’s transformation: “The answer is rarely as simple as upgrading equipment or implementing a new system. It usually requires a fundamental shift in how you do business.”

Read more: 3 steps for B2C’s to leverage digital disruption

Digital transformation risks

While digital transformation can bring around numerous benefits—it does come with pitfalls that businesses should be mindful of as they transition their systems.

Over-emphasising technology

While technology is a critical component of digital transformation, it should not overshadow the main reason for digital transformation: meeting customer needs and expectations, and ultimately, improving their experience with your brand. Digital transformation is a customer-first approach, not technology-first; failing to take customer needs into account is a recipe for a poor user interface in your digital experiences.

No overarching omnichannel strategy

Digital transformation involves many moving digital parts: social media, email, chatbots, online stores, online events and more. What sets your omnichannel strategy apart from a multichannel strategy is that all these experiences are connected; they draw on the same customer data so each customer interaction feels like a continuation of what came before, regardless of platform. However, without a clear overarching strategy and priorities, these channels can make your customers feel like they are dealing with a different business rather than the same business.

Moreover, a lack of strategic direction may mean your teams have constantly shifting priorities or priorities that conflict with one another. Take time to develop an omnichannel strategy and communicate to staff responsible for each channel how their channel contributes to the greater whole.

Read more: Learn about mastering the omnichannel challenge in our blog

 

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Cyber security

As mentioned before, digital transformation involves many elements—and the more elements in play with various logins, third-party applications, integrations, cloud storage and so on, the greater the risk of a security breach.

According to one report, 281 New Zealand businesses experienced cybersecurity breaches between June and September in 2020, with many more likely going unreported.

There’s no denying cybercrime is on the rise, however, businesses should also be aware of their responsibility concerning data privacy, particularly in the wake of revised data laws such as the GDPR and the updated Privacy Act 2020.

All that said, while poor data storage and management can lead to unintentional breaches, the most common cause of privacy and data theft is due to compromised email accounts13. In other words, poor workplace security protocols and inadequate staff training. To mitigate this, make sure all your staff undertake security training.

If you are dealing with personally identifiable information, be aware you may need an ISO certification.

 

Summary

Digital transformation is set to change how we do business—and for the better. However, there are some challenges to overcome if New Zealand is to remain competitive in the global marketplace. However, if we lean in to change and embrace the power of data, technology and a customer-first mindset, businesses can and will thrive. The risk is that businesses wait too long to take the leap, setting themselves up to forever chase the leaders that bravely stepped up and into this new paradigm.

Digital transformation is moving quickly.

Let’s not be followers. Let’s be leaders.


 

Want to be a data and digital leader? Discover the power of transactional data and how it can uncover new opportunities in our free guide.

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[1] NZBusiness, 2020. Study reveals need for digital transformation, NZBusiness, nzbusiness.co.nz, 18 August 2020.

[2] Astrid Eira, 2020. 72 Vital Digital Transformation Statistics: 2021/2022 Spending, Adoption, Analysis & Data, FinancesOnline, financesonline.com.

[3] NZBusiness, 2020. Study reveals need for digital transformation, NZBusiness, nzbusiness.co.nz, 18 August 2020.

[4] Ibid.

[5] Jacquelyn Bulao, 2021. How Fast Is Technology Advancing in 2021? Techjury, techjury.net, 6 August 2021.

[6] IDG, 2018. 2018 Digital Business Survey [White Paper], IDG, idg.com.

[7] Merriam-Webster, 2021. Automation, Merriam-Webster, merriam-webster.com.

[8] PWC, 2018. Will robots really steal our jobs? PWC, pwc.co.nz.

[9] Shannon Williams, 2021. NZ businesses lacking right technology for hybrid working as digital transformation accelerates. IT Brief New Zealand, itbrief.co.nz, 9 July 2021.

[10] Giselle Abramovich, 2018. 15 stats about artificial intelligence. Adobe, adobe.com, 9 March 2018.

[11] Shopify, 2021. The Future of eCommerce Report 2021. Shopify, shopify.com

[12] Oberlo, 2021. Ecommerce Share of Retail Sales (2019-2024). Oberlo, oberlo.co.nz

[13] NZTech, 2021. Hundreds of NZ businesses now losing money to cyber-criminals. NZTech, nztech.org.nz, 24 February 2021.