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Digital Transformation – How to Become Digital Leader

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Digital Transformation – How to Become Digital Leader Digital Transformation – How to Become Digital Leader Study 2015 - Results Arthur D. Little www.adlittle.com Table of Contents 1 Executive Summary 2 Deep Dive 3 Appendix (DTI per industry) Source: Arthur D. Little Digital Transformation Study 2015 2 Executive Summary – Study Overview Arthur D. Little conducted the Digital Transformation Study globally and cross-industry. The key findings are summarized in this document. 120 hrs Expert interviews with management representatives 1+7 Sections have been assessed Automotive Telecom & Media Energy & Utilities 100+ 7 Consumer & Life Science Global players Major industry clusters Financial Institutions have participated have been covered EPC1 & Manufacturing Travel & Transport Source: Arthur D. Little Digital Transformation Study 2015 1) EPC = Engineering, Procurement & Construction 3 Executive Summary – Randomly Selected Participants The Arthur D. Little Digital Transformation study covers leading companies across all industry segments +… Source: Arthur D. Little Digital Transformation Study 2015 4 Executive Summary – Study Overview Turning Digital has become a well understood imperative. Whilst Digital has commonly found its way into corporate strategies, the path to transform adequately remains unspecified of surveyed companies are 80% digital adaptive only of companies have comprehensive digital 17% transformation strategies in place Progress in Digital Transformation is measured via the Digital Transformation 3.92 DTI Index (DTI)1 have dedicated central units for Digital 15% strategy development and implementation perceive lack of digital knowledge across the 50% value chain as their major challenge to overcome Source: Arthur D. Little Digital Transformation Study 2015 1 Logic: The higher, the better. Measured on a scale from 0 to 10 5 Executive Summary – Why Digital Transformation? Digital Transformation is everywhere and impacts everything and everyone Our biggest challenge is to Clients are us understand the customer and pushing towards digital transformation: If his new behaviors. we don't transform they will move The market is changing: to our competitors. partners are be- coming competitors. New entrants and fast-moving Products and services need to competitors increasingly capture undergo a digital transformation: we , cannot just take digital opportunities physical indicating the potential of “digital” in products and put them online. the market. Productivity related to new technologies such as cobots, Our world has been changed by the predictive analytics and additive expectations of our customers, while our manufacturing will increase by a basic service continues to be the same: factor of 100 over the next 5–8 years, We need to transform in order to while costs will be reduced by a maintain customer satisfaction. factor of 100. Source: Arthur D. Little Digital Transformation Study 2015 6 Executive Summary – Study Overview Some of the below key findings we anticipated beforehand, whereas others have been surprising and astonishing 1. Digitization will change the competitive environment of all industries significantly 2. Most industries are already affected by digital disruption or realize that they will be soon 3. Few companies yet follow a consistent digitization approach for their whole business model 4. Companies underestimate opportunities in Operations and in Business Model Redesign 5. There is a huge demand and backlog for the majority to deal with “Digital” properly 6. No industry can claim to be a digital front-runner; however, each industry has its outperformers 7. Most companies are either not aware of or ignore potential threats from digital disruptors1 8. Companies are too slow in transformation, though facing rapidly evolving digital competition 9. Third-party integration is often underrated as companies still try to solve problems on their own 10. The usage of “smart data”, and thus also personalized offerings, lag behind Source: Arthur D. Little Digital Transformation Study 2015 1 Also too little imagination for a renewal resp. overhaul of their business model in a future digital world 7 Executive Summary – Trends Some major digital trends change yesterday’s realities – these “game changers” facilitate great opportunities and will inevitably generate some highly digitized champions Yesterday’s Realities Digital Disruption Digital Trends Automotive Telecom & Media - - Physical product Product-as a service Consumption Active creation Consumer Energy & Life Science & Utilities Points of usage Service everywhere Mass production Personalization 100+ Study Participants Travel Ownership Shared across community EPC1 & Transport & Manufacturing Embedded into ecosystem Disconnected Financial Institutions No updates Continuous improvement Vertical integration Value chain disintegration Source: Arthur D. Little Digital Transformation Study 2015 1 EPC = Engineering, Procurement & Construction 8 Executive Summary – Trends Impact on Industries Prominent examples of digitalization can be found in every industry. By nature, each trend’s impact varies and so does the industry-specific progress on digital transformation Industries Automotive Telecom Energy Consumer Financial EPC1 Travel & Media & Utilities & Life Science Institutions & Manufacturing & Transport 8 Digital Trends Cloud - - - Product as a service Services 3D- Active creation Printer Hybrid Service everywhere Advisory Model Running Personalization Shoes Individ. Car Shared across community Sharing Smart Embedded into ecosystem Home Appl. Wifi SW- Continuous improvement Upgrade for Car P2P Sourcing Google Value chain disintegration Money via Car Transfer Alibaba Source: Arthur D. Little Digital Transformation Study 2015 1 EPC = Engineering, Procurement & Construction 9 Executive Summary – Overview “Digital Transformation Framework” The survey followed a holistic approach to analyze the relevant sections for digitalization; the questions raised have been mapped to these sections Opportunities and challenges Drivers & Challenges Changes in the firm Digital client share Changes in competitive Share of digital sales and environment A interaction Digital marketing share, Strategy & Governance customer data analytics Maturity of digital strategy KPIs on Digital approach B C Flexibility of IT landscape to Roles and responsibilities for Products Customer provide digital capabilities concept and implementation & Services Management Role of IT function in digitalization Budget dedicated to digital Product and service portfolio F Information Technology adaption Impact of digital on transparency Share of digital sales D Corporate E Operations Maturity of digital support Changes in development process Services & Supply Chain processes & Control … Maturity of digital operations Target picture and G Workplace & Culture Maturity of communication and transformation roadmap collaboration Degree of dynamic adaption Mobility Business Model Agile working methods Source: Arthur D. Little Digital Transformation Study 2015 10 Executive Summary – Cross-Industry DTI The Arthur D. Little Digital Transformation Index (DTI) shows that today few firms can be considered “digital oriented” or “digital centric” Digital Transformation Index (DTI)1 10 Digital centric 9 [score above 7.5] 8 7 Digital oriented [score between 6 5 and 7.5] 5 Digital adaptive [score between 2.5 and 5.0] 102 100 98 96 94 92 90 88 86 84 82 80 78 76 74 72 70 68 66 64 62 60 58 56 54 52 4 103 101 99 97 95 93 91 89 87 85 83 81 79 77 75 73 71 69 67 65 63 61 59 57 55 53 51 49 47 45 43 41 39 37 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 50 48 46 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 3 Each # represents a specific company Average 2 1 X-Axis = Indexed at Cross-Industry Ø 3.92 Digital aware [score below 2.5] Y-Axis = Company-Specific Deviation to Ø 0 Source: Arthur D. Little Digital Transformation Study 2015 1 DTI calculated as average of scores for each section 11 Executive Summary – Cross-Industry DTI per Sections Average DTI is most advanced in the section “Strategy & Governance” as well as “Information Technology”, with a score of 5 – however, it still lags behind the virtual star performance Digital Transformation Index (DTI) per Section Strategy & Governance Workplace Products & Culture & Services 1 2 Information 3 Customer Technologies 4 Management 5 6 7 8 9 Corporate Services 10 Operations & Control & Supply Chain = Cross-Industry Virtual Star = Cross-Industry Average Source: Arthur D. Little Digital Transformation Study 2015 12 Executive Summary – Case Examples We collected many best practices for each section to share with you A Strategy & B Products C Customer Governance & Services Management Cyber-Physical Burberry Integrated Nike x-functional Product Customer Experience Digital Sports Division Service with Real-Time Dynamic Peer-to-Peer Pricing for Profit Component Coca Cola Maximization “Co-Founders” SBB GoodBox Network Rail-Transport Quicksilver Personal Smartization Pricing & Rewards Corporate D Operations E F Information G Services Workplace & & Supply Chain Technology & Control Culture adidas Speedfactory Coca Cola In-Store Production Brand Dashboard European Layered IT Architecture for Quick Process Gamification in Telco Vision Picking Implementation Project-based/ Digital Business using Augmented Knowledge Launch Factory Reality Environment ICT to Support Cold Chain Cloud-Based Industry 4.0 Quality Project Staffing Management Source: Arthur D. Little Digital Transformation Study 2015 13 Executive Summary
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