Technology has become an extension of who we are and how we live our daily lives, from turning off a morning alarm on a cell phone, to scanning emails, paying bills, and connecting through social media apps. It shouldn’t come as a surprise that nearly nine out of 10 Americans are online – 77 per cent own a smartphone and globally there will be 75 billion connected devices by 2020. From a consumer standpoint, we have successfully completed a digital transformation in our personal lives. But, the same can’t be said for businesses just yet.
While today’s most forward-thinking leaders recognize the reality that digital transformation will increase revenue opportunities, there’s a growing disconnect between the desire and the ability to bring this to fruition. In fact, SAP recently surveyed 3,100 business leaders and found that 84 per cent agree that digital transformation is important, but only 3 per cent feel their efforts are complete. Today’s most successful leaders expect 23 percent more revenue growth from digital transformation over the next two years, indicating that simply investing in better hardware will no longer be enough. A successful digital transformation is more holistic and will require collaborating across different industries to realize its full potential.
Recognizing the importance of collaborating across several industries and lines of business is critical to a successful digital transformation. Here are a few key points to consider:
Stepping Outside Traditional Confines of an Industry
The idea of various industries blurring together through technology may be difficult to imagine, however, this is already taking place. Look at the automotive industry and transition to autonomous cars as an example. What used to be an industry deeply rooted in manufacturing is evolving into a modern, digitally- advanced, cross-collaborating industry. The industry now blends elements of retail, telecommunications, education and sustainability, tied together by one key driver: technology.
The overarching investment in technology that powers autonomous vehicles opens the door for drivers to focus their energy on completing other tasks, which in return, creates a natural connection for other industries. One of these areas is retail, as car passengers can now shop at their leisure while on their way to a desired location – even before or after work. In fact, by 2020, 85 percent of a customer’s brand experience will occur without any human interaction, making shopping in a self-driving car a very close reality. This provides an opportunity for retailers to better reach their consumers while they’re in a confined space, which also leaves room for marketers and advertisers to work with technology to retarget and use consumer data to better deliver content that will be relevant to every individual. Imagine looking for a new suitcase on your smartphone, and then getting in your car and being presented with a discount for 25 percent off the exact suitcase you had your eye on. The retail industry has a tremendous opportunity to work with the manufacturing industry, and self-driving cars are just one example of this connection.
Education is another industry that, thanks to technology, has the opportunity to merge with transportation. Time spent during transit could be allocated to learning new skills, and even receiving new certifications and course credits. By using transportation time for education, there is an opportunity for those in the higher education industry to leverage technology to make education more accessible to part-time students, opening a new market for revenue.
The energy industry is already integrating with the automotive industry, to the benefit of both. Last year alone, sales of electric vehicles increased significantly. In 2016, there were 750,000 electric cars sold worldwide, compared to 547,220 sold in 2015. In the U.S. alone, sales have grown at a 32 percent compound annual growth rate (CAGR) over the past four years. With the rise of electric and self-driving vehicles, this presents an opportunity for cars to use less emissions and to run on resources outside of gasoline. Technology is the key driver of these innovations, as new digital tools can enable a 20 percent reduction in carbon emissions by 2030. By investing in technology, these organizations can alleviate the concerns for two different industries— manufacturing and energy natural resources - all while delivering on the promise of a better future through digital transformation.
Seventy eight percent of millennials would rather spend money on a desirable experience than on a physical product – which helps explains the rise in travel and entertainment experiences. This provides a massive opportunity for auto manufacturers to work in conjunction with entertainment companies to build an auto experience that is just that – an experience, rather than a means of transportation. More than half (53 percent) of Wi-Fi households in the U.S. are now using at least one streaming service, with Netflix being the most popular. Understanding that TV and movie habits are changing, entertainment companies should look to align with the auto industry so that passengers can catch-up on their favorite movies and shows on the go. By 2020, eSports and competitive gaming will reach 500 million fans worldwide, making it a very significant market and opportunity for revenue growth for both those in the auto and entertainment industries.
Industries have More in Common than Not
Historically, companies keep their departments siloed based on lines of business, however many of their priorities match up more than you would assume. Fifty percent of top executives in the manufacturing industry see investment in digital skills and technology as the most important revenue growth driver in the next two years. The same percentage of top executives in the professional services and banking industries also agree that digital skills and technologies are the biggest revenue drivers to come. This is valuable information, because it leads departments that don’t traditionally work together to discover they share similar goals and priorities. Opening the lines of communication creates opportunities for shared resources and collaboration.
By having these cross-industry insights, those responsible for different departments within the same organization may be vying to invest in technology that already exists – but for a different purpose. Without the collaboration, there could be duplicate spending, or one industry may suffer without the advancement due to lack of funding. As an example, wearable technology was initially widely adopted among the retail sector. Wearing fitness accessories allows for consumers to keep track of their workouts and showcase personal style when doing so. Today, wearable technology has evolved and now has the potential to be life-saving by keeping track of health figures, like heart rate and glucose levels. A hospital may have invested in wearable fitness trackers for their employees to use at work as a company perk. Hospitals could then invest in the same wearable technology, yet it could be used on the patient side to monitor for at-risk patients. By allowing different uses of the same technology to take place at one institution, massive opportunity is created to evolve current systems in place.
Today’s most successful leaders understand that digital transformation is important, however, what might not be so obvious is that integrating across industries is a crucial component to achieving that goal. As we continue to invest in more next-generation technologies that have the potential to create efficiency in the workplace, it’s critical to blur the lines between industries to break down the barriers holding industries back. If we are able to collaborate internally with our colleagues that we may not work directly with, we are able to learn new information and glean valuable insights that can help us create a successful digital transformation.
Pat Bakey, President of Industries at SAP
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