5 reasons why you need to digitize your Business Model immediately
22 January 2018
As the Internet increases its penetration across the world on a daily basis, the benefits of digitizing every aspect of your business only continue to grow. Automation and cloud computing is changing the way people do business, and if businesses do not adapt their models to this new reality, they will find it increasingly hard to keep up.
The proliferation of the Internet of Things
According to a report published by the European Commission in 2010, there will be anywhere between 50-100 billion ‘things’ connected to the Internet by 2020, which is a minimum tenfold increase from 2008. According to the McKinsey Global Institute, the financial impact of the IoT could exceed $10 trillion by 2025, and it is expected to create a new technological revolution of sorts.
Businesses are adopting IoT-related technologies faster than ever before. According to a survey carried out by the research and advisory company Gartner Inc., it was estimated that as many as 43% of all organizations would implement some form of IoT technology by the end of 2016. Adoption rates differ by industry, but the number is only rising on a yearly basis.
Digitization reduces operational costs
The 2016 version of McKinsey’s yearly report on Capital Investments and Banking stated that digitization was decreasing operational costs across the banking industry. The report predicts that low-speed banks and high-speeds banks can expect to reduce costs by 25% by 2020, thanks to digitization practices such as automating back-office processes, electronic acquisition of clients, leveraging big data analytics, and using cloud infrastructure.
While the report may have pertained to banking, processes such as customer acquisition, use of big data analytics, and cloud infrastructure spread across industries. Several industries can drastically reduce operational and overhead costs by digitizing anything that can be digitized.
Cloud infrastructure is very cheap
With cutting-edge cloud infrastructure provided by the likes of Amazon Web Services, Oracle and Microsoft Azure, physical, dedicated servers are slowly becoming a thing of the past. As the security concerns surrounding cloud computing decreases on a daily basis, adopting the technology is a very smart choice.
For example, Dropbox, the popular cloud-storage company, started off on Amazon S3, which allowed the company to scale massively in a very short period of time. The founders of Dropbox have stated that their growth could not have been sustainable without AWS, and Dropbox is still in the process of migrating its over-500 petabytes of data on its customer infrastructure. For comparison, 500 PB is nearly 14,000 times larger than all the books in the famed Library of Congress.
CRM decreases customer care costs
In today’s hyper-connected reality, customer care is more critical than ever before due to social media. Nowadays, customers are far more likely to seek action via social media than visit your website or email you or call you. Customer relationship management (CRM) applications drastically reduce the costs related to responding to customers. It automates more processes, organizes responses based on priority, and allows you to conduct targeted advertising in addition to numerous other benefits.
American Express has been using Salesforce’s CRM since 2010 to manage its vast network of customers. The Amex brand has completely transformed how customers are able to make payments, receive information, and run their businesses.
Digitization improves productivity across multiple channels
As more and more tasks get automated on a daily basis, their rates of efficiency also increase. Digital tools improve productivity while reducing costs required to achieve that level of productivity. Thanks to digitization, businesses can automate more processes, maintain a smaller pool of workers, have workers perform specialized tasks, and increase the speed of operation. For example, the digitization of the packaging industry has greatly benefited Siemens. The automated system is incredibly flexible and allows customized machines to become a reality easily. It is guided by powerful tools such as TIA Portal and MCS Creator. These innovations have created a sustainable value chain for Siemens in the packaging industry, an industry that many believed would die out with the emergence of digitization.
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