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Learn from the industry expert Vivek Kaushik, Business Head – Americas, Cygnet Digital (A part of Cygnet Infotech) on Importance and Strategies of Digital Transformation in our latest Podcast series TechStories along with Khushbu Raina, Manager, HR, Cygnet Digital (A part of Cygnet Infotech).
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In conversation with Vivek Kaushik, President NA, Cygnet Infotech
Digital transformation is key to success in 2023 as it enables organizations to unlock the potential of new technologies, create new business models, and drive customer experience. It also enables organizations to become more agile, scale quickly, and gain a competitive edge by leveraging digital capabilities to create new products, services, and experiences.
Why and how digital transformation?
There are various reasons why COVID-19 has played a vital role. We all have experienced digital transformation closely. Online ordering of groceries that’s a perfect example of digital transformation. Old retail transformed. We were able to schedule our appointments online with doctors, lawyers, with whosoever we wanted, we were able to do our family functions online. Companies like Zoom have become more important in our lives. We started working remotely, using messaging, online tools, and platforms. We were sharing information over the Internet and when we were sharing information over the Internet, security came into play. Today we are not so much worried about security, because security has been largely taken care of. We easily go online on our phones, send money do everything. So, the way we were doing things before COVID, the scenario had changed. Businesses had changed. For example, in the US, Walmart. Online business pre covid was only 4 1/2%. It changed to over 28%.
What is Digital Transformation? If I ask, everyone will have different definition. There are two words one is digital and the other one is transformation What is digital? If I ask some of you, what’s the example of digital? Maybe somebody will say, hey, digital is visible numbers, there used to be an analog watch. Now we have a digital watch, there were analog meters. Now we have digital meters. So, what really digital signifies is precise value. And is transformation change. How do you change and whenever we are trying to change, we always try to change for the better.
So, digital transformation is a process of using digital technologies to create new business processes or modify existing ones for better outcomes. If a digital transformation I’m doing, for example, you are writing an application for or you’re migrating an application onto the cloud, and if it doesn’t change anything in the business, then why to do it? There is a reason why you all are writing an application. Migrating an application, integrating with some platform, rewriting it on the cloud, doing QA, whatever you are doing, there is a perfect reason for doing that. And that reason is change. If I own a shop, if I’m a retailer, if I’m a bank, if I’m an insurance company, if I’m a manufacturing company, I want to ensure that I am aligned with the market. My customers will order online. Now 30% of my customers will raise their invoices online now. That’s why my entire text technologies invoicing platform exists.
To build resilience, my business should be resilient. What is resilience? Resiliency means, you know, I should be able to withstand the storm. To ensure business continuity, you know, we want to ensure that we are using digital technologies so that my business doesn’t get disrupted. That’s why everybody is going to the cloud. It is about business change, business transformation, business processes and then it was talking about clearly defining it, and executing it for better outcomes and customer experience.
So, what is the end goal of digital transformation? or the end goal of any business or the end goal of Cygnet. The answer to this is Revenue profit. Extremely important thing is profit. Profit will only be earned when revenue comes, in the end of the day if the business does not generate profit, business will die. So, end goal of the business is profit. But having said that, not at the cost of customer experience, not at the cost of degrading business value, not at the cost of providing a superior product. But it is necessary that the best product out there delivers the best customer experience, the best value. Right now, while you are thinking about it, think about iPhone, which will give you a good answer. Is iPhone the best product or is iPhone providing or apple rather sorry Apple providing the best customer experience.
The answer is more than building the best product and service out there, it’s very important. While you do that, you know that if you may not become the best product out there, you can come closer to becoming one of the top customer experiences companies then you will grow. $800.00 product can be sold in $110 and you can still make a profit, which is the end goal of your business, as we said. But the same thing you know is a smart business can do make a product for $100 and send it in $200.00, make more profit with less expenses, generate more profit for the company, more value for the stakeholders. Companies’ end goal is profit. And that profit must be distributed to stakeholders. Those stakeholders are shareholders, promoters, internal employees as esops and overall value.
How digital transformation is linked with business transformation?
Think about the business. If you are serving business, you know most of the times while we keep developing writing codes, keep doing QA, you know doing whatever work we are doing. You know, we kind of tend to forget what really, I’m trying to do. You know somebody gives you, OK, this is the specifications, Ok? You need to deliver the code you need to test the code you need to deploy the code. In the larger scheme of things, you know. It’s much beyond that business transformation. See, a business can do two things, to continue and just remember what we said, business is all about profit. While having said that, it’s about resilience. It’s about business continuity. It’s about customer experience. All these things probably are interlinked, but what business can do today? You know, if business is running smoothly, there are only three cases. In any business, either business is running right, delivering profits, amazing customer experience, achieving all plans, everything. Second case is business is just surviving, OK, it is delivering enough profits to stay there. It’s not in loss, it’s not making huge profits. No red flags yet. It’s just surviving. And the third case is the business, which is struggling facing some kind of challenges, maybe revenue challenges, people challenges, process challenges, market challenges, whatever.
There are only these three situations which exist in any business scenario, OK? The business-like Google is into multiple businesses. Why does Google need to change? Why do they need to transform? You know, they’re doing wonderfully well. They’re delivering extremely good profits. So, businesses who are doing extremely well needs to continuously change their business models, continuously change their approach to service their customers and that’s why they’re at the top. That’s the reason why somebody is at the top. It’s not about reaching at the top. It’s about maintaining your lead. So, the need for business transformation for them is much more than probably anybody else. So, they continuously make changes to the way they approach their customers, the way they deliver efficiency, the way they execute and so forth.
A perfect example is Mahindra, the automotive company, few years back when I used to go to India, it was not an aspirational vehicle and while Mahindra was doing well, there were other foreign brands people wanted to aspire. But last time when I came to India, I could see some of the folks around me, including my nephew, wanting to buy a Mahindra SUV. You know what they have done differently, which has taken them from, that level of minimal positioning to a pole position or a leadership position.
The third type of business is, they need the change to survive. For them, it’s not about leadership for them, it’s not about moving one level up or two levels up or three levels up for them. It is about survival. If I don’t change, I die. So what? What will you do?
For example, I am selling, pens today and my business is struggling. Can I stop selling pens and only start selling ink? OK will that work because ink is consumed much more? It’s recurring revenue, probably whatever I want to pivot from my existing business model to a new business model that’s pivoting. Second is I am selling pens only black pens. Can I start selling pencils? Add to pens? I’m only selling to region XYZ. Can I expand my regional thing? Can I start printing copies now as well? Probably with pens. One is pivoting where you completely change your business model and the second is when you add to your business model. Business transformation is about changing business whether you are a leader, average or not doing well. Business changes are extremely important. They are linked to profit. Profit is linked to customer experience and customer experience is linked to the way you do business. And that’s where you know, digital transformation comes in.
Digital transformation is a vehicle, is an enabler which will take you there from point A to point B. Sometimes it gets too integrated with business as well. Well, you know sometimes digital is your business. Companies like Grofers in India and Instacart in the US they became the lifeline of our life. So, the business was built on digital pretty much. Now having said that digital transformation enables you a leader like Google, they use technology to help them achieve their business objectives, whatever it could be, they have a product they want to introduce, a new product, which is around, say for Google ChatGPT. You know, what will they do? They will use technology to reach out to their customers and ensure that they continue to stay ahead of the curve. Digital is not monolithic. It’s not single brick, it’s a multiple thing. It enables better outcomes for individual business processes.
What is digital doing?
When I say digital, consider as an enabler. What is the difference between ok business, average plus business and great business? While profit is one that’s the end objective. But how do you get the right balance of profit? Is the ability to take decisions fast, smart businesses make the right decisions. Based on qualitative data insights, what that means is smart businesses will make less mistakes. They will make mistakes, but they will make less mistakes. Their decisions are more informed, they are quantitative and qualitative in nature. It’s very analytical and how that is achieved is by providing a single point of truth, the good digital strategy means you cannot have multiple sources of information. If I have to launch a product in, northern part of India or southern part of India. I need to know about the demographics. Well, I need to know the pricing point really well. I need to know, what is disposable income, is it suitable for my product or whatever the case maybe I need to know. Better than my competitors to be able to come up with the right pricing strategy.
The real core and the crux of it is the data right now, there could be various examples of internal workflows, business processes, external ones, you can have the best systems out there, you can buy Salesforce, you can have SAP, you can have the best systems out there. But that will not ensure that you have the best business out there.
How do you build your business around the right approach towards your customers backed by data, backed by analytics? Which will help you take right decisions. So, the end goal is profit, I keep saying that digital will always help you make better decisions.
What is the benefit of digital transformation?
Digital transformation has a lot of benefits: –
- Better CX
- Customers reach
- High quality
- Better insights
- Anytime anywhere business model
- Cost optimization
- Operational and technical efficiencies
- Higher returns
- Foster adaptability
- Enhanced security
- Improved communication
Absolutely, you know digital transformation will give you better outcomes, better CX. The profits are the by-product of better customer experience. You know customers will not pay you if they don’t get what they want, right? Cost savings, 100% profit is a function of revenue minus expenses. So, my profit is more than my expenses, that’s the end goal of my business, better insights, decision making, faster decision making. Faster decision-making means an edge over my competition means more revenues means more profit, new revenue streams.
For example, I was a local store selling only in one part of the city. Now my son or daughter is from the technology they made an application. Now I can sell my grocery to three more localities that enabled my revenue streams that enhance my revenue reach. What I have done is I have gone through a business transformation. And digital Omnichannel technology has helped me outperform or outreach my customers. Now I’m here. By now I was only selling offline, then it became online, it turned inti omnichannel. Then I started using mobile. Now I am integrated with banks. So, I can be an omnichannel business from a single channel business which will help me generate more revenue, more customer experience, more reach, more profits, and higher ROI obviously return on investment as I gave an example. Can I be smarter $100 versus $110 or $100 versus $200. It will depend on the way I approach my business, flexibility, and adaptability. How quickly I can adapt. There is a very interesting example, you know just before covid, it was a question how to build a concentrated agile team in the room. We all need to have stand-ups in the morning. It doesn’t matter. People can’t be away. They have to be. We have to look into each other eyes, body language, everything. We all have gone through that. How can we implement distributed agile? People in multiple parts of the world it unlocked. So many things. There is a great talent sitting in the southern part of India or the Western part of India or somewhere in Poland, somewhere you know. Now if I can work remotely, then I need not. Look for people in the same Geo. Suddenly, the talent availability in Highlands or increased right?
Enhance security vest with everything you increase your business, you build your home, you expand another thing. Whatever you do, security is the crux of it, right? You can’t drive a vehicle without brakes, can you? Even Tesla can’t do it right. You need physical breaks. There are certain things which are ingrained in any business.
Agility is faster, time to market, faster reaction, more agile. Google and Apple are more agile than other similar businesses. Digital transformation is about enabling businesses. We help customers move from point A to point B. We don’t tell the customer that they should go to point B or rather should go to point C and not point B. There are hundreds of benefits when it comes to digital transformation, but the challenges which businesses face when it comes to the adoption of digital transformation are the vaccine acceptance to need of change is the starting point.
Change management probably will be your first challenge. We break the business into smaller parts, define goals and objectives, analyse our current business, break it into smaller chunks of processes, set goals and objectives, prioritize our most critical, and then go 1 by 1 to execute our digital transformation initiative.
So, this is again very simplistic template, we can make it as complex as it is, but for everybody’s understanding, imagine these four processes. The second most important in digital transformation is to know where you are. Then only you will know where you will go. The more honest you are with your assessment, better results you will get.
Steps for change management
Step 1. Prepare your digital strategy.
Step 2. Define goals and objectives.
Based on current process, check how much time does it takes? Who are they? Who are the involved parties in this process? Then some internal assessment as to what? What we rate this process as from 1 to 10 probably? And then what my external stakeholders rate this process and then go to define the goals and objectives. Is it an existing process? Is it still required? Can it be improved? What is the priority of this process? This step can also define new ideas for processes that are not currently in existence. You can probably include a new process as well, probably for a subprocess in the process.
Step 3. Prioritize your task
Now how do I know functionality on client and company side? Do I need to add more functionalities on customer side or company side? Who’s responsible for this whole-time estimate, cost estimate? You can add more details to it as many details you want to. Just try to keep it simple, add only the activities that you think you should digitize which will give you quick and better outcomes. Then you prepare your strategy into execution. You know very well know; how to define phase one? How to define phase two, and so on. But the idea is if you can. You know, company has multiple functions, it has a HR function, it has a finance function, it has a support function, it has a product development function, it has a marketing function, whatever it has, maybe 10 or 12 sub-functions to run the company. Every function has different business processes. Can we break those business processes accordingly and then see which ones will give better results quickly and then prioritize them, write them down, put together their strategy and then execute them.
So, what we are trying to do is we are trying to create a digital strategy for this cell through the process. We are a business, so we need to change, we need to adapt this new normal. New normal is the online environment. Covid has come and our business approaches must be changed. You know how quickly and effectively we need to change you know how we can deliver value to customers with the first steps of good strategy. So basically, heart of any business is servicing.
You’re selling a product or a service to a customer end of the day, that’s about it. You know there’s only two things you are selling either services or a product. Now you’re selling it. Process is very simple, right? If you see that it’s only four-star process, but then if you break it up it makes, you know maybe 20, 30, 40, 50, whatever number of steps but essentially you are building a product, you are defining things around that product and then there’s a distribution of the product and then you know the collection and then receiving feedback. That’s the cycle of it. But most of the strategy which starts is not technical, it’s about how do I approach my business.
Analyse your current business processes. So, for example, sell service. So that service for example, if we’re talking about this could be the process. We have listed down the steps in the process, OK. So, there are 13 steps. Probably we have identified in this process client reads about the service on our website. So, starting from somebody’s writing down in plain English, starts with plain English and then it gets into much more.
Technical execution phase, when we start implementing it, the client sends an inquiry form. Let’s say John from sales get an e-mail. John passes to Gill. There’s a small business we are talking about John emails a code to the client, client accept the code. So, there is an entire process which we have listed around right now how much time it takes to order one process is 4 to 6 hours probably, now involved in the process. These are four five parties which are involved in the process. We have done some internal assessments. We can expand with more details into it to capture more information, but it is a very small example of how I have captured 11 business process to sell service to our customer. What it takes, how much time it takes etc. So, I’m analysing my current business process. Is this an existing process? Now we are setting goals and objectives. Is it still required? Can this process be improved? If possible, who are the guys involved? Priority is high, so we can again define more steps here, but now we are trying to define the next steps for this current business process to be digitized.
Prioritize your transformation process. Transformation takes priorities. List all the activities and order them implementing ordering system, add online payment, add auto invoicing, automotive emails, enhance website to allow customers log in to see their order status. This is the new functionality on the client side we want to add.
New functionality required on the company side are assigning tasks for staff, and a new order comes in and all we have added a few functionalities on the company side there would be responsibility priorities etc. This can be rated as 1, 2, 3, 4 whatever the case may be, this is what we get quotes. Once this thing is generated, then it goes to somebody from the business team and then the business team will involve IT. IT will say we need to add the new functionality, can we find a vendor and then they find Cygnet and then Cygnet starts building an online ordering system for the business.
So, the objective of showing you this is that you know this entire cycle, we are probably doing one small little element, but in the end, we are helping a business process become more efficient and that is what digital transformation is all about.
Thank you. Thank you, everybody.