How digital transformation can generate competitive advantage?
How digital transformation can generate competitive advantage?
If you do not find the right technology to develop your digital transformation, you may ask us to build your own solution. It’s a strategic decision that requires serious preparation, but it will give your company a real competitive advantage.
No matter which industry you are in, your competitiveness will constantly be challenged by new business models, asset-light, or heavily funded new actors, that will leverage technologies to create an unfair advantage.
In addition, large-scale companies are usually slowed down by:
- their size, procedures, and policies,
- their market share on the existing business model,
- the sense of security provided by the barriers to entry,
So, how corporate can stay competitive with digital transformation?
This article lists the competitive advantages of developing your own solution based on technologies to tailor your digital transformation effectively.
Building your Vision of the Future
We listed the Five Steps to Digital Transformation in a previous article. These are critical steps to frame your digital transformation. If you are going to invest in proprietary technology, it must solve a real challenge on your market.
This step of the digital transformation may borrow a bit from the lean startup handbook, but the great advantage of corporate over startups is the access to the market.
While startups must figure out a way to reach potential users, a large company can easily engage with its existing clients. The only challenging part is to get your existing clients to think about the future, forgetting the current offering as much as possible. Otherwise, these clients will seek startups to dream of the future more often than ask their existing suppliers.
It is critical to place a marker into the industry’s future, the dream of the ideal product or service that the market will love. It does not need to be what the company can deliver today, not necessarily what it can show tomorrow, but a vision and a direction.
This vision must be free of the constraint of the current offering; otherwise, the digital transformation will be incremental, have fewer chances of providing new value, and not build a competitive advantage.
Once you identified the constraints of the present, building the vision of tomorrow with your own scalable technology can give you a real competitive advantage.
Breaking down your Barriers to Transformation
With a vision of the future that the market will embrace, it becomes easier to see the barriers to break to make that future possible. These barriers are typical of certain types:
- existing assets,
- legacy systems,
- internal organization,
Your chances are that the competition has the same obstacles. So breaking one of these barriers is the first competitive advantage of your journey.
Digital Transformation is often a way to remove the need for certain types of assets. Heavy asset-based business models are very vulnerable to pure digital players. The proposal to move to a digital model will suffer resistance as long the assets are still not deprecated, mainly because every change faces opposition.
Legacy systems very often drive the processes and the mindset of organizations to a point where it is difficult to consider alternatives unless:
- the legacy system is so outdated that it became a technical risk,
- the alternative is hugely better in terms of performance,
Even in these two scenarios, the legacy systems will be a barrier as they have settled down deep in the organization.
A company’s organization may have evolved to solve internal problems more than external problems. Digital transformation is a good time for corporates to embrace customer-centricity at the same time and propose re-organization towards that dual goal. It can be the second competitive advantage to harvest simultaneously as the benefit of digital transformation.
With the development of your own solution, you will able to break down existing barriers that have been keeping new players headed.
Leading your Industry
Breaking down each barrier is already a competitive advantage. Taking the first step towards creating the future of the industry is the third competitive advantage. It is achieved by laying the first brick of technology that will deliver the most value to the customer.
It is often called Minimum Viable Product in the startup world. But the same acronym will not lead to the same result in a corporate environment. A corporate M.V.P. must be compliant with internal rules, cannot break existing processes, must produce a minimum output for reporting and decision making. It is the aspect of corporate innovation where own technology has a change of differentiation.
Startups' solutions will not be compliant with corporate standards. When a company tries to integrate a startup technology, the internal alignment takes so long that the benefit of the innovation loses its edge in time to market. Technology solutions available for corporates do have the full compliance built-in, but they are never M.V.P. they are too often feature inflated solutions that deliver little innovation.
The third way, which combines the best of both worlds, is for corporations to invest in technology themselves, to the level of compliance and agility they require.
Investment in differentiating technology is the best way for corporations to combine their requirements with an accelerated time-to-market strategy.
Getting Long Term Benefits
This approach will bring long-term benefits in exchange for a long-term commitment to the technology itself. The quick wins of flashy off-the-shelf technology will not deliver these benefits.
Starting a Digital Transformation project is a long-term commitment. As technology evolves at an exponential speed, it is essential to keep upgrading technology investment regularly. The more often the technology is upgraded, the safe and more sustainable it is.
Equipped with a vision of the future, a corporate can gain an important position on the market by delivering this vision leveraging the right technology in continuous improvement cycles.
Prioritizing a your scalable solution will provide you with long term benefits. You will be able to continuously evolve and adjust to your market needs.
We are Here to Help
At System in Motion, we are committed to building long-term solutions and solid foundations for your Information System. We can help you optimize your Information System, generating value for your business. Contact us for any inquiry.