Digital transformation is happening inside enterprises everywhere today. “Seamless Customer Experience”, “Streamlining Business Processes”, “Enabling Digital Twins”, “Becoming Digitally Native” are just a handful of monikers organizations are adopting as they race to put these transformation programs in place.
Technology investment is at the core of these programs, enabling organizations to stand-out against their peers, gain market-share and in a lot of cases create entirely new markets. We saw many examples of these outcomes through the pandemic as organizations had to quickly adapt to an overnight change in the business environment.
It’s evident that in this new world, digital transformation is not a choice, but a fundamental business strategy that must be interwoven into every part of an organization.
Here’s another startling piece of data “87% of companies have not realized the full impact of their investment in digital transformation projects.[i]” according to a Forbes Technology Council study. In simple terms, only 13% of companies implementing new technologies inside their organizations are reaching their desired outcomes. Why is this happening and what can you do to make sure your company doesn’t experience a similar fate?
Be Successful
At its core, success for digital transformation efforts is inextricably linked to your success as an organization. One key trait in organizations with successful transformation programs is the ability to “Define, Deliver & Monetize Value”. These organizations are in-tune with their target customer’s needs and perception of value while seamlessly aligning with their customer’s journey.
Surprisingly, a lot of organizations pursuing their digital transformation projects treat monetization strategy as an afterthought and instead focus their energies on technology implementation. Defining clear objectives for these programs is a must, and these goals need to include your strategy to monetize the offering you bring to market. You simply cannot afford to get it wrong because for most companies, transformation initiatives are put in motion every five to seven years. A mistake made now could take a long time to correct, put you well behind your peers and competitors or worse put your business in jeopardy.
Successful Transformation: Apple and Microsoft
Apple and Microsoft are great examples of companies that integrated their monetization strategies as part of transformation initiatives. Apple started with one service and added more over the years, ultimately offering the Apple One bundle…to perfectly complement wildly popular hardware products, and the results are clearly phenomenal. Apple’s services account for 21% of their revenue today.[ii]
Microsoft is all in on subscriptions as well, helping them transform from a perpetual licensed software company to an incredibly successful SaaS company. Virtually everything they offer today is available via subscription. For Microsoft, this model has created a robust recurring revenue base that supports further development and innovation. In November, while reporting their first quarter earnings for fiscal year 2022, the company saw its Cloud revenue hit $20.7 billion representing 36% year-over-year growth. A significant feat given the size of the revenue base.
Both Apple and Microsoft not only created value for their customers, they also executed successful pivots to how they monetize their offerings. Most people would agree, they took the right approach.
What are your Digital Transformation Goals?
Most organizations want to increase the efficiency of their business processes, gain competitive advantage, increase collaboration and employee productivity. Innovative companies differentiate themselves with their ability to create new business models, quickly pivot and address multiple market and customer segments as market dynamics change
In order to truly transform, you need to understand what the key success drivers will be and ask the right questions.
- Are you seeking to launch new revenue lines, expand existing revenue lines, or both?
- Is your goal to maximize ROI or scale your business?
- Do you want to start your project fast, and then adapt as you go?
Working with trusted advisors – people who understand digital transformation and monetization – people who know the right questions to ask – will put you on a path for success.
Experts who can help you realize compelling business outcomes versus just focusing on cost savings. Experts who are knowledgeable about lead-to-revenue (order-to-cash) workflows. Experts who understand how to accommodate for subscription complexity and orchestrate frictionless omni-channel customer experiences. These are all key ingredients for building successful monetization models that we will dive into deeper in future blog posts.
[i] Digital Transformation is Not a Technology Problem, Forbes, July 21, 2021
[ii] Apple Reports 3Q 2021 Results: MacRumors.com