The fact that economies the world over are being swept up in a ‘digital wave’ which is here to stay is a reality that businesses across the globe are dealing with. This is causing enterprises to take a more serious look at investing in the technology, tools and people to ward off the threat of disruption that this wave brings in its wake.
The Fletcher School at Tufts University, in conjunction with MasterCard, recently published their ‘Digital Evolution Index’ (DEI) a study of the growth and trajectory of digital evolution across 50 countries. The Digital Planet report that leverages the data from the DEI “illustrates how countries evolve over time through the interplay between innovation, institutional policies, demand and supply conditions” as stated in the preface by Anabel González, Senior Director of the Trade and Global Competitiveness Practice, at The World Bank.
The DEI ranks four Latin American countries – Brazil, Chile, Mexico and Columbia – as being on the threshold of “breaking out” which is defined as “having the potential to develop strong digital economies. Though their overall score is still low, they are moving upward” and have the potential to become leading digital economies globally. Another report by We are Social tracks key statistics, digital landscapes and behavioral indicators around internet, mobile and social media penetration in 30 countries across North, Central, and South America and The Caribbean (see figure below).
Source: We are Social, http://www.slideshare.net/fullscreen/wearesocialsg/social-digital-mobile-in-the-americas/1
While the current users of mobile, social and other digital channels hail from a generation that has only recently (in the last decade or so) been introduced to these technologies, the next billion customers – whether millennials or those born later – are already used to interacting and transacting in a 24/7 mobile environment and will introduce a whole new dynamic to the concept of e-consumer. The future of commerce and the digital marketplace in emerging markets like those in Latin America will be driven by the likes, dislikes and whims of these new e-consumers, as illustrated in the below infographic.
While most of the enterprises from the developed economies like the US, UK, Netherlands, etc. are currently investing in developing mobile apps, omni-channel presence, social media platforms, and the analytics base around these, enterprises from Latin America are playing catch-up in the technology space. On the other hand, the proliferation of cheap smartphones and the ubiquitous internet have led to customer expectations moving ahead by several paces and the limited ability of enterprises, and governments, to provide a “delightful experience” is often a put-off for these discerning customers. It is imperative for enterprises to evaluate the risk and leverage the opportunities presented by these changes.
Vendors Must Evolve
To grapple with the rapid pace of innovation and changes in the technology landscape, enterprises lean heavily on their vendor partners and look at leveraging their skills and capabilities to drive the transformation of their businesses. There is an overwhelming requirement for vendors in Latin America to develop and promote a portfolio of offerings around digital enablement as it is the first step towards building digital economies.
The best way to approach this is to build the requisite capabilities across the spectrum of technologies that underpin the digital story, and to map this to the core business value that can be delivered. This is easier said than done, but enhancing the portfolio, effectively executing around these and succinctly capturing the value-add in messaging is essential for the Latin American vendors and local economies to evolve especially given the fact that most vendors have substantial captive audiences within their region.
However, looking at the market it is clear that the term “digital” is being used very loosely and that there is no single view of “digital transformation,” with the vendor community tweaking the term toward their strengths and portfolios – whether it is a platform that allows service components to be enabled in a “plug and play” model, or a set of automation tools, legacy modernization services, or analytics dashboards.
There is a real need to define what really constitutes “digital transformation” especially in the Latin American region where the vendor ecosystem has not hit the level of maturity of their counterparts from other regions. Unless the vendors are able to accurately articulate what “digital” means, help clients figure out where they are in their journey and support them on this journey with the right set of tools, resources and technologies, they will have a difficult time in crafting appealing messages around what really differentiates them from everyone else on the bandwagon.
Latin American enterprises need to understand that digital transformation does not end with creating a mobile app or a responsive website, these are just the tip of the iceberg. Becoming a digital enterprise is a massive undertaking that aims at profoundly changing the culture of an organization and equipping it with the right tools to engage with customers across multiple digital channels. This transformation starts with the acknowledgment of the fact that business models are changing fundamentally and past success does not in any way guarantee future survival. Rather, it is about changing the way people work – the organizational culture, mindset, and behavior. Unless these change, no amount of investing in new technologies will yield the results expected. Businesses need to be willing to get creative and experiment with new ways of working and strive to become more agile and flexible to be able to respond quickly to changing market dynamics. This change has to permeate through the organizational culture before an enterprise can claim to have “transformed”.
Any executive who has tried to affect any kind of change in an organization knows that it is not a cakewalk and that a number of things have to fall into place if they are to succeed. In a recent report entitled “Six steps to digital transformation”, Ovum offers a six-step approach (see figure below) that identifies the key questions to ask when embarking on a ‘digital transformation’ initiative. The steps need to be customized to the socio-business environment to each country but the underlying principles are universal. Finding the candid answers to these questions will help ensure that the right investments are made and the right processes and people are put in place to achieve competitive advantage.