EY Imagining The Digital Future
EY Imagining The Digital Future
EY Imagining The Digital Future
Digital future
How digital themes are transforming
companies across industries
February 2015
Contents
1.
Introduction
2.
2.1
2.2
3.
10
3.1
Automotive sector
11
3.1.1
12
3.1.2
14
3.2
3.3
3.4
4.
5.
18
3.2.1
19
3.2.2
Key areas of digital transformation for the consumer products and retail sector
21
Government/public sector
25
3.3.1
26
3.3.2
28
32
3.4.1
33
3.4.2
35
39
4.1
40
4.2
41
4.3
44
4.4
45
Appendix
46
1. Introduction
1. Introduction
The new or rather the contextual definition of digital business refers to the way in which businesses are adopting
technology platforms for their physical assets to improve processes to connect internally and to their stakeholders
customers, suppliers, employees, shareholders and the public at large.
Digital is fundamentally changing how companies do business. Enabled by data and technology, digital is a
continuous form of disruption to business models, products, services and experiences. It has radically changed the
way people consume content, communicate, and access products and services.
New companies are popping up overnight even as existing ones work to gain the required agility to compete in
todays increasingly complex market landscape. How an enterprise responds to the digital challenge will
significantly impact its survival today and its success in years to come. Companies are exploiting opportunities and
managing risks by becoming essentially digital.
Digital has already disrupted established businesses in many industries. But, there will be another tidal wave of
digital change. Whether your company is among the early adopters disrupting the market or among those forced to
follow is dictated by how you understand and respond to opportunities and risks that digital presents.
A look at contemporary literature on the subject reveals that most of it is focussed on building a case for these
technologies using impressive numbers. Very few really get down to specifics. Even fewer discuss the impact of
these technologies when used in a cohesive and complementary manner.
We have attempted to address some of the existing gaps. For this, we have undertaken a sector-by-sector analysis
covering four large sectors of importance, namely, automotive, consumer goods and retail, BFSI and government.
In addition, we have evaluated specific instances where digital technologies are being used. These companies have
been selected from sectors basis their contribution to the economy, as well as the relative impact of digital
transformation on their businesses.
Secondly, and more importantly, we have tried to give a sense of a roadmap to companies that are embarking on
this journey. In this regard, some of the relevant questions that need to be asked are:
How do you charter this journey and the steps in this direction?
That being said, your challenges may be unique. We shall be happy to discuss your specific needs and assist you in
your journey in the digital realm.
We hope you find this report useful and will be happy to provide you with more information and guidance around
some of these ideas.
Samiron Ghoshal
Partner, Advisory Services &
Member Global Emerging Markets Advisory Core Group
EY
52%
30%
of the IT spend of
enterprises is being
invested beyond the
traditional corporate
IT realm
\
\
Augmented traditional business models, such as moving from selling products to providing solutions
Digital transformation is not only redefining businesses within an industry, but is also expanding industry
boundaries. This is because effective delivery of digital services requires (a) transition from a product-centric
approach to an ecosystem-centric one and (b) seamless integration across diverse industries, leading to coopetition or co-existence of competition and cooperation. An automobile manufacturer, for example, in addition
to focusing on its product, may have to collaborate with various stakeholders such as telecom operators, device
manufacturers and insurance providers to create a connected car ecosystem.
Intelligent, connected ecosystem
Connected
product
Intelligent,
connected product
Product
50 bn
35
internet-connected things by
2020, including sensors and RFID
chips
1%
of potential connectivity is
estimated to have been achieved
so far
2.2
The smart, mobile connected digital world is driving companies to build and support an entirely new technology
infrastructure. This technology web is the interplay of leading edge Social media, Mobility, Analytics, Cloud and
Internet of Everything (SMACi) technologies, which are empowering enterprises across critical digital dimensions
including products and services, customer experience, operations and workforce.
Key enablers of digital transformation
IoE
Social Media
focus of application
development away from
the traditional desktopbased approach to a
mobile-first one
Analytics
Cloud
Analytics is enabling
enterprises to explore large
volumes of data to gain
insights and drive strategic
decisions
Cloud computing is
reshaping the way software
and services are sold and
delivered
Digital transformation web is charting out a must-have digital portfolio for businesses
Digital ecosystem is revamping business processes, enabling organizations to be more innovative in how they
engage with customers and employees alike. Enterprises are now monitoring the sales force effectiveness,
employee engagement and retention, enabling greater efficiency and collaboration in operations.
Digital transformation harnesses the qualities of SMACi technologies to deliver integrated business solutions that
empower enterprises across each of the digital dimension, as given below:
Digital portfolio
Digital products and
services
New digital business
models
Digital enhanced
businesses
Digital customer
experience
Digital commerce
Digital marketing
Digital service
Digital workforce
Digitally-enabled field-
Digital HR
Connected workforce
force
Multi-channel
integration
Digital maintenance
and support
Digital R&D
Digital operations
Generate
incremental
revenue by adopting
customer-centric
approach
Prioritise customer
convenience by
selling products and
services via digital
channels
Improve bottom-
line by empowering
sales force identify,
pursue and close
opportunities
through channel of
choice
Achieve business
agility and
automation through
better maintenance
and support
Develop an efficient
workforce by using
digital solutions to
reach and recruit,
identify and
provision need
based training,
manage employee
performance and
productivity
Having a digital portfolio would enable organizations across diverse sectors to reap full benefits of digital
transformation, as is explained in the following chapter.
Customer experience
Financial
Improved satisfaction
Greater share of wallet
Improved loyalty and retention
Revenue Growth
Increased profitability
Increased
effectiveness/efficiency
Cost reduction
Benefits of digital
transformation
Automotive sector
Digital transformation in the automotive sector
Automotive sector is at the cusp of a digital revolution, driven by trends such as the rapidly changing consumer
behaviour, an increasing need for greater fuel economy, new opportunities presented by connectivity and the
emergence of new growth markets. In order to remain competitive and proactively address these trends,
automotive players need to embrace innovation. Digital transformation is playing a key role in taking the
automotive industry into the future.
Digital transformation across the auto industry ecosystem
Evolution of products
New customer-OEM
relationships
role of software
Better customer
Supply/value chain
improvements
Greater supply chain
Sales and
marketing
Supply chain
management
Enterprise
Operations
Reduced product
The increasing number of trends in the industry is creating new challenges, along with opportunities. Sales have
struggled in a tough economy while consumers have become more aware and vocal of their vehicle preferences.
New mobility solutions are being embedded in existing business models. Connected vehicles are creating manifold
opportunities for new sales and service formats which focus on holistic customer experience. Ongoing trend of
digitisation has led to exponential growth in the volume of data generated. However, the real value will be derived
from the insights that businesses will be able to draw from the data, rather than from the information per se.
12
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The industry needs to create a formal digitization strategy including overall approach, governance (e.g., center of
excellence) and adoption of analytics culture. Only companies that integrate analytics in their decision making will
be able to sustain a viable business modeliii.
To secure top-line value from digitisation, enterprises need a holistic and strategic plan for identifying
opportunities, overcoming challenges and managing risks.
20%
80%
~38%
104 million
outperformance by
companies that
successfully use data
analytics
OEMs selected
customer analytics as a
critical business
process according to
EYs global survey
consumers expected to
consult social media
before making their
next car purchase
13
3.1.2
Enterprise operations
Automotive companies need to leverage technology to ensure cost effective delivery of new processes and
optimised operations. Huge volume of data is generated in an automotive organization with manufacturing
plant and related operations being no exception. The digitisation of enterprise operations enhances
stakeholders ability to take decisions in real-time, formulate strategy based on evolving trends and ensures
efficient support processes.
Digital transformation is affecting the following business areas within enterprise operations in the automotive
sectoriv:
Manufacturing
Finance and IT
Workforce analytics
Sales forecasting
14
Digital transformation is affecting the following business areas within sales and marketing in the automotive
sectorv:
Customer pre-purchase
Vehicle ownership
Brand management
A well-outlined digital strategy ensures that
customers have the same experience along all
communication channels
OEMs brand communication strategies
should ensure that customers are able to
switch channels at any time and without any
disruption
Replacement
Proactive analysis of vehicle diagnostics data
helps identify when a customer is likely to buy
a new car and allows to plan the timing of
incentives accordingly
Vehicle specific data can be tracked to build
relationship with the second buyer of the
vehicle
EY engaged in crafting digital strategy: EY helped the client engage prospects and manage
relationship with customers. The OEM had multiple digital assets but lacked uniformity, completeness
and adoption.
EY studied the key two-wheeler customer personas in the national and international market place, as
well as the adoption/usage of digital technologies by them. In addition, it identified ways in which
competitors were leveraging digital technologies.
EY also created a digital heat map across the customer lifecycle and provided a detailed digital maturity
plan for the client across customer lifecycle.
15
Product innovation
Automobiles are increasingly being equipped with the ability to receive data and feed it into the cloud or to
other vehicles, making them a key device in the IoE domain. As a result, automakers need to adopt new
product development techniques and launch innovative connected car services. Also, the evolving
legislative ecosystem has intensified the need to adopt technology-enabled solutions to ensure compliance
in new product development.
Digital transformation is affecting the following business areas within product innovation in the automotive
sector:
Collaborative product
development
Enterprise-wide cloud solutions can enable the
sharing of vehicle specific output across the
organisation and reduce product development
time
Social media channels and digital campaigns
can be tapped to obtain customers input on
future product development
EY also analysed additional challenges at the dealership and fleet owner levels in the US.
16
Digital transformation is affecting the following business areas within supply chain and logistics management in
the automotive sectorvi:
Inventory management
Analytics can enable real-time monitoring of
vehicle inventory based on demand
Warranty analytics
Automotive companies can analyse warranty
claims data to identify the root cause of the
claim
Also, better component traceability will result
in reduced warranty/recall costs
Procurement
Cloud computing is increasing the efficiency of
procurement process in the source-to-pay
processes and network collaboration
Also, analytics can facilitate spend analysis
and ensure better sourcing, contract
management and invoice management
EY engaged in a dealer audit process improvement: After identifying some significant risk events in
OEMs dealer network, its audit committee concluded that the dealer audit function needed to develop
a more effective and efficient approach for investigating and remediating issues.
EY created an analytics model that generated a population of high-risk dealers and transactions that
would later be targeted for further investigation by the internal audit team. This enabled agile
reallocation of audit resources to high-risk dealers and improved exception identification rates.
17
3.2
3.2.1
Digital transformation, though in its nascent stage, is bringing about a revolutionary change in the consumer
products and retail sector in India. On one hand, the dynamics of consumer behaviour are undergoing a change, as
consumers spend more time online and multi-task between screens. Organisations, on the other hand are directing
their efforts towards building omnichannel marketing and supply chain capabilities.
Todays tech-savvy consumers are looking at brands for enhanced and interactive experiences and are seeking
innovative solutions to address the growing need for convenience and more rapid anytime, anywhere solutions.
Digital transformation is acting as a disruptive force across the entire value chain
Consumer-driven marketing
Digital spend on the rise
Changing medium for
consumer engagement
Consumer co-creation and
collaborations with startups
for new product
development
Smart organizations
Digitally embedded
organisational designs
Improved store layouts,
merchandising, assortment
and shelf space
Analytically driven CRM
capabilities
Decision
making
models
Distribution
Agile supply chains
Supply chain
management
19
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With digital shifting control to consumers and routes to market becoming more complex, companies are being
compelled to adapt to the new reality, or risk becoming irrelevant for consumersvii.
Digital transformation is driving companies to step up innovation across products,
services, pricing and experiences, and re-think existing business models.
30%-50%
70%
5.2%
6.5x
increase in digital
spending by consumer
products companies in
India during 2013-14
retail companies
investing in technology
to know their customers
better and enhance
consumer experiences
share of e-commerce in
the overall retail market
by 2020
20
3.2.2
Digital transformation is affecting the following business areas within marketing and communication in the
consumer products and retail sectorviii:
Consumer engagement
Companies are leveraging online, social
media and mobile platforms to interact with,
and prompt consumers to try their offerings
Role of digital platforms have evolved from
mere airing of TVCs to becoming a separate
channel for engagement
Media planning
Consumer engagement: A leading global cosmetics company drove significant level of consumer
engagement around the launch of its makeup foundation. The company first gathered insights on what
consumers looked for in a foundation via an online poll. Based on results, it developed its foundation and
launched it through its social media page. During the course of the campaign, the company received
75,000 poll responses and a social media fan base growth of 33,746 users.
Consumer feedback while naming a brand: A global food company chose the brand name for its
vitamin enriched flavoured water based on more than 50,000 responses from consumers on social
media.
21
Distribution
In a landscape where traditional retail continues to dominate distribution strategies and modern channels
constitute only around 10% of consumer product companies revenues, online is emerging as a powerful
distribution platform. The dual benefits of extensive consumer reach and significantly low fixed costs have
made this channel an appealing alternative source of revenue generation.
Digital transformation is affecting the following business areas within distribution in the consumer products and
retail sectorix:
Channel management
Delivery
Payment mechanisms
Tapping market through e-commerce: A Swedish hygiene products manufacturer has tied up with
leading e-commerce companies to distribute its products to tier II and III consumers. It already
generates 10% of its revenues in India online and has been focusing on m-commerce.
Virtual shopping mall: A leading Indian e-commerce company set up its virtual shopping mall at the
New Delhi Indira Gandhi International Airport in 2013. The mall allows passengers to browse through
the companys merchandise by using smartphones and can also place orders by calling at the call
centre of the company.
Investment in cloud infrastructure: A leading Indian e-commerce marketplace is investing INR615
million to scale up its cloud-based technology infrastructure to support traffic during peak seasons.
Click-and-collect service: In May 2014, a leading global e-commerce company piloted the use of
kirana stores and petrol pumps as pick up points for its click-and-collect service in India.
Investment in omnichannel retailing: In September 2014, a leading Indian retailer announced plans
to invest INR1 billion in omnichannel retailing. Omnichannel operations which will allow its
customers to view the companys entire inventory (online and in-store), place orders online and opt
for in-store or home delivery are expected to enhance the companys revenues by 6%-9% by 2016.
22
Digital transformation is impacting the following business areas within decision making models in the consumer
products and retail sectorx:
Customer segmentation,
targeting and relationships
Organisational design
Store operations
Separate unit for online sales: A leading Indian personal care company reorganised its operating structure to
create a separate unit for online sales.
Investment in analytics: A leading global personal care and food company invested in analytics to create
perfect stores in India. These reported 4% higher average growth than other outlets. The concept is based
on the insight that every geography and outlet size has an optimal store and merchandising layout that best
addresses consumers needs and presents the companys brands.
Acquisition: A leading Indian online marketplace acquired a company to leverage its proprietary algorithmbased platform that offers users gift options based on parameters such as relationship with the recipient, their
age, personality, likes and interests.
Deployment of visual analytics: A leading jewellery manufacturer and retailer in India deployed visual
analytics to explore and analyse business data, including supply chain and profitability metrics.
23
Digital transformation is affecting the following business areas within supply chain management in the
consumer products and retail sectorxi:
Demand management
Warehouse management
Inventory management
24
3.3
3.3.1
Government/Public sector
Digital transformation in the government/public sector
Organisations across the world are riding the digital transformation wave to drive innovation, and the
government/public sector is no exception. It has become necessary for government bodies to leverage SMACi
technologies to create and nurture an effective and efficient ecosystem. Smart governments are integrating ICT in
their operations across multiple domains and jurisdictions to generate sustainable public value.
Areas of digital transformation across the government/public sector:
Delivering public services
Reducing traffic
congestion and improving
safety
Effectively managing
public finances and
strengthening security
Increasing energy
efficiency with reduced
costs
Governance
and finance
Infrastructure
management
Healthcare
Expanding accessibility in
remote areas
Enhancing learning
environment
Education
and skill
development
Governments are rapidly infusing new technologies into their citizen engagement practices and approaches to
problem solving. They are exploring ways to leverage big data analytics to better address challenges and improve
operational efficiencies and services. At the same time, social media is changing how citizens communicate,
interact and mobilise, making it an imperative that governments are more responsive. Innovative governments are
also shifting away from specialised agencies and discrete services towards more streamlined, citizen-centric
processes.
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26
In its pursuit of digital transformation, the government/public sector continues to face issues in governance such
as the need for specialised infrastructure, data availability and reliability, and information security. Concerted
effort across all levels of the government is required to enable technology platforms that are scalable and allow
the quick creation and delivery of servicesxii.
Governments all over the world need to develop a comprehensive approach towards embracing digital
transformation across their services to secure a sustainable ecosystem.
118
US$1.1 trillion
25,000 petabytes
US$107 billion
countries where
governments used
social media for econsultation in 2014
Smart citiesxiii
Governments are progressively moving on to develop smart cities to tackle the increasing urban population. Smart
cities use digital technologies to enhance performance, reduce costs and resource consumption, as well as to
engage more effectively and actively with its citizens. Digital technologies could potentially revolutionise the
management of resources. Governments are using smart cities to promote sustainable economic development.
Key areas of deployment of smart solutions include governance, public finance management, energy, transport,
education and health care.
Smart cities framework for the government sector:
Physical infrastructure
Institutional infrastructure
Smart cities
Economic infrastructure
Social infrastructure
This relates to components that work
towards developing human and social
capital; these include education, health
care, entertainment, as well as creative
arts, sports, and gardens
27
3.3.2
Digital transformation is affecting the following business areas within governance and finance management in
the government sectorxiv:
Citizen identity
Governments are migrating to e-identity
solutions to replace traditional paper
Examples include e-passports, e-driving
licenses and national e-identity cards
EY engaged in UID project: In 2010, EY was selected as a project management consultant for the
Governments ambitious project - Unique Identification project (UID). EY was tasked to provide professional
services to set up the Central ID Data Repository (CIDR) and help with selection of MSP.
The scope of work included planning and formulating the overall programme management strategy,
preparing a road map and implementation plan for the UID project, identifying and developing business
models and business cases for potential revenue streams from the CIDR, among other things.
28
Infrastructure
With increasing urbanisation and rising burden on rural land, Governments have realised the need for equipping
cities with the ability to cope with the challenges of urban living. Infrastructure involving technological platforms
such as automated sensor networks and data centres will be the basis for providing essential services to
residents.
The GoI has recognised the key role of smart infrastructure in accelerating the momentum of economic
development. Many projects are being initiated in categories such as smart transport, smart environment, smart
supply chain and logistics for the development of smart cities.
Digital transformation is affecting the following business areas within infrastructure in the government
sectorxv:
EY engaged in smart card ticketing project: A metro rail corporation has appointed EY as a consultant
for developing the Common Smart Card Ticketing Solution. EY is expected to deliver the detailed
feasibility report within six months. Its responsibilities include preparing a policy for implementing the
smart card-based ticketing system and holding discussions with all the stakeholders for system
implementation.
29
Health care
Overburdened public health care systems are relying on ICT to effectively and efficiently deliver health care
services. Developments in health information technology are making it possible for health care providers to
better manage patient care through secure use and sharing of health information.
Several tools are available for e-health systems such as health information networks, electronic health records,
telemedicine services, personal wearable and portable communicable systems and many others for assisting in
disease prevention, diagnosis, treatment, health monitoring and lifestyle management.
Digital transformation is affecting the following business areas within health care in the government
sectorxvi:
Medical records
Hospital information
management
EY engaged with the Australian Government: In 2011, EY was engaged by the Health Department for
the Australian Governments personally controlled e-health record program (PCEHR), winning a US$1
million contract to provide "external delivery assurance adviser" services over the next 14 months.
As the external assurance adviser, EY was responsible for project monitoring and providing
independent advice on progress, covering design assurance, process assurance and benefits
assurance.
30
Administrative processes
Learning platforms
Teacher training
E-learning programs: The Ministry of Human Resource Development has launched several e-learning
initiatives such as National Programme on Technology Enhanced Learning (provides e-learning through
online web and video course) and Virtual Labs (provide remote access to Labs in various disciplines of
science and engineering).
Digital classroom: An Indian state Government has decided to implement the digital classrooms concept
from 2015 in all residential schools across the state.
31
3.4
3.4.1
Changing customer expectations, combined with increasing competitive pressures, challenging macroeconomic
conditions and a stringent regulatory environment, are forcing financial services (FS) companies to re-think
and review current processes. Digital transformation is definitely a huge opportunity for the FS sector. Such
technologies will not just redefine and maximise customer experience, but will also restructure players internal
process.
Areas of digital transformation across the financial services sector:
Mitigate risks and better
reporting
Easier customer
acquisition and retention
Targeted products and
effective communication
Differentiated branches
Better prevention of
fraudulent transactions
Customer
relationship
management
Drive productivity
Remodelling of legacy
systems and processes
Cost
optimisation
Risk
management
and
compliance
Transaction
management
Efficient distribution of
physical network
The Indian FS sector has already started adopting digital technologies in its day-to-day operations. Large
private sector banks are the front runners. In India, mobile phone ownership exceeds bank account
penetration, and mobile is emerging as a popular mode of usage due to ease of access and cost benefits.
Alternate payment options are also gaining traction. Social media has re-defined customer interaction. Most
Indian FS providers have established a presence on social media. Many banks are offering fund transfer
services through social media websites. Insurance companies are using the social media platform as a new
distribution channel. Analytics has huge potential, spanning from providing valuable customer insights to risk
management to distribution network optimisation. Cloud computing is set to drive efficiency and cut costs by
ensuring efficient resource utilisation. Many banks have already started implementing cloud services, as it
entails low investments, effective data management and control over expenses.
33
Digital transformation will not only help FS companies in customer acquisition/retention, revenue generation,
cost optimisation and achievement of operational efficiency, but will also assist in effective monitoring,
regulatory compliance and risk mitigation. This will, in turn, help these companies maximise customer
experience and gain a competitive advantage in the market.
70%
72%
16%
60%
respondents believed
that big data analytics
helped in fraud
prevention and
detection according to
EYs Global Forensic
rise in NEFT
transactions volume in
FY14, while increase in
debit card usage was
only 28%
34
3.4.2
Digital transformation is affecting the following business areas within customer relationship management in
the FS sectorxix:
Network management
A large bank wanted to review multichannel sales to improve conversion rates: The bank wanted to analyse
multi-channel housing loan sales opportunities and convert them in channel or pass through to the call centre.
EY evaluated the sales pipeline and reviewed digital and call centre opportunities through to closed sales to
understand backend performance and end-to-end customer experience. This helped the client generate
incremental revenue of more than US$40mn over the next 4 years.
Life insurance client improves profit margin using analytics: The life insurance division of a large bank had
high lapse rates, which put pressure on its margins. EY used analytics to diagnose actual patterns, developed
short-term tactical remediation initiatives and designed high-level retention strategies. The client witnessed
more than 7% increase in NPAT over the first 6 months and has long-term potential of further 2% reduction.
35
suspicious transactions
Transactional banking digital channels study: EY was engaged to conduct a transactional banking digital
channels study to validate the proposition, confirm functions/non-functional requirements, provide a
roadmap detailing the priorities and migration approach, articulate the customer journey and provide a robust
governance framework.
36
Cost optimization
Emphasis on cost reduction requires BFSI companies to successfully leverage cost advantages of digital technologies
to drive productivity and efficiency. Data is a crucial resource for financial institutions. Good quality data speeds up
the decision-making process pertaining to resolving customer issues, risk management, etc. FIs are increasingly
reviewing and re-evaluating the efficiency of their core systems and processes. Despite the rise in digital channels,
branches are crucial for business growth and revenue generation. Therefore, banks need to carefully formulate
network expansion strategy.
Digital transformation is affecting the following business areas within cost optimization in the financial
services sectorxxi:
Data management
The way FIs use data internally is changing
with increasing demand from multiple sources
Use of data warehouses and cloud computing
in managing data at a low cost
Process re-engineering
A global insurance client improves operating efficiency: A global insurance and re-insurance client was
facing increasing claims costs (year on year). EY undertook an extensive analytical review of the clients
private vehicle portfolio, leading to current state assessment of overall claims cost against industry
benchmarks and improved data management framework. This led to millions of dollars of savings in claims
costs and improved overall operating efficiency.
A leading Australian banks branch transformation: The bank embarked on the process of branch
transformation by reviewing branch role with focus on developing customer relationships. This freed staff
from basic banking practices and increased the percentage of automated transactions from 15% to 30%. In
addition, it transformed traditional face-to-face customer experience and ensured a dedicated business
banker for high-growth potential clients. As a result, the bank was able to increase customer face time from
30% to 70% and average product sales by 36%.
37
Digital wallets
Mobile banking
A bank looks for advice on future digital network: EY was engaged to advise and assist the client in the
delivery of its future digital roadmap, new internet banking processes, implementation activities and support
for program planning and reporting. EY supported a number of key areas within the program, including
internal audit and QA, release management, strategy, roadmap, solution design, business analysis, operating
model design, business readiness and implementation, and PMO support.
38
In a rapidly changing world, it is crucial for companies to be more able to respond to change
Digital transformation has created a rapidly changing business environment that offers exponentially
expanding opportunities for new capabilities that transcend traditional ways of doing business. Digital is
disrupting value chains and compelling companies to rethink nearly everything they do, ranging from product
conceptualisation and designing to how they engage and retain smart customers and how they build and secure
the necessary IT infrastructure.
Digital technologies create
1.
Smarter customers
2.
3.
4.
5.
6.
7.
8.
Access to resources
9.
40
4.2
Create
Incubate
Activate
41
Companies embarking on the journey to achieve digital agility should focus on the following parameters:
Experience design
Design and deliver customer, employee and supplier
experiences that span both physical and digital worlds,
creating competitive differentiation and building trusted
relationships, one interaction and experience at a time
Digital law
Navigate data privacy, IP laws and e-commerce trading laws
Access a strong network of professionals with broad legal experience in
interdisciplinary projects
Innovation
Establish an innovation portfolio approach
Activate and manage innovation
Gain agility in innovation processes
Build product, service, experience, and business model innovation
Digital accounting
Implement new processes across the accounting life cycle, including:
identifying digitisation opportunities, selecting the right vendor,
designing new processes, creating and implementing a digitisation
plan, updating procedures and operating instructions, and helping with
change management activities
42
Digital technology
Build a digital technology strategy, architecture and roadmap for
covering application strategy, commercial/IT procurement strategy,
and data and architecture
Run large digital technology implementation programs with multiple
agencies, SIs and technology vendors
Digital operations
Improve the efficiency, flexibility and differentiation in their supply
chain management and operations
Use digital capabilities to become leaders in cost-to-serve, customer
service, Omni channel management and product/market innovation
Understand the impacts of e-commerce and other disruptors to
existing supply chains
Define new strategies and develop new business models that take
advantage of new technologies and new devices to improve efficiency
and accelerate profitable growth
Digital tax
Assess tax implications of new digital business models and supply chain
Identify and implement tax-efficient digital operating models
Optimise transfer pricing and compliance for digital distribution
channels.
Manage risk of indirect tax (VAT) exposure
Evaluate pre-controversy exposure
43
4.3
The fundamental themes that need to be kept in mind by the enterprises while designing their digital
transformation roadmap are:
Design a well defined
digital strategy
Formulate
business cases
Building blocks of
digital
transformation
Leverage ecosystem
support
44
4.4
Digital transformation offers a new set of value creation and growth opportunities. However, efforts to seize
those opportunities will not be without challenges. As digital technologies are getting incorporated in the IT
fabric, organisations need to shift focus away from driving adoption to balancing benefits realisation with
security and governance concerns.
45
5. Appendix
5. Appendix
Demystifying SMACi
Social technologies-based platforms and various other mediums including social bookmarking and geo-location
sites are becoming an integral part of companies marketing and communication strategies due to their
ubiquitous reach. Few of the many opportunities provided by social media channels are:
Strengthening customer engagement by embedding collaborative tools in business processes
Promoting a companys brand and generating leads by building communities to directly/indirectly help in
creating positive word of mouth
Embracing social media for co-innovation through crowdsourcing for generating new product ideas and
efficient services.
Businesses are rapidly deploying strategies to monetise their social media presence and achieve measurable
results. Enterprises now track metrics such as leads, website traffic, conversions and revenue generated to
keep a tab on their social media performance.
Mobility technologies have become the focal point of our personal and professional lives by enabling
anytime/anywhere access and sharing of information:
Enterprises are embracing Bring Your Own Device (BYOD) or Corporate-Owned Personally Enabled (COPE)
for creating a more responsive workforce and enabling a clear view on their business operations. This has a
cascading effect on boosting employee productivity and enabling real-time business decisions.
The mobile-first approach towards application development is creating a rich consumer and business app
ecosystem.
Mobile has become the medium to reckon with for advertising, due to rapid proliferation of mobile devices
customer
Enterprises all around the world are racing to exploit opportunities presented by big data. Analytics can help
retailers predict the buying decisions of shoppers; it can also help banks weed out fraudulent transactions.
Meanwhile automotive sector is using big data to improve production quality and resolve supply chain issues.
Cloud technologies have enabled the distribution of all technology offerings as-a-service including
infrastructure, platforms, software, storage and security. Enterprises are leveraging cloud computing to
reduce upfront IT investments, adopt a scalable model for IT and ensure business continuity and data
protection in the event of an outage or other catastrophic events.
Cloud computing is relevant for SMEs and large enterprises alike. Cloud adoption in SMEs is triggered by limited
IT budgets and the need to enhance operational efficiency, large enterprises, on the other hand, are
transitioning to cloud to achieve business agility, lower cost of ownership and replace on premise legacy
technology that cannot be scaled up.
47
Internet of Everything (IoE) xxiv is poised for massive growth in coming years as an increasing number of
devices get connected to internet, driven by breakthroughs in cost of sensors, processing capabilities and
bandwidth connectivity. IoE will have major implications for both business-to-business (B2B) and business-toconsumer (B2C) enterprises, as follows:
Diverse industries such as manufacturing, aviation, healthcare, automotive and utilities are at the forefront
of IoE boom to capture new growth opportunities such as smart meters, connected cars, home automation
and wearables.
Machine-to-Machine (M2M), which refers to the connecting of remote sensing, monitoring and actuating
devices, is a vital sub-set of IoE. Machina Research forecasts worldwide M2M connections to increase from
2 billion in 2013 to 18 billion in 2022, up 22% annually. This vindicates the business potential of M2M in the
areas of professional support and service management.
Data created by built-in sensors in industrial equipment such as jet engines, manufacturing machines and
medical equipment is assisting enterprises in predicting a malfunction before it occurs and preventing a
negative impact on profits. By proactively measuring and monitoring health-related data, providers can
improve care management and address risk factors and symptoms of chronic disease early, as well as provide
positive reinforcement in new and more effective ways.
The following data points provide relevant details of increased adoption of SMACi technologies and the
renewed focus on digital transformation by enterprisesxxv:
Social media is fuelling the digital revolution and transforming customer landscape
93% of marketers use social media for business.
Spending on digital marketing is expected to increase 11% year-on-year (YoY) in
2015, while traditional advertising budgets are expected to contract 3.6%.
The number of marketplaces that support business networks by connecting
suppliers, partners, and customers are expected to increase by 100% by 2017.
Mobile is the device of choice for sharing, communicating and transacting
Mobile devices are expected to account for 30-40% of online sales by 2015.
Spending on mobile enterprise business apps will more than double from US$26
billion in 2012 to US$53 billion in 2017.
Augmented-reality is gaining traction in mobile advertising and is expected to grow
at a CAGR of 95.35% from 2011 to 2016.
Analytics is becoming a strategic focus area in a dynamic business environment
The big data industry is expected to grow to US$20 billion by 2019.
Lack of understanding the data is cited as the top most reason for overrunning
project budget and can cost businesses 20%35% of their operating revenue.
Improved use of data has the potential to generate US$3 trillion in additional value
each year in seven industries*.
Cloud is evolving as a key enabler of digital transformation
80% of the new apps will be distributed or deployed via the cloud by 2015.
55% of the companies consider the cloud ready for mission-critical workloads, which
makes the cloud a cost effective medium to store huge volumes of data generated
over mobile and social media.
48% of the US government agencies have moved at least one workflow to the cloud
following the new "cloud-first" policy adopted by the US federal agencies.
Internet of Everything (IoE) is becoming pervasive with the mainstream adoption
of IoE devices and solutions
IoE technologies are expected to be worth US$6.2 trillion by 2025; manufacturing
and healthcare will account for majority of the market at 40.2% and 30.3%,
respectively.
69% of consumers are planning to buy an in-home IoE device (thermostat, security
camera) in the next 5 years.
Within 5 years, 40% of wearables are expected to evolve into a viable consumer
mass-market alternative to smartphones.
48
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iv
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v
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vi
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accessed 28 January 2015
vii
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accessed 27 January 2015
ix
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2015
x
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xi
Indias most innovative retailers, LiveMint website,
http://www.livemint.com/Companies/RFfGa5O7nfNoUCY67L02WL/Indias-most-innovative-retailers.html?utm_source=copy,
accessed 17 January 2015
xii
Global Smart Cities Market to reach US$1,265.85 Billion by 2019 - Transparency Market Research, GlobeNewswire website,
hthttp://globenewswire.com/news-release/2014/10/07/671131/10101535/en/Global-Smart-Cities-Market-to-reach-US-1-26585-Billion-by-2019-Transparency-Market-Research.html, accessed 3 February 2015;
Cities of the future? Indian PM pushes plan for 100 'smart cities', CNN website,
http://edition.cnn.com/2014/07/18/world/asia/india-modi-smart-cities/, accessed 27 January 2015;
Ernst & Young bags $1m PCEHR contract, The Australian website, http://edition.cnn.com/2014/07/18/world/asia/india-modismart-cities/, accessed 28 January 2015;
xiv
Ernst and Young selected as consultant for UIDAI, The Hindu website, http://www.thehindu.com/news/national/ernst-andyoung-selected-as-consultant-for-uidai/article114093.ece, accessed 23 January 2015;
India: creating a unique identity, EY website, http://www.ey.com/GL/en/Industries/Government---Public-Sector/Citizen-Today-India--creating-a-unique-identity , accessed 23 January 2015;
50
xv
Ernst &Young consultant for Kochi metro, Business Standard website, http://www.business-standard.com/article/economypolicy/ernst-young-appointed-as-consultant-114080400483_1.html, accessed 27January 2015;
Intelligent Transport System (ITS), DeitY website, http://deity.gov.in/content/intelligent-transportation-system-its, accessed
27 January 2015;
Civic bodies to start intelligent transport project, Times of India website, http://timesofindia.indiatimes.com/city/pune/Civicbodies-to-start-intelligent-transport-project/articleshow/17850157.cms, accessed 27 January 2015;
xvi
Ernst & Young bags $1m PCEHR contract, The Australian website, http://edition.cnn.com/2014/07/18/world/asia/indiamodi-smart-cities/, accessed 28 January 2015;
External Delivery Assurance Advisor $990,000, Healthbase Australia website,
http://www.healthbase.info/pcehr/page19/page25/page25.html, accessed 28 January 2015; Exchange rate used: 1 AUD =
1.0602 USD (June 2011)
Integrated Disease Surveillance Project (IDSP), National Centre for Disease Control website,
http://www.ncdc.gov.in/index2.asp?slid=478&sublinkid=149, accessed 28 January 2015;
Hospital Management Information System (HMIS), Gujarat, OneWorld South Asia website,
http://southasia.oneworld.net/features/hospital-management-information-system-hmis-gujarat#.VMqQ5miUfoE, accessed 28
January 2015;
xvii
EY Global banking outlook 2015: transforming banking for the next generation, EY, 2014
Increasing Customer Acquisition and Retention using Predictive Analytics, bankinnovation website,
http://bankinnovation.net/2013/03/increasing-customer-acquisition-and-retention-with-predictive-analytics/, accessed 15
February 2015
xx
How Analytics Can Help Banks Make the Transition to Dodd-Frank Compliance, BankTech website,
http://www.banktech.com/compliance/how-analytics-can-help-banks-make-the-transition-to-dodd-frank-compliance/a/did/1295272?, accessed 23 January 2014
xxi
Branches of the Future Designs, The Financial Brand website, http://thefinancialbrand.com/40423/bank-credit-unionbranch-design-innovations-new/, accessed 15 February 2015;
Banks consider cloud computing to improve efficiency, cut costs, BusinessLine website,
http://www.thehindubusinessline.com/industry-and-economy/info-tech/banks-consider-cloud-computing-to-improve-efficiencycut-costs/article2577074.ece, accessed 15 February 2015;
Banking on Big Data Analytics, LiveMint website, http://www.livemint.com/Industry/F5uNVbogJfsNB7cSt1toBL/Banking-onBig-Data-analytics.html, accessed 15 February 2015
xxii
Mobile Banking zooms as India gets smarter, Business Standard website,http://www.businessstandard.com/article/finance/mobile-banking-zooms-as-india-gets-smarter-114081100826_1.html, accessed 13 August 2014
THE PEER-TO-PEER PAYMENTS REPORT: The Exploding Market For Smartphone Apps That Transfer Money Business Insider
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51
IMPS can transfer money within minutes. Why isnt it more popular?, moneylife website,http://www.moneylife.in/article/impscan-transfer-money-within-minutes-why-isnt-it-more-popular/40017.html, 3 January 2015
xxiii
IDC FutureScape: Worldwide Social Business Transformation 2015 Predictions, IDC, 4 December 2014
Matt Hatton, The Global M2M Market in 2013, Machina Research, January 2013
xxv
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January 2015
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52
The EY Team
Samiron Ghoshal
Partner, Advisory Services
Member, Global IT Advisory Leadership
Member, Global Emerging Markets Advisory Core Group
+91 124 464 4652
Samiron.Ghoshal@in.ey.com
Ernst & Young LLP
Asheesh Malhotra
Partner, IT Advisory Practice, Advisory Services
+91 80 6727 5743
asheesh.malhotra@in.ey.com
Ernst & Young LLP
Manoj Jha
Director, IT Advisory Practice, Advisory Services
+91 22 6192 0623
manoj.jha@in.ey.com
Ernst & Young LLP
Rahul Rishi
Partner, Advisory Services
+91 11 4363 3000
Rahul.Rishi@in.ey.com
Ernst & Young LLP
Nilesh R Naker
Partner, Financial Services, IT Advisory
+91 22 6192 1265
nilesh.naker@in.ey.com
Ernst & Young LLP
Joydeep Dutta
Senior Manager, Digital Advisory
+91 80 6727 5110
joydeep.dutta@in.ey.com
Ernst & Young LLP
Acknowledgement
Special thanks for condusting research, analysis and compliation of the study.
Swati Goenka
Kadhambari Suresh
Nishant Bansal
53
Notes
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