Over the last few months I’ve had the opportunity to collaborate with a range of my Deloitte colleagues on a report into the “digital disruption” of business. The result brings together the impacts of digital technologies, with the explosion of information and the enabling capabilities of cloud. For me, the most important aspect of the collaboration has been the separation of digital from its purely technical connotations. While focused on Australia, the report’s findings are largely applicable to all geographies.
Hear the word “digital” and your mind races to the latest internet or mobile device. Over the past forty years many new technologies have been introduced which have caused disruption and met this definition of digital.
Some examples include the wide introduction from the 1970s of the “digital computer” a term which no longer needs the digital preface. Similarly the digital mobile phone replaced its analogue equivalent in the 1990s introducing security and a raft of new features including SMS – who recalls the number of scandals caused when radio hams listened into analogue calls made by politicians? Digital communications over the internet are simply another example of various analogue predecessors being digitised.
Digital business separates its constituent parts to create independent data and processes which can then be assembled rapidly in a huge number of new and innovative ways. Airlines are a good example. Not that many years ago, the process of ticketing through to boarding a flight was analogue meaning that each step led to the next and could not be separated. Today purchasing, ticketing and boarding a flight are completely independent and can each use completely different processes and digital technology without impacting each other. Passenger handling for airlines is now a digital business.
What this means is that third parties or competing internal systems can work on an isolated part of the business and find new ways of adding value. For retailers this means that the pictures and information supporting products are independent of the website that presents them and certainly the payment processes that facilitate customer transactions. A digital retailer has little trouble sharing information with new logistics, payment and mobile providers to quickly develop more efficient or new routes to market.
If you don’t think that this is going to impact you in the short-term, then the report’s analysis should convince you otherwise. 32% of the Australian economy (and by extrapolation the economies of other countries) will experience a major disruption in 0 to 3 years and a further 33% will be similarly impacted in 3 to 5 years. Impact is one thing, but this report leaves you with a sense of just how much work there is still to be done to respond to the digital challenge.