Make it happen: How to digitally transform your business

The first of our monthly guides to harnessing global trends with a razor-sharp regional focus

The digital transformation of companies large and small has been central to business strategy for years. Now, the coronavirus pandemic and the need to reduce energy consumption are accelerating its rollout. Enterprises across the Middle East are pursuing digital transformation to boost revenues while reducing cost and risk. Governments in the region are seeking to future-proof their economies, with Saudi Arabia reducing its reliance on oil production and Abu Dhabi putting greater focus on knowledge-based industries. 

What is digital transformation? 

It means the integration of digital technology into all areas of a business, transforming how they operate and deliver value to customers. It’s a cultural change requiring companies to challenge the status quo and adopt new practices. 

Sounds tricky – and expensive…

The shift to digital operating models does require significant investment along with cultural change. But whatever the sector — retail, manufacturing, agriculture, hospitality, transport, finance, education, healthcare — operational agility is key to enhancing customer experience, and this requires comprehensive digital integration, leadership and workforce enablement.  

Remember, organisations are in different places on the road from vision to execution. For some, digital transformation might simply mean moving to cloud-hosted services enabling innovative solutions at a lower cost. Others might be assessing whether to design new jobs to create their framework, or hire a consulting service. Many chief information officers fear they lag behind their rivals on transformation when this might not be the case. 

How is the Middle East positioned on this global digital journey? 

A young demographic and lack of legacy infrastructure can mean companies in the region have a distinct advantage when it comes to unlocking digital opportunities, but international expertise is required.  

Tamer Farouk of digital consultancy Injazat, said: “Education is still needed so businesses in the region know how they can improve services, reduce the cost of IT ownership, and mitigate risk by using the cloud and accessing data analysis services.” 

Other regional idiosyncrasies? 

Store-based sales still dominate the retail landscape, although e-commerce rose to 8 percent from 4 percent in 2020, according to a survey by Euromonitor International. However, creating engaging new in-store experiences remains a strategic priority. This hybrid of physical and digital (sometimes known as “phygital”) is demonstrated at the flagship store of Adidas in the Dubai Mall, which has “smart” fitting rooms and a “Maker Lab” enabling customers to personalise products. 

Meanwhile, Carrefour City+ in Dubai is a cashier-less, self-service store, deploying artificial intelligence to increase convenience. Digital technology will increasingly allow retailers to create more personalised experiences and drive cost efficiencies both offline and online. 

What’s more, the pandemic gave a boost to home cooking and grocery shopping online, a category that had been resistant to ecommerce. McKinsey Digital noted that, on the business-to-business side, remote selling has become more established between wholesale food suppliers and retailers. 

Doesn’t a sector such as hospitality rely more on human interaction than AI chatbots? 

It’s a fine balance of automation and driving innovation without losing the front-of-house personal experiences, said Jacob Chacko, regional director at Aruba, a Hewlett Packard Enterprise company. “For hospitality businesses to bounce back better from the pandemic, they must demonstrate they’re able to respond to digital-first expectations, delivering safety-conscious contactless experiences and digital interactions”. 

Harnessing data to understand customer preferences is a three-step model. First, process data efficiently in real time, at its source, rather than transferring it back to a centralised hub, because every second counts. Second, analyse data intelligently and act on it. Third, store data securely to reassure customers. 

What about security? Privacy is paramount in this age of cyberfraud 

The latest consumer identity and access management platforms are based on the premise that no one person or thing can be trusted and should be constantly verified. They enable what’s called Zero Trust. Organisations can also remove the need for passwords during the login process to eliminate phishing attacks and the platforms include a cloud architecture that isolates each company’s data for ultimate security. 

That helps customers. How is digital transformation affecting employees? 

UK banking group RBS is aiming to make the organisation a great place to work as well as meeting customer demands and lowering costs, according to Steve Wood, head of the RBS Digital Office. 

Technology “empowers employees with mobile and cloud services that allow them to work anytime, anywhere and from any device,” he said. It takes advantage of the project, content, conferencing and office productivity management in Microsoft Office 365, and makes use of social tools such as Workplace and Facebook to support engagement and information exchange between employees and customers. 

Crucially, it also requires suppliers to work with each other. Fujitsu runs RBS’s desktop platform, and Wood said: “We need an ecosystem that adds value not just for RBS and its customers but also for the suppliers themselves. Nobody can do this on their own, whether a bank or technology provider.” 

Experts’ verdict

Along with enterprises from Coca-Cola to Unilever, RBS collaborated on its digital transformation with consultant and leadership mentor Michael Bayler, author of The Liquid Enterprise. 

“Technology giants such as Google and Amazon provide connected consumers with a ‘sense-making window’ into the cultural and commercial ecosystems that the web has created,” said Bayler. “The implication on the business side is huge: not only do the location and control of value need revisiting but the nature of value itself. Asking ‘what business are we now?’ is rarely a frivolous comment today.”  

Jim Swanson, enterprise chief information officers at Johnson & Johnson, said: “Data analytics, technologies and software are enablers, not drivers. In the centre of it all is leadership and culture.” 

Top 10 digitally transformed companies 

• Porsche The German maker of high-performance cars uses the latest customer relationship management system so big data is used to adjust to every customer touchpoint.  
• Starbucks The food and drinks chain added 1,900 locations in pre-pandemic 2019 and generated 7 percent unit growth by applying AI-based tool Deep Brew to choose locations based on data analysis such as population, income levels, traffic and competitor presence. 
• Unilever Having data and predictive analytics capabilities, Unilever is able to increase the accuracy of demand estimations and plan its production.  
• Keller Williams The real estate business now describes itself as a technology company that specialises in real estate. It uses customer relationship system KW Command, an open and highly customisable platform that allows agents to run their business more efficiently. It collaborates with software development partners including Google and DocuSign.  
• Ikea The Swedish home furnishings giant offers an omni-channel shopping experience, strengthening its position with e-commerce. As well as changing to smaller-format shops, it allows its consumers to use augmented reality to “see” furniture in their homes before making an actual purchase.  
• Lego The company has revived its fortunes by investing in mobile games and apps, which in turn blend the physical and digital worlds. 3D printing allows customers to create their own products.
• DHL DHL’s stock management and supply chain is almost fully automated, making it easier to use for employees. It has introduced a $2.2 billion plan dubbed Strategy 2025 to boost long-term growth via upgrading networks and modernising the intercontinental fleet. 
• Nike To expand its digital marketplace, the sportswear company uses social commerce with a wide range of mobile apps to build stronger relationships with customers. Due to its digital ecosystem, the corporation can collect every interaction, which in turn helps it to tailor its message and products better. 
• McDonald’s The fast food chain’s Velocity Growth Programme is intended to transition the company from analog to fully digital. As a part of the plan, it purchased a tech start-up, Dynamic Yield, used to deliver real-time personalisation of menus in its drive-thru outlets. 
• Walmart The retail group has a holistic approach to digital transformation, deploying autonomous robots to provide real-time on-shelf inventory. However, the biggest development is investment in e-commerce. Thanks to its investment between 2011 and 2014, the company’s online revenue grew by 150 percent.