Free: Digital Transformation 2019

DIGITAL TRANSFORMATION

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© 2019

TABLE OF CONTENTS

1 Introduction to Digital Transformation • Digital Transformation 101 • Stages of Digital Transformation • Key Drivers for Digital Transformation • Strategic Challenges • Key Technologies • Contemporary DT Investment Focus 2 Digital Transformation Guidelines • Cultivating a Digital Environment • Organizing for Business Agility • Fostering Collaboration • Increasing Competitiveness

3 How to Measure Digital Transformation Initiatives • Common Metrics for DT Initiatives • Key Considerations for DT’s Maturity & Success

4 Market Trends and Emerging Technologies

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GLOSSARY OF TERMS

Term

Description

IoT is the extension of Internet connectivity into physical devices and everyday objects. Embedded with electronics, Internet connectivity, and other forms of hardware, these devices can communicate and interact with others over the Internet, and they can be remotely monitored and controlled. DX is the reworking of the products, processes, and strategies within an organization by leveraging current technologies. These digital solutions enable inherently new types of innovation and creativity, rather than simply enhance and support traditional methods. AR is an interactive experience of a real-world environment where the objects that reside in the real-world are enhanced by computer-generated perceptual information. VR is an experience taking place within simulated and immersive environments that can be similar to or completely different from the real world.

IoT: Internet of Things

DX: Digital Transformation

AR/VR: Augmented Reality/Virtual Reality

NPS is a management tool that can be used to gauge the loyalty of a firm's customer relationships.

NPS: Net Promoter Score

CSAT is a measure of how products and services supplied by a company meet or surpass customer expectation.

CSAT: Customer Satisfaction

CLV: Customer Lifetime Value

CLV is a prediction of the net profit attributed to the entire future relationship with a customer.

5G networks are the next generation of mobile internet connectivity, offering faster speeds and more reliable connections on smartphones and other devices than ever before.

5G

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Introduction to Digital Transformation

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DIGITAL TRANSFORMATION 101

• Digital Transformation (DX) is the reworking of the products, processes, and strategies within an organization by leveraging current technologies . • DX requires an examination and reinvention of most, if not all areas within an organization; from its supply chain, workflow, employee skill sets, board-level discussions, customer interactions, and stakeholders' value. • In the 1990s, only organizations in select industries—such as music, entertainment, and electronics—were exploring digital products and services. The advent of the internet has made customers increasingly empowered based on pervasive access to online information. As a result, customers have now become the vocal driver behind digital transformation across all industries.

Evolution of Digital Transformation

Digital Products & Infrastructure

Digital Distribution & Web Strategy

Digital Transformation of Business Models

Digital products (e.g., music, entertainment)

Web strategy and e- commerce (e.g., retail, electronics) Creating efficiency through web strategy (e.g., government)

Mobile revolution

Infrastructure (e.g., telecoms, software, IT)

IoT

Cloud-centric software

Artificial Intelligence

Data analytics

Late 1990s

2000s

2010s

Source: IBM. Digital Transformation. Retrieved from: Link

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DIGITAL TRANSFORMATION 101

• As connected customers and employees move past traditional boundaries, people are letting

Degree of Product and Service Digitization

businesses know just what they want and need. This disruption is pushing all industries toward the digital end of the physical-digital continuum. • Many industries and individual organizations are either in the midst of transformation projects, are planning digital transformation strategies, or are struggling with the concept. • There are multiple key processes an organization generally must have to transform. Cloud computing, for example, grants an organization quicker access to its needed software, new functionalities and updates, along with data storage, and enables it to be nimble enough to transform.

Primarily Physical

Mixed Digital & Physical

Primarily Digital

Industry Examples:

Industry Examples:

Industry Examples:

Agriculture

e-Commerce

Aerospace & Defence

Consumer Products

Technology

Industrial Products

Entertainment (e.g., Music, Gaming)

Automotive

Metals And Mining

Banking

Social Media

Services

Consumer Electronics

White Goods

Healthcare

Medical Devices

Publishing

Education

Retail

Telecoms

Traditional/Physical

Digital

Hybrid

Source: IBM. Digital Transformation. Retrieved from: Link

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The 6 Stages of Digital Transformation These 6 Stages Serve as a Digital Maturity Blueprint for DX

Organizations operate with a familiar legacy perspective of customers, processes, and business model, believing that it remains the solution to digital relevance.

Business as Usual

1

Present and Active

Pockets of experimentation are driving digital literacy and creativity, throughout the organization while aiming to improve and amplify specific touchpoints and processes.

2

Experimentation becomes intentional while executing at more promising and capable levels. Change agents increasingly seek executive support for new technology.

Formalized

3

Individual groups recognize the strength in collaboration as their work contribute to new roadmaps that plan digital transformation ownership, efforts, and investments.

Strategic

4

A dedicated DX team forms to guide strategy and operations based on business goals. The new organization takes shape as changes through DX are solidified.

Converged

5

Digital transformation becomes a way of business as executives and strategists recognize that change is constant. A new ecosystem is established to identify and act upon technology and market trends.

Innovative and Adaptive

6

Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

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Digital Transformation Capabilities These 6 Capabilities Serve as a Digital Roadmap for DX

Deliver Business Model Innovation Collaboration with Customer

The ability to design and deliver new business models is the one of the primary goals of DX, since building customer value is viewed as a core competency across industries.

1

Another key DX competency is finding new ways to engage its customers, using social networking tools or new platforms to foster user participation.

2

The ability to integrate across all customer touch-points is essential for managing digital operations. Digitally-matured organizations can integrate all customer touch- points across digital and physical channel.

Cross-Channel Integration

3

Insights from Analytics

DX-focused organizations are able to process information across all sources (internal, external), and harness the full advantage of data analytics.

4

Physical components of the supply chain will be equipped and interconnected with sensors that enable real-time analysis. Companies will then have the flexibility to determine its best inventory allotments and better manage its cost. Collaboration enabled by mobile and online tools becomes an essential part of the communication mix within organizations, as well as among companies, partners, and customers.

Digitally-Enabled Supply Chain

5

Networked Workforce

6

Source: IBM. Digital Transformation. Retrieved from: Link

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PATHS TO DIGITAL TRANSFORMATION

Create and integrate digital operations first. Then address the customer value proposition to achieve full transformation. Enhance, extend, or reshape the customer value proposition with digital content, insights, and engagement. Then focus on integrating digital operations. Build a new set of capabilities around the transformed customer value proposition and operating model in lock-step. The best path for a particular company depends on its strategic objectives, industry context, competitive pressures, and customer expectations. In industries where the product is mostly physical and customer requirements for information are not as advanced, Path 1 is recommended . In industries where products and services can be offered online or through mobile devices, Path 2 is recommended . However, many industries might need to redefine customer value propositions and operating models simultaneously ; in that case, Path 3 is recommended. 1 2 3

1

DX

3

2

0

Extend

Enhance

Extend

Reshaping the Customer Value Proposition The “What”

Source: IBM. Digital Transformation. Retrieved from: Link

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KEY DRIVERS OF DIGITAL TRANSFORMATION External and Internal Drivers

Over the years, the top drivers for advanced digital transformation efforts have consistently revolved around two things: modernizing technologies across the enterprise and investing in modern customer experiences. But as digital transformation takes on the enterprise holistically, understanding evolving customer behaviors and preferences has slid to the second spot in the list of key drivers for 2018. Also on the rise is the importance of regulatory and compliance standards. This driver is motivated by new regulations such as the European Union’s General Data Protection Regulation (GDPR) and the increasing frequency and publicity of data breach scandals.

Survey on the Key Drivers of DX Within an Organization

Growth opportunities in new markets

51%

Evolving customer behaviors and preferences

46%

Increased competitive pressure

41%

Lack of expertise, literacy, and understanding of digital trends Proactive investment to fight disruption Evolving employee behaviors and preferences New regulatory and compliance standards

38%

26%

26%

19%

Decline in business performance

12%

Others

1%

0%

20%

40%

60%

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

KEY PRIORITIES OF DIGITAL TRANSFORMATION Long and Short-Term Priorities for DX Initiatives

Survey on an Organization’s Long-Term & Short-Term DX Focus

The biggest priorities for digital transformation has continued to be customer experience. That work is aimed at fixing and modernizing the customer journey. Once this happens, digital transformation tackles more sweeping efforts that involve multiple groups. This is why organizations who are further along the six stages of digital transformation develop customer-centered roadmaps and then divide and conquer against those initiatives across the enterprise. They do so with an eye on the short-term (next 3 years) and also factor in the long- term (next 5-10 years) with an emphasis on technologies, business models, and operations.

57%

Building an omnichannel customer experience

54%

49%

Modernizing IT infrastructure

45%

37%

Investing in an integrated e-commerce platform

36% 36%

Revamping customer service online

31%

34%

Formalizing innovation programs

34%

34%

Focusing on customer's digital touchpoints research

35%

31%

Creating data analytics infrastructure

32%

27%

Improving operational agility

28%

22%

25%

Corporate reorganization to increase collaboration

20%

Creating a digital culture

27%

17%

Modernizing employee experience

23%

14%

Testing new digital concepts & technologies

24%

13%

Using M&A to expand digital capabilities

18%

13%

Training and/or hiring new skillsets

19%

0%

20%

40%

60%

Short-term

Long-term

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

CHALLENGES OF DIGITAL TRANSFORMATION

• The top challenge reported by executives is the lack of data or ROI to justify the value of digital transformation. The second top challenge cited is budget, and the perception of digital transformation as a cost center, not as an investment in performance and growth. • These two challenges are intertwined. When it comes to digital transformation and innovation, many executives perceive digital transformation as a resource that takes away from shareholder value and quarterly performance, the reality is that it is an investment in near and longer-term competitiveness and value creation. Without clear data that shows how digital transformation positively affects the bottom line, digital transformers or change agents struggle to get the resources they need to succeed.

Survey on Major Challenges Impeding DX

Lack of data or ROI to justify value

29%

Budget concerns

28%

Resistance to change

26%

Legal, risk, compliance concerns

26%

Lack of staff resources

21%

Rigid technology infrastructure

21%

Low digital literacy or expertise

20%

Company culture

20%

Legacy business models

19%

Lack of clear vision

16%

Risk averse

16%

No sense of urgency

13%

No leadership driving efforts

8%

0%

20%

40%

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

KEY TECHNOLOGIES OF DIGITAL TRANSFORMATION

• Forbes spoke with executives about crucial contributors to a successful DX implementation, and cloud computing leads the list. The report added that in the future, data becomes agnostic from its containers, with a layer on top that allows for predictive analytics, insights, and competitive advantage. • The platform where such data is stored and analyzed will be the next focus of DX adopters. For example, insurance company AIA expects analytics advancements through artificial intelligence, machine learning, and blockchain to play a crucial role in its effort to transform the healthcare industry. • Forbes concluded that companies which prioritized technology expenditures experienced above-average performance afterward.

Survey on the Top Tech Contributors to a Successful DX

Cloud Computing

64%

Mobile Solutions

44%

Data Analytics

42%

IoT

31%

Social Media

30%

0%

20%

40%

60%

80%

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Source: Forbes. How to Win at Digital Transformation. Retrieved from: Link

DIGITAL TRANSFORMATION INITIATIVES BY METHOD

Survey on the Organization’s DX Initiatives

• While most companies agree that innovation is instrumental to compete in a digital economy, how innovation takes shape and gains momentum varies greatly from organization to organization. • The best performers in their industry responded that they are building a culture of innovation mandated at the executive level. Every employee undergoes proper training to accommodate a new technology or enterprise system, and every initiative is supported with business-specific goals. • These organizations understand that technology is ultimately an enabler for its

Building a culture of innovation from top- down to ground-up

47%

In-house innovation team with dedicated enterprise resources

46%

Informal research team within organization exploring opportunities

37%

Venture capital subsidiary focused on tech startups

36%

DX-focused board members

32%

Partnerships with leading tech cities

29%

No formal investments or initiatives yet

5%

human capital, and DX should be mandated across the enterprise.

0%

20%

40%

60%

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

CONTEMPORARY DX INVESTMENT FOCUS

• Digital transformation was initially intended to modernize technological infrastructure, migrating costly, dated, and complicated hardware and software solutions to more agile and scalable cloud and mobile platforms. But since the early days of digital transformation, the speed of technology innovation has only increased. • At present, digital transformation has to keep up with all relevant technology trends as they represent disruptive threats and competitive opportunities; contributing to a dramatic rise of digital transformation budgets as well. • These moves represent advanced strides toward the 6 th stage of digital transformation “Innovative and Adaptive”, and serve as best-in-class examples for how other companies can get there.

Top-Priority Technology Investments in 2019

Social Media e-Commerce Mobile Solutions Real-time Analytics & Reporting IoT Big Data Artificial Intelligence Cybersecurity Cloud Computing

37%

35%

34%

28%

26%

25%

23%

21%

19%

Voice-based interfaces 3D Printing Autonomous Vehicles Quantum Computing AR/VR Wearable Technology 5G DevOps Blockchain Machine Learning Collaboration Platform

17% 17%

14% 14%

11%

10% 10%

9%

7% 7% 7%

0%

20%

40%

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

Digital Transformation Guidelines

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CULTIVATING A DIGITAL ENVIRONMENT & CULTURE Page 1 of 2

• Research shows that a single set of cultural characteristics is associated with DX success, and these characteristics are consistent across industries and company size. Specifically, successful organizations have: 1. Less hierarchical and more distributed in leadership structure.

Company Culture and its DX implementation

Nimble/Quick to Act

AGILITY

Slow/Deliberate

Cautious/Risk Averse

Bold/Exploratory

RISK APPETITE

2. more collaborative and cross- functional.

DECISION MAKING

Instinctive

Data-driven

3. encouraging of experimentation and learning. 4. more bold and exploratory, with a higher tolerance for risk.

LEADER STRUCTURE

Hierarchical

Distributed

PASSION FOR WORK

Work to Live

Live to Work

Independent/ Siloed

WORKING STYLE

Collaborative

5. more agile and quick to act.

• These findings suggest that all organizations can begin the process of digital transformation, by working toward developing these hallmark characteristics of a digital culture.

1

3

5

2

4

Early Stages

Developing

Successful

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Source: Gerald, C.K. (2019). The Technology Fallacy.

CULTIVATING A DIGITAL ENVIRONMENT & CULTURE Page 2 of 2

What We Know

What Organizations Can Do About It

• Company culture drive digital transformation in different ways. Early and developing-stage companies tend to rely on “push” techniques, specifically mandates or technologies being provided top down. Existing research suggests that these techniques can be ineffective in achieving digital transformation. • Digitally-maturing companies, in contrast, tend to “pull” digital transformation by cultivating an organizational culture that creates the conditions that facilitate transformation. • Digital cultures are distinct and intentional.

• Using the organizational culture characteristics identified in the previous slide, complete an assessment of the current organizational culture. • Compare the organization’s baseline state with where it wants to be, or need to be, along different digital culture dimensions (e.g., risk taking, agility, collaboration). • Examine current digital initiatives from an adoption standpoint to identify challenges that may be linked to culture. • Determine if the company is using a “push or pull” approach for enabling these initiatives. Where a “push” approach is found, determine how the organization can shift to a “pull” approach.

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Source: Gerald, C.K. (2019). The Technology Fallacy.

ORGANIZING FOR BUSINESS AGILITY Page 1 of 2

1 Empower Teams to Act: While it is critical for senior management to keep its finger on the pulse of the competitive environment, cross-functional teams must be given a certain degree of autonomy to adapt their plans to the environment. Managing in this environment requires allowing, enabling, and empowering employees to act strategically and with less direct oversight. It also necessitates educating these employees on the organization’s strategic objectives, as well as developing “rules of engagement” to guide employee action. Finally, it requires that executives learn new ways of managing and leading. 2 Embrace Modularity: Just as technological modularity allows for computer technology to innovate faster by allowing different aspects to evolve at different rates, so organizational modularity helps companies respond more quickly. Cross-functional teams can be swapped in and out or repurposed to different tasks as needed. Teams work on specific projects, with a certain degree of autonomy. They can be repurposed or swapped out to deal with different objectives as goals are accomplished or the purpose of the team is no longer relevant to the organization’s objectives.

3 Cultivating Talent Markets: Organizations could partner with or cultivate on-demand talent markets that sources and integrates talent across networks, so that specialized help is available as needed and on-demand. Talent markets can be maintained via platforms that monitor, evaluate, and support the talent pool of on-demand contractors.

4 Rethinking Core Employees: Core employees, even those who are relatively junior, should have a certain level of strategic autonomy to accomplish or contribute to designated goals. Offering greater independence would also require more communication with top leadership and increased awareness of the strategic direction of the company.

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Source: Gerald, C.K. (2019). The Technology Fallacy.

ORGANIZING FOR BUSINESS AGILITY Page 2 of 2

What We Know

What Organizations Can Do About It

• Companies need to be agile to respond to the changes and speed of the digital environment. • Companies can look at the values and principles of agile software development methods as an approach to digital transformation: 1. Individuals and interactions over processes and tools. 2. Working software over comprehensive documentation. 3. Customer collaboration over contract negotiation. 4. Responding to change over following a plan. • Agile approaches emphasize small meaningful improvements involving sprints over short (6-to-8-week) timeframes and constant face-to-face communications over formal project reporting. • DX-focused organizations tend to rely on cross-functional teams that are empowered to act and operate in an environment of reduced bureaucracy.

• Conduct an audit of how the organization currently run its digital transformation initiatives, relative to the values and principles of agile; identify the biggest gaps. • Select one or two existing or planned digital initiatives that can be run as agile efforts. Train key members in agile methodology and run a learning pilot focused on understanding what it will take to scale agile more broadly. Determine what additional infrastructure and process changes will be needed for the agile pilot. • Evaluate the pilot and repeat.

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Source: Gerald, C.K. (2019). The Technology Fallacy.

FOSTERING COLLABORATION Page 1 of 2

• Research shows that the biggest barriers to effective collaboration are primarily organizational—silos, culture, fragmented departments, time, reluctance to change, and leadership. • The research added, however, that the instrumental benefits of collaboration are often secondary effects that occur only after the company used the platform to strengthen the organization . Their research shows that companies need to first work on cultivating authenticity, pride, and attachment among employees through the platform, before they can deliver on the type of performance and other collaborative benefits companies are looking for.

Survey on the Top Barriers to Effective Collaboration

Incompatible organizational culture

29%

Fragmented departments and structural barriers

28%

Lack of resources

24%

Lack of common understanding/vision

8%

Lack of motivation

7%

Others

5%

0%

20%

40%

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Source: Gerald, C.K. (2019). The Technology Fallacy.

FOSTERING COLLABORATION Page 2 of 2

What We Know

What Organizations Can Do About It

• Engaging in intentional collaboration is a key characteristic of DX-focused organizations. • Digital platforms change collaboration by providing two key capabilities: 1. Managing networks. 2. Sharing digital content. • Benefits of collaboration include: 1. Transactive memory. 2. Collective intelligence (better decision making).

• Create groups for general communication and collaboration, as well as specific groups built around work or special topics. • Pilot the use of the collaboration platform. To guard against biases and reap the benefit of collective intelligence, create these conditions in groups: 1. Cultivate diversity of opinion. 2. Monitor for groupthink and allow for independent decision making. 3. Decentralize communication. 4. Provide an appropriate mechanism for expressing and aggregating individual opinions to make decisions.

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Source: Gerald, C.K. (2019). The Technology Fallacy.

• Interestingly, the barrier found to be highest across all organizations is the same. Even companies that are innovating better than their competitors still say that experimenting and getting people to take risks is the single biggest challenge they face. • What makes experimentation so hard in most organizations? Quite simply, it flies in the face of what most companies have been built to do over the past 50 years— optimize efficiencies and minimize operational variances. • A good way to “test fast” is to put a fixed short-term timeline on experiments. Experimental organizations often perform short “sprints” (e.g., 6-to-8-week initiatives) during which they attempt to change one aspect of the organization. At the end of the sprint, the experiment is concluded, and the success or failure of the experiment is determined.

INCREASING COMPETITIVENESS Page 1 of 2

Survey on the Top Barriers to Digital Competitiveness

Fear of experimentation

20%

Ambiguity in business target

13%

Lack of technology expertise

12%

Distributed decision-making

10%

Lack of transparency

9%

Fluidity in organizational structure

8%

Multigenerational workforce issues

8%

Others

7%

Transient team structure

5%

Large workforce

4%

Segmentation of customer bases

4%

0%

20%

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Source: Gerald, C.K. (2019). The Technology Fallacy.

INCREASING COMPETITIVENESS Page 2 of 2

What We Know

What Organizations Can Do About It

• Innovation is critical to survival in the rapidly changing digital age. • Risk taking, experimentation, and failure are all necessary elements for achieving innovation. • Most organizations born in the 20 th century are optimized for efficiency and productivity—and designed to eliminate variation, reduce experimentation, and minimize risk. • Organizations need to learn how to conduct pilots in which failure is a possible outcome. The goal is not failure per se but rapid learning and adaptation.

• Assess your organization’s risk appetite and identify where there are barriers. • Determine which risk and security policies are nonnegotiable and which have flexibility of modulation. • Make your customers aware of selected risk and security policies. • Before engaging in risk experimentation, determine and communicate guiding principles of acceptable and unacceptable risk taking. • Put a fixed short-term timeline on most experiments, such as conducting short “sprints,” or 6-to-8-week initiatives, that are assessed at the end of each cycle. • Release the minimum viable product to a small group of trusted customers and/or stakeholders for feedback. • Feed learnings and feedback into subsequent versions and continue the iterative cycle.

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Source: Gerald, C.K. (2019). The Technology Fallacy.

How to Measure DX Initiatives

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MEASURING THE SUCCESS OF DX

• Getting support for effective and pervasive digital transformation programs requires a narrative that’s broader than “digital”. • When making their case for digital transformation, most fledgling digital transformers place too great an emphasis on the many disruptive and emerging technology trends. But in the end, change needs purpose and ultimately a vision to move resources toward shared and tangible goals. Metrics that align with these are more likely to effectively make the case for advanced digital transformation and also persuade other stakeholders and executives to support it. • Doing so helps stakeholders align on roadmaps, sponsor new efforts, and increase available resources.

Survey on the Common Metrics for DX Initiatives

Operational Efficiencies (e.g., productivity, cashflow) Growth (e.g., lead generation, conversions, sales)

42%

42%

Business Performance (e.g., revenue, profit)

39%

Customer Metrics (e.g., NPS, CSAT, CLV)

36%

Active Customer Engagement (e.g., comments) Business Innovation (e.g., ideas generated, proofs)

36%

33%

Employee Engagement and Satisfaction

33%

Digital Literacy (e.g., educated workforce, capabilities)

31%

Market Share

28%

Passive Customer Engagement (e.g., downloads, clicks)

27%

Shareholder Return

17%

0%

20%

40%

60%

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

7 PRIORITIES TO ACCELERATE DX SUCCESS AND MATURITY Page 1 of 4

Audit the Journey :

1

• In Altimeter’s research, most companies think they’re further along in their digital transformation journey than they really are. In order to offer a benchmark tool that companies can use to compare their internal perception of where they are against those of their peers, Altimeter analyzed years of digital transformation progress among companies and documented key milestones in the advancement of digital transformation. Undergoing an audit — not just once, but at strategic intervals — will allow an organization to track its progress and align its roadmap with those of best-in-class organizations.

Study the Digital Customer Experience (CX) Journey:

2

• Organizations that are prioritizing CX initiatives should be studying digital (and more specifically, mobile) customer experiences routinely. Understanding how customers’ intents, behaviors, and preferences are evolving gives purpose to CX strategies. These insights also inform cross-functional digital transformation initiatives that directly touch and affect the customer. For CX to be its most effective at unifying any enterprise-wide digital effort, gathering these customer insights should be a priority of a cross-functional group. Communicating these insights to the digital transformation steering committee helps to ensure consistency, keep the C-Suite informed, and ultimately earn top-down support.

Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

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7 PRIORITIES TO ACCELERATE DX SUCCESS AND MATURITY Page 2 of 4

Study the Employee Journey :

3

• Helping employees develop critical digital literacy — training, retraining, and engaging them around a digital transformation vision — empowers them and turns them into capable agents in the organization’s transformation and innovation efforts. To understand the state of its employees’ competence, motivation, and overall engagement, the company must study the employee experience (EX) and journey continuously. As with CX, EX too will benefit from connecting insights to initiatives.

Make Data the Center of Decision-Making:

4

• Today, data is fragmented, incomplete, and siloed. Leading organizations are building centralized data infrastructures to better inform and support cross-functional efforts. Doing so promotes collaboration and integration, unifying digital transformation around data-supported, meaningful efforts. Advanced, agile organizations are also investing in data science and expertise, and in AI and machine learning, to support real-time and even predictive data analytics. These investments create incredible competitive advantages by providing advanced CX, EX, and operational insights that strategically inform digital transformation roadmaps and innovation efforts.

Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

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7 PRIORITIES TO ACCELERATE DX SUCCESS AND MATURITY Page 3 of 4

Align Digital Transformation Investments with Business Objectives :

5

• Many digital transformation and innovation efforts are still often viewed as cost centers. The need to substantiate investments is more important than ever. To shift the perception of digital transformation from cost to investment strategy, organizations need ROI metrics. Successful digital change agents and steering committees make the case for their initiatives not by emphasizing the need of a company to simply get on a technology trend bandwagon, but by tying transformation efforts to expected business outcomes. To do that, they’re prioritizing metrics that link digital transformation and innovation to business objectives, ROI, and growth. This helps them make the case for funding broader and bolder investments.

Make Data the Center of Decision-Making

6

• CIOs and specialized IT organizations are forming business partnerships with key strategic groups within the enterprise to explore how technology can help meet business goals. Digital transformers are tracking emerging technology trends and assessing where those technologies can have the greatest impact and ROI. From its seat on the steering committee, IT can help connect emerging technology trends to overall enterprise and corporate innovation objectives.

Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

PAGE 29

7 PRIORITIES TO ACCELERATE DX SUCCESS AND MATURITY Page 4 of 4

Prioritize a Culture of Transformation and Innovation

7

• Research shows that companies that were furthest along the six stages of digital transformation were those that emphasized the human-side of digital and change rather than technology-first approaches. An innovation-focused culture was also consistently cited among the organizations studied as the leading challenge to digital transformation and innovation. In 2019, it’s evident that progressive companies are prioritizing investments in organizational culture to be more iterative, adaptive, and innovative. Aspiring enterprises should embark on the same endeavour and focus on creating an organizational culture of innovation, introduce EX programs that empower its employees, that modernize employee engagement, and cultivate a more digitally capable workforce.

Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

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MEASURING THE SUCCESS OF DX

Key Factors Contributing to the Success Rate of DX

• McKinsey’s research points to a set of factors that might improve the chances of a DX initiative succeeding. These factors fall into 5 categories: 1. Having the right, digital-savvy leaders in place. 2. Building capabilities for the workforce of the future. 3. Empowering people to work in new ways.

76%

Clear, actionable vision for transformation

24%

Information is democratized and made transparent

68%

32%

Digital self-serve technology implemented for employees' and/or business use

67%

33%

Sense of urgency for making transformation changes

66%

34%

4. Giving day-to-day tools a digital upgrade. 5. Communicating frequently via traditional and digital methods.

Key roles ensured collaboration between initiatives

65%

35%

Standard operating procedures were modified to accommodate new technologies

64%

36%

63%

Employees are encouraged to experiment

37%

0%

20% 40% 60% 80%

Statement describes DX

Statement does not describe DX

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Source: McKinsey. Unlocking the Success to Digital Transformation. Retrieved from: Link

Future Outlook of Digital Transformation

PAGE 32

8 DIGITAL TRANSFORMATION TRENDS FOR 2019 Page 1 of 2

1 5G Fixed to 5G Mobile: Network technology is finally in a spot where 5G will start becoming prevalent. Today there are a wide number of fixed and test deployments with companies such as Qualcomm, Intel, Nokia, Ericsson, Samsung, and Huawei all getting into the action. There are also seeing new companies like Mimosa Networks making it possible to roll 5G out to both rural and urban locations, paving the way for bullish 5G mobile providers—i.e., ATT and Verizon—to start offering new, cooler, faster, more innovative services for mobile users. If 2018 was the year that fixed 5G applications found their legs, 2019 will be the year 5G found its way into consumer’s mobile devices. 2 Chatbots: Huge steps continue to be made in the way of natural language processing and sentiment analytics; so many, in fact, that some believe NLP will shake up the entire service industry. In addition, NLP now provides the ability to gather insights and improve their service based on them. 40% of businesses surveyed by Forbes have indicated that they will adopt it by the end of 2019. 3 Connected Clouds (Public, Private, Hybrid): Companies are realizing that going all public cloud, private cloud, or data center isn’t the best option. Thus, connected clouds are continuing to develop to meet companies’ changing needs—whether they want to cloud-source storage, networking, security, or app deployment. For most businesses this means a mix of workloads running in public, private, and hybrid environments, and this is expected to be a focal point for DX in 2019.

4 Blockchain to Take a Backseat: Blockchain is still too complicated for lay people to use right now, and there’s no standard way to use it because its applications are diverse. A lot of smart developers will continue to work on realizing the potential of blockchain, but Forbes expects that it will be 2-3 more years before the promised traction can be realized.

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Source: Forbes. Top 10 Digital Transformation Trends For 2019. Retrieved from: Link

8 DIGITAL TRANSFORMATION TRENDS FOR 2019 Page 2 of 2

5 Data Analytics to Machine Learning to AI: Recent data has shown that 90% of the world’s data was created in the past year, and that organizations are only using 1% of the data effectively. With a plethora of companies like Microsoft, SAP, SAS, and Salesforce showing market leadership in the promotion of data being made into meaningful business analytics, there is much to be done by data driven organizations to realize the power of the data on hand and the data that they are collecting. 6 GDPR: Forbes reported that a number of companies were still not compliant with Europe’s General Data Protection Regulation (GDPR). While brands do not necessarily want to have to comply, this movement will serve as a warning to companies to figure out better ways to genuinely build relationships with their audience as opposed to the often-clear misuse and abuse of personal data in the name of marketing and selling. 7 Edge Computing and IoT: As the IoT grows—and the number of connected devices skyrockets—it makes sense that businesses need more space to process the data it’s working to capture and process. That means the market will be leading more and more toward edge computing, as analytics and data won’t just be for processing, they will be for processing in real-time. And that’s something only edge computing can support right now. 8 Consumption-Based IT Services: CIOs and IT executives are interested in creating efficiency, having more flexibility with their workloads, and having the ability to scale up and down quickly based on the business requirements. With the as-a-Service industry growing, companies are becoming more sophisticated in choosing “a la carte” IT services to fit their needs. This model allows for scalability, access to the latest technology, shorter procurement cycles, and increased agility.

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Source: Forbes. Top 10 Digital Transformation Trends For 2019. Retrieved from: Link

• In the early stages of digital transformation, budgets are usually small and focused within an initiative that operates independently. As digital transformation matures and expands its mandate, budgets also swell to lead cross-functional initiatives as well as make technology upgrades. • This year, digital transformation budgets are not only growing, smaller budgets are simultaneously subsiding. Although the largest number of companies (18%) reported having budgets for digital transformation in the range of US$1 million to US$5 million, that number is down by 63% from last year. • The percentage of companies reporting budgets of more than or equal to US$50 million jumped from 2% in 2017 to 15% in 2018, representing a dramatic rise of 640%.

ANNUAL BUDGET FOR DIGITAL TRANSFORMATION

Survey on the Organization’s Budget for DX Initiatives

Unsure

11%

More than US$50 million

15%

US$30 million to US$50 million

13%

US$15 million to US$30 million

16%

US$5 million to US$15 million

17%

US$1 million to US$5 million

18%

US$500,000 to US$1 million

7%

Less than US$500,000

3%

0%

20%

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

• Since successful digital transformation is an enterprise-wide, cross functional effort, it is increasingly owned by executives who possess a broader organizational purview. For the second year in a row, CIOs & CTOs are cited as the most typical official owners or sponsors of transformation initiatives. • Up 35% this year, CEOs are notably taking a more proactive role in digital transformation leadership as well (23%). While still low, the increased involvement of CEOs in the leadership of digital transformation sends an important message to executives tracking the best practices of their peers. • Some roles are also combining over time as digital becomes the new norm and innovation becomes a priority, as shown by Chief Innovation Officer and Chief Digital Officer both sharing an 11% ownership.

EXECUTIVE OWNERSHIP OF DIGITAL TRANSFORMATION

Survey on Which C-Suite Executive Has Ownership of DX Initiatives

Chief Information Officer/Chief Technology Officer

23%

28%

23% 23%

Chief Executive Officer

11% 11%

Chief Digital Officer

15%

Chief Innovation Officer

11%

3%

Chief Marketing Officer

5%

5% 5%

Chief Experience Officer

0%

20%

40%

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Source: Altimeter. The State of Digital Transformation 2018–19. Retrieved from: Link

DARQ: New technologies are catalysts for change, offering businesses extraordinary new capabilities. Distributed ledger technology (D), artificial intelligence (A), extended reality (R), and quantum computing (Q) will be the next set of new technologies to spark a step change, letting businesses reimagine entire industries. Customer Identity: Technology-driven interactions are creating an expanding technology identity for every consumer. This living foundation of knowledge will be key to not only understanding the next generation of consumers, but also to delivering rich, individualized, experience-based relationships in the post-digital age. Empowered Workforce: Employers are empowered by their skillsets and knowledge, plus a constantly growing set of capabilities made possible through technology. Now, companies must adapt the technology strategies that successfully created this next generation workforce to support a new way of working. Cybersecurity: While ecosystem-driven business depends on interconnectedness, those connections increase companies’ exposures to risks. Leading businesses are recognizing that just as they already collaborate with entire ecosystems to deliver best-in-class products, services, and experiences, it’s time security joins that effort as well. On-Demand Experience: Technology is creating a world of intensely customized and on- demand experiences, and companies must reinvent their organizations to find and capture those opportunities as they come. That means viewing each opportunity as if it’s an individual market—a momentary market.

Emerging Tech Trends of 2019

1

2

Digital saturation is raising expectations, abilities, and risk across industries. Businesses are seeking new ways to differentiate themselves as the world moves into the post-digital era.

3

4

5

Source: Accenture. 2019 Tech Trends Report. Retrieved from: Link

PAGE 37

• 89% of businesses are already experimenting with one or more DARQ technologies, expecting them to be key differentiators. Each technology is at a different point on the adoption curve, but the first wave of companies using DARQ technologies to drive differentiation is already here. • While quantum computing is the furthest from full maturity and impractical as a current investment for most companies, • Companies such as Volkswagen has used quantum computing to test traffic flow optimization, as well as to simulate the chemical structure of batteries, hoping to accelerate battery development. As the technologies mature, this experience will provide the tools to weave together solutions creatively. advances in quantum research are bringing costs down significantly.

EMERGING TECH TRENDS: #1 DARQ

Survey on the Organization’s Stage of Adoption on DARQ Technology

100%

13%

15%

18%

80%

22%

23%

24%

60%

27%

27%

25%

40%

24%

23%

22%

20%

7%

11%

9%

3%

3%

5%

0%

Artificial Intelligence

Distributed Ledgers

AR & VR

Don't know

Not planning or evaluating for adoption

Evaluating or planning to pilot

Piloting

Adopted in 1 business unit

Adopted across the organization

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Source: Accenture. 2019 Tech Trends Report. Retrieved from: Link

EMERGING TECH TRENDS: #2 CUSTOMER IDENTITY

• Technology identities not only reflect overall consumer identities, they also define new aspects of people’s lives in an era where everything is digital. Companies that disregard technology identities will inevitably create offerings out of sync with what their customers are able or willing to use. • Savvy businesses are taking their first steps with technology identities to personalize their existing product and service offerings. • For example, life insurance company John Hancock now offers interactive life insurance policies that incorporate clients’ fitness and health data through wearable devices. Policyholders qualify for discounts when they hit certain exercise targets and can get personalized premiums and rewards for their activity.

of business and IT executives agree that digital demographics give their organizations a new way to identify market opportunities for unmet customer needs. of executives strongly agree that understanding consumers’ behaviors around technology will be critical for their organization to increase customer loyalty.

83%

41%

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Source: Accenture. 2019 Tech Trends Report. Retrieved from: Link

EMERGING TECH TRENDS: #3 EMPOWERED WORKFORCE

Percentage of workforce that IT executives report have moved or will move into new roles requiring substantial reskilling within their organizations

• 43% of business and IT executives report that more than 60% of their workforce will move into new roles within the next 3 years, requiring substantial reskilling within their organizations. • One popular strategy used to address this issue is a passive and real-time measures of engagement via sentiment analysis. Applying machine learning to employee feedback makes it possible for the business to more quickly act on employee pain points or frustrations , without having to wait for the next survey or active measure of engagement. • By gathering workforce engagement data at a speed that matches the rate of employee velocity, companies can better manage attrition and identify opportunities to engage their workforce .

100%

4%

5% 4%

17%

13%

15%

80%

26%

28%

60%

31%

30%

40%

34%

44%

20%

16%

21%

11%

0%

Past 3 Years

Today

Next 3 Years

Less than 20% 20% - 40% 41% - 60% 61% - 80% More than 80%

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Source: Accenture. 2019 Tech Trends Report. Retrieved from: Link

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