The digital economy will disintermediate every industry over the next few years in every geography.
Unlike the past few years, there will be global economic and geopolitical tailwinds in 2018, which will enable more small businesses to increase their IT budgets. Additionally, the disintermediation impacts of the digital economy will disrupt more businesses – and whole industries – which must be addressed by small businrss owners and corporate executives before their firms' revenues are usurped by new or transformed competitors.
More small business owners recognize the need for cloud computing, collaboration and strategic planning that includes IT.
Small business owners and IT executives must address the people, process, and technology issues driving the digital economy and produce productivity improvements. Executives will have to satisfy analytics, mass personalization and mobility requirements that demand more collaborative, interactive, personal, and predictive real-time information.
Simultaneously, executives will have to tackle the data and service level concerns that impact business outcomes, productivity, revenues and security so that there is more confidence in the organization.
Small business owners and IT executives will also need to increase their focus on all the tools that will improve business operations, leverage technology, and enhance security so that IT can deliver more and better offerings quicker and at a lower cost while better protecting the organization from cybersecurity attacks and vulnerabilities.
The digital economy will disintermediate every industry over the next few years in every geography. Those that fail to recognize the trend and address it within their company may cause great economic harm to the firm. This is not a fad but a dramatic shift in the way people live, work, play, and shop. The retail and travel industries have already been transformed – with more to come. (See below chart).
Robert Frances Group 2017
Some old-line companies survived the changes but to do so they evolved.
Those that failed to keep up, disappeared. The younger generations have embraced the digital economy and if companies wish to attract or keep them as customers, then the enterprise has to satisfy the demands of the customers. It can no longer be product first – it must be customer first.
Customer first in 2018 is much more than being friendly or greeting someone at the door. It means being in front of the customer in the social media and ecommerce world – a physical presence is optional.
The technologies that must be adopted to meet these demands are the mobile and social tools as well as analytics and mass personalization as openers. Companies must be able to present themselves to the user on whatever device the customer chooses and be in front of the customer (for sales and marketing) in many different cyber spaces.
Moreover, the messages cannot be generic; they must be personalized for each person – and even predictive in some cases – at each touchpoint.
On top of all this, firms must aggressively use analytics to guard against fraud and money laundering. Analytics is also a key component of the personalization capabilities, commonly referred to as Know Your Customer (KYC) and bringing it to life in each interaction.
Then there is the security component. Because of the constant barrage of breaches that hit the news, customers want to know that the organization has incorporated all the best security tools and techniques to ensure their information and transactions are safe – when in use and at rest (wherever they may reside).
The new general data protection regulation (GDPR) comes with major penalties (up to four percent of annual global revenues) and goes live at the end of May 2018. While this is an EU regulation, it is expected to hit most geographies and large companies. Anyone with the slightest chance of doing any business in the EU is impacted.
Not only must firms ensure total protection of personal data but they must have the ability to "forget" the customer on request and delete his/her information almost in entirety.
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About the author
Mr. Braunstein serves as Chairman/CEO and Executive Director of Research at the Robert Frances Group (RFG). In addition to his corporate role, he helps his clients wrestle with a range of business, management, regulatory, and technology issues.
He has deep and broad experience in business strategy management, business process management, enterprise systems architecture, financing, mission-critical systems, project and portfolio management, procurement, risk management, sustainability, and vendor management. Cal also chaired a Business Operational Risk Council whose membership consisted of a number of top global financial institutions.