Tuesday, September 3, 2019

DIGITAL PRODUCT LIFE CYCLE ...THE NEW STRATEGIC COST MANAGEMENT SERIES 1


Digital transformation has become essential for every organization. But the biggest problem is that we all are focusing on Digital Distribution but in terms of revenue, we are laggards. Companies spend millions on the product and of IT infrastructure to develop the distribution of the products. But the real truth is that Digital Transformation itself is the product for long term sustainable business model.  The Traditional strategic management theory of Product Life cycle is over. It is now the time for treating Digital Transformation as the product life cycle. Did we ever measure the life cycle costing of Digital Transformation?

Few Examples of Digital Transformation before moving ahead.
At Hasbro, digital transformation is child’s play. The toy and game company made big investments in its digital and data strategies that paid off in a big way. In late 2012, Hasbro realized that instead of focusing on children, it really should be marketing to their parents, who are the people who actually make the purchases.

Home Depot, once just a hardware store, The Home Depot today has a robust data and IT department to fuel its ongoing digital transformation. Home Depot has also improved its use of data to better understand customers.

Honeywell also made major changes in itself. Honeywell uses data to determine the best spinoffs and movements for its company.  Along with its own digital transformation, Honeywell uses data to help its customers. In 2016 Honeywell started its own internal digital transformation group. It introduced new technologies, including more IoT-connected and data-centric devices and offerings. As it reinvents industrial process control and offers more technology solutions for its customers, Honeywell also shows off its renewed focus on customer data and internal solutions.

Disney has acquired other companies to advance their digital transformation. Disney recently spent $52.4 billion to acquire the assets of 21st Century Fox to be able to connect directly with consumers rather than through distributors and advertisers. 

It is not the product consumed by the consumer but the Digital Transformation is the product which is consumed by people. Trivago, RedBus,Ola, Uber, Digital Banking any industry has Digital Transformation as the product. It is not the product mix which gives growth to an organization. It is the Digital Transformation which gives growth to an organization.

 The new strategic management speaks that Digital Transformation is the product and one has to measure the Life cycle Costing of the Digital Transformation. This means there is a shift from A traditional product-based life cycle costing to Digital Transformation based life cycle costing analysis.
In most cases it has been found that Digital transformation of an organization means copy paste the model from other companies.  The problem begins from here only. It is true that the Digital Transformation needs a basic level to match the industry where copy paste can be implemented but the same level cannot transform revenue growth.

 Innovation in the digital transformation which bridges the gaps and improves the society is going to the winner. Your product or digital transformation should make the consumer feel that it is part of building the future. It should not turn out that you are imposing the change on them forcefully. Once the consumer gets a feel of forced imposition then they will never accept the product.

The digital Transformation when reaches a maturity level then it is obvious that the organization or the industry revenues will come down as the product reaches the maturity level. Now if a company which does constant innovation and creates new segments of digital Transformation treating it as a product, then that organization creates new frontiers and new growth paths for the industry as well as for itself.

The digital transformation should add value to the existing market, create new market or give value to the consumer. Most of the companies spend million on how to reach to a consumer but they don’t measure the maturity of the Digital initiatives taken by the company.

In many instances it has been found that how tweaking in Digital Transformation a company has revived or has got a significant exponential jump in its growth.

ROA is nothing but the efficient utilization of the data using various analytics and integrating the same into the Digital Transformation platform. The life cycle of an organization also depends upon the from anticipating a need, to design, to manufacture and test, to install, use and maintain. This can only be done by measuring the life cycle of the Digital Transformation.

Companies are focusing on data analytics to explore new opportunities but are we focusing on integrating the same in Digital Transformation or focusing on product mix. Yes, this theory of product Mix has changed now. It is now the Digital Mix. The insights about the same will be shared in the next article.

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