Digital business transformation across healthcare, financial services, retail & manufacturing.
Digital transformation drives business success. It's not just market hype – survey results make it clear that business leaders are investing in digital business transformation to improve many operational outcomes.
According to the Broadridge 2022 Digital Transformation Survey, 62% of business leaders felt digital transformation improved planning and decision-making, and 71% said transformation initiatives could help increase revenue.
The caveat? There's no one-size-fits-all when it comes to digital transformation strategy. Different industries have different operational and cultural challenges that must be addressed to leverage the power of digital tools.
In this article, we'll explore what effective digital transformation looks like across four verticals: healthcare, financial services, retail and consumer packaged goods (CPG), and manufacturing and distribution.
What is digital transformation?
Digital transformation is the process of identifying and implementing technologies that can help enable and accelerate business transformation.
Consider a retail business looking to gain better inventory insight to reduce waste and improve budget management. This requires digital transformation – making the shift from legacy inventory operations to cloud-based solutions capable of real-time tracking of products in stock and in transit.
But it's not enough to simply purchase and deploy new technologies; companies need a digital transformation strategy to help pinpoint where digital transformation makes sense, which specific processes can benefit from digital solutions and how they can best implement these solutions to produce consistent results.
Digital transformation in healthcare
Digital transformation in healthcare is a massive growth opportunity – financial predictions suggest a market compound annual growth rate of more than 32% annually through 2030.
Several operational priorities are driving this growth. First is the increasing use of electronic medical records (EMRs). Under the HITECH Act, healthcare providers that can't demonstrate "meaningful use" of EMRs in their practices may face penalties, such as a 3% reduction of their approved Medicare claims.
Another driver of digital transformation in healthcare is patient experience. Thanks to the broad adoption of remote care technologies, such as video calls during the pandemic, patient expectations have evolved. As a result, providers must adapt.
Digital transformation strategies for healthcare must prioritize two key components. First is the identification and classification of physical documents to help prepare for their digital conversion. Second is the compliant adoption of digital patient technologies, with providers ensuring that the use of video calls or text messages doesn't inadvertently compromise patient data privacy.
Digital transformation in financial services
The success of financial technology (fintech) firms is driving significant market disruption. As a result, more traditional banks and credit unions are looking for ways to keep pace with digital-first firms without sacrificing financial data security.
Consider the rise (and fall and rise) of cryptocurrency. While digital currencies themselves are inherently volatile, the underlying technology of blockchain offers significant benefits for financial transactions. By using what's known as a "shared ledger" model – in which all participants in the network share transaction data – it becomes increasingly difficult for fraudulent transactions to occur.
But blockchain doesn't exist in isolation. For financial services firms to effectively make this digital transition, they need to create and deploy digital oversight and auditing processes that ensure digital funds are effectively tracked, monitored and secured.
Digital transformation in retail and CPG
For retail and CPG businesses, supply chain disruptions remain a top concern. As noted by Supply & Demand Chain Executive, 70% of CPG leaders say they're still grappling with supply chain issues, and just 22% feel they've successfully modernized their order management operations.
Paired with the need for more reliable supply chains is the shift toward just-in-time inventory management. Rather than having excess items sitting in warehouses, retail and CPG companies are looking to minimize overstock by more accurately predicting supply and demand.
To achieve both of these goals, digital transformation is critical. In the case of supply chains, better management requires a combination of visibility and autonomy; this requires tools capable of mapping the supply chain at scale, detecting potential problems and taking steps to correct issues as they arise. From an inventory standpoint, retailers need enhanced analytics solutions that use a combination of historical and current data to help predict future trends.
Preparation for this transformation starts with a thorough vetting of third-party suppliers to ensure they're capable of meeting product demands. Companies also need to assess their existing data sources to ensure information is accurate and up-to-date.
Digital transformation in manufacturing and distribution
The fourth industrial revolution, or “Industry 4.0,” is driving digital transformation in manufacturing and distribution. With a focus on interconnection, interoperability and autonomy, Industry 4.0 seeks to optimize the impact of digital processes introduced by its predecessor, Industry 3.0.
For manufacturing and distribution firms, this transformation typically takes two forms: the adoption of the industrial internet of things (IIoT) and the use of artificial intelligence (AI) to improve operations. Both of these initiatives can be seen in the adoption of "edge AI," which embeds AI capabilities into IIoT devices at the edge of manufacturing and distribution networks.
Consider a connected sensor designed to detect and report temperatures that exceed a certain value. While reporting provides value for organizations, it lacks a larger context. However, by laying AI onto this edge device, it becomes possible for the sensor to track and interpret temperature values over time, in turn helping companies pinpoint potentially problematic trends.
To prepare for the adoption of edge AI, manufacturing and distribution firms must conduct a complete inventory of all devices, their location(s), and their connection to other devices and the cloud.
Driving success through digital transformation
For digital transformation to succeed, technology alone is not enough. Instead, companies need to create transformation strategies that identify current pain points, pinpoint potential solutions and map out implementation to help ensure digital solutions deliver the desired outcome(s).
Not sure how to get started? Mazars can help. Our team works with your organization's leadership to identify areas for improvement, establish clear objectives and put technology into practice. We're here to assist with strategy and implementation at every stage of digital transformation.
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The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.