COVID-19 kick started a surge in digital transformation. Organisations had to react quickly to enable remote working, shift to digital channels and transform products and services to meet the changing demands of customers. The pandemic forced organisations to urgently leverage new technologies and ways of working. And the typical organisational, cultural and operational barriers were pushed aside allowing projects to be implemented in weeks rather than months or years. However, there are concerns that these reactive initiatives addressed a short-term need at the risk of long-term success.

Digital revolution

The way we live and work has now changed, possibly forever. These once-simmering changes are now driving a digital revolution. To compete in the 'New Reality' accelerating the adoption of new technologies is a must to keep pace with existing and emerging competitors. However, to strengthen a long-term strategic position, addressing the new environment with a fragmented, disconnected approach is no longer an option.

Here are four new approaches to help organisations on the digital revolution road:

1. Merge

While in crisis mode, functions frequently operate as silos – doing what they can to remain upright. This made sense as an immediate reaction because it takes time, energy, and vision to look at ecosystems across the enterprise, but it is that broader perspective that offers large, lasting improvements.

Recovery response: A functional transformation may include performance goals and value that work to the benefit of the function, but at the expense of the company. This lack of coordination might result in redundant investments, data fragmentation, or skewed priorities, and assuredly, result in companies not getting the most out of their digital investments. In fact, 79 percent of surveyed CEOs report that they are personally responsible for overseeing cross functional alignment in a way their predecessors were not.

New approach: The early quick action worked for the short-term; now is the time to thoughtfully target and invest in capabilities for the long haul. In an ideal world, every change in technology and process would be customer-centric in spirit and impact. Data and insights would flow freely through the landscape, driving informed and bold decision-making and fostering new levels and patterns of collaboration.

2. Crossroads Ahead

Customer behaviour has changed, already demanding consumers are now buying more consciously and looking to digital channels to provide a smoother, more efficient experience.
Recovery response: Companies are rethinking their physical and digital environments to optimise the customer experience. Advances in disruptive technologies including artificial intelligence, data analytics, and machine learning are dramatically changing how companies remain relevant.

New approach: Fragmented digital infrastructure and lack of alignment between front, middle, and back office functions – from customer service, to supply chain and operations, HR and IT- cause disconnects. This impacts the ability of organisations to deliver a seamless customer experience and to be truly engineered for profitable growth. Examples of aligned digital technologies providing insights that improve the customer experience, as well as the bottom line, include: Remote vital-sign monitoring (e.g. heart rate, blood pressure, glucose, respiration rate) that is revolutionising patient care; contact tracing to provide a safe and healthy environment for employees returning to the workplace; AI-powered chatbots providing instant customer support and issue resolution; and Internet of Things solutions that lower operational costs and improve productivity, while attracting and engaging customers. ahead.

3. Change ahead

COVID-19 exposed serious fault lines in existing supply chain paradigms. It has become clear that there is a need to increase transparency and resiliency within the supply chain should a second wave of infection hit, or a whole different global threat appear.

Recovery response: It took three months for the world to go into lockdown. Closing supply chains down was simple; starting them up again is more complex.

Ruptured supply chains demonstrated that recent ultra-efficient, just-in-time configurations, intended to reduce costs, also increased risk.

New approach: The pre-pandemic criteria of supplier segmentation – contractual service level agreements around performance and spend – suddenly carry less weight. Instead, criteria such as impact to critical business operations, flexibility of services, and innovative ideas are central to a new segmentation process.

Forward-looking companies are investing in predictive supply chain risk platforms that allow advance warning signals by using AI, big data, digital twins, and other enabling technologies. Additionally, current events have put pressure on infrastructure and global free trade, with many organisations changing their geographic footprint. They are using technology to replace traditional outsourcing labour arbitrage in an attempt to improve self-sufficiency and supply chain control, as well as generate savings.

4. Slippery Road

The expected long-term increase in remote working and digital offerings will require significantly more robust, reliable and scalable systems – with greater IT security to protect against cyber threats.

Recovery response: Many companies have simply transplanted old habits into a virtual environment, copying what was in place before the pandemic. This misses the opportunity to take a fresh look at processes and systems to consider the best approach to protecting critical services and assets.

Remote environments create unique challenges for security and data privacy. The sudden influx of remote workers left IT teams struggling to make quick, pressure-driven decisions, some of which put companies at risk.

New approach: In addition to the shift to virtual work, there’s been further shifts to digital – from banking to classrooms to grocery shopping and yoga instruction. To support these massive trends, digital technology has become the critical lifeline for most businesses. There’s simply no longer business strategy and technology strategy. There’s just strategy, and technology is driving it.

Future readiness

The UK has now officially in an economic recession and the risk for those businesses hit hardest is that behaviours learned during the pandemic end up becoming entrenched. When the upturn does finally arrive, these businesses could remain fixed in a downturn mindset and miss the opportunity to rebuild for profitability.

Companies need to envision the future of their industry and determine how to capitalise on the reset opportunities the New Reality presents. This will almost certainly mean accelerating digital transformation.

With KPMG’s Ignition Centre we can help organisations build a connected enterprise bringing insights, people and technology together to accelerate transformation and deliver lasting change. 

Adrian Clamp

Partner, Head of Digital Transformation, Connected Enterprise

KPMG in the UK