This is an excerpt from the whitepaper published by The Economist on “Connecting Capabilities” which is an in-depth research program exploring the potential for digital transformation within 11 countries in Asia. I have shared my views on India’s capabilities and its digital transformation index in the same. I would like to thank and congratulate the intelligence unit of The Economist for the the effort. I would like to share this with my readers.
The Environment for Digital Transformation
Digital transformation is currently a hot topic in India, according to Vikash Kumar, chief digital officer of Trident Group, a diversified manufacturing company. The finance and IT sectors, strategy consultancies, marketing agencies and parts of government are all pushing a digitisation agenda. Consumers are also clamouring to become digitally empowered, he says, for example through better mobile broadband capabilities. A genuine appreciation of what digital transformation requires is lacking, however. “Everyone in India is excited about going digital but few know how to implement it,” Mr Kumar observes. “Too many executives believe that it amounts to having a website which you can find on the first page of Google. But digital is about much more than this.” Inadequate ICT infrastructure is amongst the chief obstacles businesses face when launching almost any type of digital initiative. In the digital infrastructure category of the Index, India ranks last or next to last in most indicators. “Most advanced digital technologies are not readily available in India,” says Mr Kumar, “and need to be obtained in the US or Europe.” They are also extremely costly for Indian businesses, he complains. And because labour remains cheap in India, he adds, it’s easier for companies to hire people to do jobs that technology could otherwise do. Many Indian executives surveyed by the EIU confirm such infrastructure issues are a major impediment to digital transformation. One-third (33%) point to a lack of affordable broadband connectivity in this context, and another 35% complain of a lack of technology solutions within their organisation. Talent shortages also hold companies back in their efforts to push digitisation. There is no lack of engineering specialists with the ability to address technical challenges, says Mr Kumar. “But when it comes to people with advanced digital skills in areas such as design or UX [user experience], we have to turn to countries such as Singapore or the US”.
Figure 1. Asia’s Digital index (Research Credit : The Economist)
The Front line: Digital Transformation of Businesses
Four-fifths of Indian business executives report that their firms’ investments in digital transformation “have already proved their value. ” When asked about the nature of the benefits they have gained, top of the respondents’ list is more innovative ideas for new products and services. Following closely behind are expanded reach into new markets as well as cost savings. In terms of digital technologies, social media has been the dominant focus of digital transformation initiatives thus far, judging by the survey responses, reinforcing the view that many companies have tended to view digital as primarily a marketing tool. This looks likely to change, however, as respondents indicate that more transformation efforts will involve big data and analytics in the future. Infrastructure and digital talent shortages, as discussed, are difficult impediments to transformation. The most serious obstacle to progress, however, in Mr Kumar’s view, lies squarely in the executive suites of Indian businesses, including the IT sector. Technology and talent shortages are surmountable, he believes. But changing executive mindsets about digital is another matter altogether. “There is good talent at entry and middle levels of management,” he believes. “Unfortunately, however, not many people are available with the right kind of vision and strategy to man the top positions.” This contributes, Mr Kumar observes, to organisational inertia when it comes to digital change. “Most companies in India are two decades or more old and have this fear of change to do something new, even if the technology is available.”
Digital Transformation, one step at a time
Using digital technology to drive change is a challenge in any organisation, whatever its size or industry profile. Achieving it in a sprawling manufacturing conglomerate employing over 12,000 people may be considered particularly testing. “We are like an elephant which is trying to run,” is how Vikash Kumar describes his digital transformation challenge. In 2015 he was appointed chief digital officer of Trident Group, a venerable Indian manufacturing firm with separate businesses in paper, chemicals, power equipment, linen and yarn. “You have to understand that the processes which we have been following are 30 or 40 years old.” Mr Kumar’s approach to implementing a digital strategy has therefore been to start small. The first step was to establish a dedicated digital team which, he emphasises, is involved in more than digital marketing; it has a remit that overlaps with IT and other functions. Thus a major early achievement was to ensure that all enterprise information flows through electronic systems and is no longer registered manually. Digital transformation, believes Mr Kumar, relies on how efficiently and quickly information flows through a company’s IT system, and how consistent its data is across the platform. “We now have a ‘single version of the truth’ across every department in the business,” says Mr Kumar. “The information is available everywhere, including via a mobile platform to employees on the move.” The most obvious early benefits have been in time and cost savings which, he says, have been especially significant for the HR function. Another is transparency, made possible with the help of an e-supply chain management system. “We buy and sell using digital platforms, be it staplers, pins or huge fabric dyeing boilers. There is a system for everything, and everything is now on a system.” Moving all information systems onto one enterprise-wide platform is a first in the Indian manufacturing industry, says Mr Kumar. It’s a start of the company’s digital transformation but, he acknowledges, there is a long, difficult road ahead before the destination is reached.
Please follow the link for complete research. http://connectedfuture.economist.com/country/india/