In a world that’s constantly changing, digitalization has been that much-needed anchor that has helped businesses build resilience amidst disruption. It’s helped businesses harness data to garner better customer insights and competitor tracking in real time basis. Given how digital-savvy today’s customers are, it’s become critical for companies to embark on digital transformation journey, if nothing to keep up with the customer and ensure consistent customer experience across omni-channels and platforms.

But why this emphasis on digitalization? When did digitalization become the lifeline of companies looking to survive in changing business environments, looking to stay agile and responsive?

The digitalization story

Digitalization is more than the integration of technology into different facets of business. True digitalization completely changes the way an organization functions including its processes, systems, and culture. In an era where everything, from the way we work to the way we shop, has been recalibrated digitalization has been at the center of this change. Collaborative tools, data moving to the cloud, online commerce, connected devices, Artificial intelligence and machine learning, Industry 4.0, Workplace 4.0 – each of these are an intrinsic and important part of the digitalization story.

With millennials and Gen Z being an always-on consumer group, it has become critical for companies to have a digitalization strategy, which keeps pace with changing market dynamics.

Having the right digitalization strategy will help companies in reducing costs while optimizing efficient use of resources (both technology and people). A digitalization strategy also helps to measure the size and scale of a business, the targeted customers and the digital supply chain involving both.

The key driver for embarking on digitalization is usually costs related. Other factors are starting to take center stage, from enabling employees to work from anywhere and having access to data anywhere (which is where the cloud becomes a driver) to ensuring great customer experiences and superlative customer service (connected customers are the driver). Digitalization brings process improvements across all aspects of an enterprise: business functions (like human resources, marketing, and operation), the entire business ecosystem (including stakeholders and vendors), asset management (including customers and their data), work culture and digital supply chain between employees and customers.

Benefits of digitalization

Digitalization isn’t about short-term gains but about achieving a company’s long-term strategy, which goes beyond expanding its business presence or standing out from the competition. The pitfalls of ignoring digitalization are evident. In times of disruption such as the pandemic, digitalization enabled businesses to stay connected to customers and continue to offer their services uninterrupted; small businesses, especially, that had digitally transformed survived and thrived pivoting on technology.

Here are the top benefits of digitalization that you shouldn’t ignore:

1. Saving costs is topmost for businesses 

   The first and immediate benefit of digitalization is cost optimization (of resources) and cost savings. Companies are using their digital transformation initiatives to bring in efficiencies and utilize existing resources better, a direct cost implication. Automation saves time and eradicates duplication and repetitiveness of tasks, again a cost reduction. By monitoring processes constantly, there’s a reduced possibility of (manual) error. This also leads to predictive response, instead of reactive which in turn leads to greater agility.

2. Customer is the king and customer service is queen

   The old ‘customer is king’ has never been more apt than now. With customers adapting to digital everything (from accessing brands to building relationships with brands online) companies need to be quicker to cater to this digitally savvy customer. A unified view of the customer offered by CRM software can help keep track of this complex customer journey and offer personalized service. Linking CRM and ERP will help companies provide great customer service that will translate to great customer experience. Digitalization enables constant and consistent improvement of products/service leading to elevated customer experience while efficiencies in inventory management results in optimized costs.

3. Be where your customer is to grow your business

   Today’s customer doesn’t have a linear journey to a brand. They browse online, check instore and purchase online. By having digital presence on all possible channels and platforms companies can constantly stay connected with customers, communicate with them, address concerns and prevent escalations- a death knell in this age of always-on consumers. Due to digitalization, companies can stay connected through mobile applications, social media content and forms, emails and other platforms, something unknown earlier. By offering services where the customer is present, a company can build deeper relationship and customer loyalty.

4. Data is the new oil and will fuel strategic decision making

   Never has it been easier to harness data and derive insights that transform how businesses run and plan for the future. Digitalization has helped companies to make sense of data – organized data that enables predictive instead of reactive decisions. It’s not cliched that ‘data is the new oil,’ but the truth. Without data, companies cannot take strategic decisions from understanding what are new market opportunities to figuring out if customers are ready for a new product or assessing whether employees and satisfied and motivated to work. Data fuels strategic business decisions across all aspects of the organization (marketing, sales, customer service, product development, human resources, etc.). Due to data availability in organized, customized, and personalized data structures, digitalization has made decision-making faster and easier.

5. Rewire your presence in the digital world to create greater visibility

   Heightened competition and ever-changing consumer behavior can only be addressed through digitalization. Tracking competition real-time and tracking consumer sentiment real-time will enable companies to stay competitive and customer-centric. To do both, companies need to be present on every available digital platform offering their services (websites, online stores, etc.) and communicate through all available online media (blogs, social networking handles, websites, etc.) ensuring brand reach and visibility. Since today’s digital-first natives are just that digital, companies’ shifting or pivoting business to digital platforms has also put e-commerce on hyper thrust mode.

6. Lean on technology to enhance productivity and bring in efficiencies

   One of the primary benefits of digitalization is increasing productivity and efficiencies, whether it be man or machines. For instance, digitalization allows you to free up time of employees, who can then focus on innovation and driving business growth, while automating mundane, repetitive tasks. Industrial Internet of Things (IIoT), for instance, monitors machinery in real-time assessing performance and breakages and through AI/ML it enables predictive maintenance instead of reactive, increasing efficiency within the system.

7. Free up human intellect to increase innovation

   When automation allows humans to focus their time and efforts on making process improvements or product innovation, digitalization transforms how businesses work. Instead of looking at short term gains, digitalization leads businesses to look at sustainable growth, generating efficiencies and improving products and services. Besides accelerating improvement across all levels, it also opens ways to streamline the digital supply chain of resources and data. 

8. Collaborate to communicate better and engage more meaningfully

   The recent trend of remote working clearly highlights one of the top benefits of digitalization. Companies that had transformed digitally were able to provide employees with anytime, anywhere secure access to data while collaborative tools helped them work from anywhere. As companies move towards a hybrid working model, digitalization will create a level playing field for ‘back to office’ workers and those that continue to work remote. 

9. Work doesn’t have to be dull nor workplaces boring

   Another key benefit and an area that will show immediate results of digitalization is the workplace and the work environment. Using digital tools to constantly gauge employee sentiment and revisit HR policies has instant results: better adjusted employees, happier employees. Digitalization isn’t about technology alone, but the culture. A digital culture that accompanies digital transformation is sure to increase employee productivity and engagement levels. From flexible working hours to increased employment options with new teams to a renewed focus on teleworking, digitalization has helped human resource function in organization to keep their ears to the ground and act, rather than react. It also helps talent management to retain talent and decrease attrition.

10. Stay ahead of the competition 

    Digital is where the new battle ground is, and companies must get used to this new reality. To stay in the game, companies need to aggressively track what the competition is doing including product launches, GTM and perceived new market opportunities. Digitalization allows companies to do all this, from tracking new feature enhancements to existing products to design changes to websites and social/digital marketing strategies. Having such information allows the companies to be more competitive, and be innovative catching in new trends and advancements introduced by their direct and indirect rivals. A company’s digitalization strategy needs to encompass competition audit, monitoring and assessment to win the game.

11. Trust is the new currency

    Whether it’s employees or customers, trust brought about by transparency is the deal maker or breaker. °Õ³ó±ðÌý revealed an epidemic of misinformation and widespread mistrust of societal institutions and leaders around the world. This left businesses with a clear mandate to rebuild trust to chart a new course. Digitalization enables companies to have transparency in all their transactions, a must-have in a 24/7, always on, always connected world (both customers and employees). Whatever the online platform, digitalization provides companies with the wherewithal to keep their key stakeholders informed of any changes before it happens – building trust. It allows companies to be honest, authentic, and transparent in their responses – cementing trust.

What next in your digitalization story

Every small- and large-scale enterprise has a digital transformation agenda. Digitalization is no longer a nice to have, it’s a must have. Companies that have already embarked on their digitalization journey are looking at new ways to pivot on technology learning from their past mistakes and experiences. Consumer behavior has drastically changed in the past two years and this evolution will only continue. Consumers will continue to adapt digital means to initiate relationships, and if companies are to stay competitive, they need to be ahead of the curve. Digitalization is a , one that will play an even more important role in the years to come.

No realm of business will be untouched by digitalization and no aspect of human life either. From drug development to cancer treatment, from AI-driven manufacturing to deep collaboration in Workplace 4.0, companies need to prepare for the next wave of digitalization. There will be a greater focus on technologies such as AI/ML and Blockchain which would allow companies to get an ‘inside’ look of what drives consumer sentiments and how to leverage these insights. AI will let companies to leverage data, find the right set of customers and focus more on this ‘ideal’ customer profile offering unparalleled customer experience and increasing revenue through new leads that close because of ‘data insights.’

There will be further innovations and developments in the current set of technologies, perhaps new applications, and these are sure to shape the path to success. Companies will need to constantly recalibrate their digitalization strategy to take advantage of new developments, ensure that these developments lead to increased productivity and efficiencies. They will need to relook their strategies and frameworks to incorporate any requisite changes without disrupting the normal course of business. 

For a more convenient flow of work and data within the company, the development of a more intuitive visual interface should also be on the radar to bring about effectiveness and increased automation. The cost-effectiveness of a digital transformation process will be a critical factor in the years ahead as businesses begin to emerge out of the pandemic and related disruptions. There will be structural shifts on an ongoing basis and well into the future, especially in the digital supply chain, hence return on technology will become a key factor.

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Here are some of the numerous factors that prompted this radical shift to the digital:

• Declining branch traffic and the rise of mobile banking apps: A recent by S&P Global Market Intelligence found that 51% of respondents confessed to visiting bank branches less frequently due to the ongoing pandemic. Of those, more than 65% claimed to also use mobile apps more frequently. The most popular mobile banking feature among the respondents was the ability to use the photo check deposit (24%), followed by account-to-account money transfer, bill payment, and peer-to-peer payments (20%). In fact, banking conglomerate JPMorgan Chase & Co. that its active mobile user count grew by 9% to 42 million users. Naturally, banks are reducing their physical footprint to go deeper into the digital realm

• Changing customer needs and expectations: According to a survey by PwC,  wish to open a new account digitally but cannot do so today. There’s a marked change in the way customers want to engage in financial transactions and activities. Clearly, banks that fail to rise to the occasion will lose out to the competition.

• Heightened competition from non-traditional players: Tech giants Amazon and Google are making headway into the banking space.  that the number of UPI transactions on its platform is doubling each month, with the total number of transactions touching 4.2 billion in October 2021. The company has highlighted the importance of preparing its infrastructure to cater to the fast-rising demand. Meanwhile,  with a wealth management platform, Kuvera, to allow users to facilitate investments into mutual funds, fixed deposits, etc. Considering this field’s immense scope, it is only natural to expect that more and more tech companies will want a slice of the pie. This will increase the competitor pool of traditional financial institutions.
• Skyrocketing use of innovative technology: From cloud computing and smartphones to digital currencies and blockchain technology, there are numerous technological tools that are driving digital disruption in the banking sector. One interesting example is the rise of Robo-advisors, which are computer programs that provide investment advice to customers. This is done by analyzing the customer data in real-time and extracting emerging patterns as well as trends to make the ‘advice’ relevant and engaging. The increasing popularity of business analytics service solutions in different fields, leading to the development of tools such as , is another example.

Needless to say, all these fast-paced developments have driven banks and financial institutions to revisit their offerings, restructure their current growth strategies, and understand their true place (and potential) in the digitally powered financial ecosystem. 

Emerging Digital Trends Reshaping the Financial Industry

the current wave of digital transformation has the potential to drastically alter the banking sector. With the help of breakthrough technologies and innovative offerings, financial players are looking to hyper personalize consumer experience and enable smoother journeys.

Here’s how the industry is leveraging digital transformation to transform every juncture in the customer’s journey:

• Using newer technologies:

  Banks are leveraging a heady combination of Information Technology, Big Data, and specialized human capital to gain a competitive edge. With the help of futuristic technologies such as artificial intelligence (AI) and machine learning (ML), banks can process high volumes of customer data and drive actionable insights to improve customer experience. For example, HDFC leverages the services of ‘Eva’, an AI-powered chatbot that can efficiently answer overuser queries with more than 85% accuracy. Additionally, over 81% of companies compete mostly on the basis of CX and  are expected to involve emerging technologies such as machine learning applications, chatbots, and mobile messaging. Clearly, the demand for emerging technologies is skyrocketing in the financial sector.

• Developing customer-centric products:

  Banks are developing and deploying new products with a laser-like focus on increased transparency and great user-friendliness. In other words, banks are focused on creating products that can actually address their core customer’s pain points and minimize friction.

• Catering to phygital customers:

  Approximately banking customers use digital channels and 80% of all customer touch-points occur on digital channels. Yet, usage of physical branches and the traditional way of conducting financial transactions in person is not dying down. So, banks are taking the middle route to cater to the needs of the ‘phygital’ customers–those who actively use both digital and physical channels — by driving a seamless, customer-centric, and hyper-personalized omnichannel banking experience.

• Leveraging cloud-native architecture:

  Financial institutions are focusing on creating a centralized digital banking platform–powered by cloud-native architectures and containerized workloads–to deliver increased speed, flexibility, and agility when building new products for customers. In fact,  indicates that 50% of financial firms are steadily adopting Infrastructure-as-a-service (IaaS) to drive cost-effectiveness, boost on-demand availability, and leverage automated scalability. Furthermore, financial institutions benefit from a shorter ideation-to-service timeline, thanks to cloud computing technology.

• Driving cultural change:

  There’s a change in the organizational mindset, with banks wanting to invest in the right tools and processes to free up their IT team. This team can then focus on more strategic tasks, as opposed to engaging in routine and repetitive work with zero value-add. Additionally, banks are working towards better aligning the digital platforms with the organizational goals and restructuring the technology decisions based on the customer’s needs.

• Rebuilding technology stack:

  The financial industry is focusing on rebuilding its tech stack, keeping in mind more business-critical factors such as risk and compliance, operations, and business development. This, instead of solely focusing on the technology’s technical specifications, indicates a win-win-win situation for the users, the leadership, and the bank itself.

• Utilizing business analytics:

  Leading banks are now using the power of analytics in various ways. From employing ML techniques to forecast which consumers are currently engaged and who are likely to leave to looking at competition marketing to see if any banks are offering any needless discounts, the results are varied. In a nutshell, banks are dependent on business analytics services to manage and reinvigorate customer experience.

The Way Forward

Digital transformation is the only logical way ahead if the financial services industry wants to keep pace with the technological, cultural, and societal advancements occurring at breakneck speed. There’s an acute need to build highly-scalable IT systems at low costs, without compromising on the quality of service or falling short of the customer’s growing expectations.

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As operations and movement of goods came to a halt, suppliers could not fulfill orders. The consequent demand-supply mismatch and falling inventory levels became a challenge. With a high percentage of the workforce not being able to report to work, overall productivity was impacted, as many processes were still manual. The quality of products/services was also affected, and regulatory and compliance issues loomed large.

´¡²ÔÌý aims to understand the state of the mid-market segment in the aftermath of the second wave of COVID-19. 

Covering six different industries, the study was comprehensive in representing the importance of technology for an industry. The study covered over 350 mid-market enterprises – across chemicals, industrial manufacturing, life sciences (including pharma and pharma manufacturing), professional services (including IT/IT-enabled Services), retail and consumer packaged goods and EC&O (engineering, construction, and operations) industries. These enterprises reported annual revenues in the range of INR 500 crore–INR 2,000 crore. Among the respondents, more than half were C-level executives; the remaining occupy roles such as Director and above in their organization. 

Companies that had pivoted on technology were able to cope with disruptive forces. Indeed, successive waves of COVID-19 have brought the importance of technology in businesses to the fore, as lockdown measures across the world disrupted supply chains. 

Those ahead in the technology adoption curve raced to build digital resiliency—the ability to adapt rapidly to business disruptions by leveraging existing digital capabilities to restore business operations as well as capitalize on the changed conditions.

The study provided interesting insights into digital resiliency and its components, including business and IT priorities of Indian mid-market enterprises, such as: 

• Providing smoother customer journeys in the virtual space became a priority after the pandemic. Now, 40% of mid-market enterprises are taking an end-to-end approach to manage and customize user journeys across departments. During the pandemic, employee retention was a top challenge for human resources teams at these mid-market enterprises. Half of these enterprises are now adopting organization-wide technology initiatives to enhance employee engagement.
• Hopes of revival hold as three-fourths of all enterprises studied expect their operations to return to pre-pandemic levels by the end of 2021. 

For mid-market enterprises, business revival and digital resiliency are intertwined goals to work towards. Almost 83% of the enterprises studied said they were focusing on resiliency objectives like business continuity, to ensure operations remain unaffected due to disruptions in the future. To build operational resiliency, these enterprises brought in process automation to improve their operations and serve customers. An important step: focus on the management and improvement of customer journeys.

As the mid-market segment innovates and improvises, notwithstanding their limited resources, the pertinent question is about their business and technology priorities in the future.

What are the business and technology priorities of mid-market enterprises for 2022 and beyond?

With the need for digital transformation becoming evident, mid-market enterprises have truly embraced the power of digital to create agility, flexibility, and scalability. Optimistic about revival, 74% of enterprises in India will increase or retain their spend on IT security, governance, and risk management in 2022.

Exact priorities depend upon the perceived importance of technology in an industry. Highly regulated industries, for instance, are driving adoption of data management and security technologies. These sectors include banking and financial services, healthcare and pharma, and professional services. However, better customer service through touchless solutions, uninterrupted operations through automation, and seamless user experience through self-service options are also important. In other words, top business and technology priorities are centered on employee and customer engagement, security, and modernization to improve operations.

The IDC InfoBrief commissioned by Â鶹ԭ´´, ‘The State of Midmarket Enterprises in India: A Perspective on Digital Resiliency’, identified the following as the top business priorities of the mid-market enterprises for 2021–22:

• Increase customer engagement and satisfaction
• Increase employee engagement, productivity, and skills
• Create new products and services using technology and data
• Secure business and data by improving security posture

Even in the face of a business disruption, a digitally resilient organization’s workforce remains not only secure but also productive, engaged, agile and adaptive. Having understood this, mid-market enterprises are now prioritizing strategic initiatives for better employee engagement. These include:

• Upgraded network connectivity for better productivity and security
• Cloud-based collaboration solutions
• Simplifying and automating employee/HR related activities
• Frequently used applications enabled or configured on mobile

Retaining existing customers and acquiring new customers is another area of prime focus. For this, enterprise investment is focused on end-to-end seamless customer lifecycle management. Priorities include customer engagement platforms, mobile enablement, social media management platforms or capabilities, and customer analytics platforms.

To help achieve employee and customer-centric business objectives, the top technology priorities for 2021–22 are:  

• Support work from home: productivity without disruptions
• Gain insights into business operations, products, and services
• Customer experience programs like loyalty programs, personalization, etc.
• Application upgrades, workload migration to cloud (Software as a Service)

Modernization and cloud will be key imperatives in the Digital Resiliency narrative. And the top drivers behind application modernization initiatives:

• Cognitive capabilities to integrate AI and analytic capabilities
• Enterprise digital transformation agenda to increase business agility, innovation and deliver enhanced experiences
• Gaining competitive edge
• Improving time to market
• Talent shortage
• Better security 

Enterprises are looking to boost their IT investments in cloud, cybersecurity, analytics, and business intelligence, as well as productivity applications, to stay competitive. Some of the key initiatives include migrating on-premises applications to cloud, securing data and systems, automating operations, and digitalizing the entire customer journey.

While almost 74% of the mid-market enterprises intend to migrate more applications to cloud, many other enterprises (46%) are looking to craft a hybrid cloud strategy. Agility, performance, and availability were the key drivers for adoption of hybrid cloud platforms. Here, identifying the right deployment model for the right workload and having a single pane of control to manage hybrid cloud environments is critical. 

So, what does this mean for you?

While mid-market enterprises realize the role of technology in their business to build digital resilience, most of them are working towards stabilizing operations and bringing them to normalcy. If you are the leader of a mid-market organization that is on the same path, you must power your engines to propel through the journey so that you can shift your sight to focus on elements of digital resiliency. 

°Õ³ó±ðÌýfour fundamental implications for a mid-market enterprise like yours include:

1. Leverage automation and analytics: Mid-market enterprises struggled during the pandemic from lack of automation in their operations. There is a need to increase the level of automation and data-driven analytics to withstand any turbulence in the digital-first future we are stepping into.
2. Contain cost with cloud: Like most mid-market enterprises, if you intend to reduce your IT spending for on-premises business applications, invest in cloud-based business applications to reduce capital investments as well as increase business agility.
3. Optimize customer and employee engagement: Employee and customer engagement need more IT investments. Specially to attract and retain customers, you need to build systems that enable multi-channel engagement and manage your customer journeys end-to-end.
4. Put risk safeguards in place: As more enterprises move towards a hybrid cloud model, the need for a secure architecture will be paramount. You should look at solutions that help scale and perform with no security glitches. With the ever-expanding threat landscape, you must prioritize risk management services in the future.

In conclusion

The mid-market segment has immense potential to unlock India’s growth story, especially in the smaller towns and cities. And this can be fast tracked by increasing the role of technology in business. However, before mid-market enterprises look at building Digital Resiliency, they must get their operations back to pre-pandemic levels. By utilizing the power of cloud, mid-market enterprises can actualize their potential and gain access to process efficiencies demonstrated by bigger players. To find out how to accelerate your journey to becoming digitally resilient and setting yourself up for success in the long run,  on ‘State of Mid-Market Enterprises in India, a Perspective on Digital Resiliency’.

All of the above data points are derived from ‘IDC InfoBrief commissioned by Â鶹ԭ´´, The State of Midmarket Enterprises in India, A Perspective on Digital Resiliency, December 2021, Doc.#AP241284IB

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