‘Digital’ is one of those trendy terms that seems to mean different things to different people depending on the point being made or the corner being fought.
But its usage also seems to depend on which function you work for. Marketing, for example, tends to apply it to how customers engage with the brand, and the proposition that brand offers to its customers via online channels.
IT, on the other hand, generally uses digital to refer to technology and platforms such as cloud, mobile and big data, which tend to be linked to the internet in various ways and give users access to new products and services.
But what is common to all these definitions is that digital provides more ways for people and businesses to connect and be connected than ever before. This situation has led consumers to become much more vocal and demanding about what they want, giving them more control over their own customer experience.
A third characteristic of digital relates to market disruption. Organisations such as Uber and Airbnb, for instance, have become poster children for the digital age after undercutting incumbents in the taxi and hotel industries, respectively, shaking up these markets in the process.
Meanwhile, as to where the average UK company is in terms of embracing digital transformation, it appears there is still quite a lot of work to be done. According to management consultancy PA Consulting’s Digital Barometer, which looks at how organisations are adapting to the digital age, 78% of the 400 firms questioned classed themselves as somewhere between “digital dabblers” and “digitising today”.
Of that group, 62% were keen to find ways to create new products, services and even business models using digital means. On the downside, though, only 18% said they understood what going down this route would mean for their organisation and less than 30% felt they had the right approach internally to succeed. Legacy technology and a lack of appropriate skills were also seen as a drag on change.
Leap in awareness
But PA Consulting’s Kevin O’Shaughnessy says that over the past 12 to 18 months, he has seen a leap in awareness of the issues, especially at senior levels, and industries such as retail, travel and retail banking were now “moving quite fast”.
“For incumbents, the drivers are defending their customer base, cutting costs and making themselves appear more relevant and modern,” says O’Shaughnessy. “New firms, on the other hand, are trying to steal market share and scale up to become bigger. So there is a polarisation there.”
While the low capital investment required to employ online technologies and cloud services is making it easier for startups to make money out of their new ideas, more established firms are finding that they need to experiment to get it right.
William Fellows, research vice-president at analyst firm 451 Research, says: “The biggest challenge for many companies is cultural – organisational resistance, conventional budgeting and the like. There is also the issue of where you put your money down and which digital initiative is the best use of your resources.”
A key consideration, whether the company culture supports it or not, is how to introduce change quickly rather than risk being left behind. As a result, an increasingly common approach is to set up joint ventures with third parties, create internal incubator/accelerator models to support new ideas, or even just set up a skunkworks project, says Fellows.
“It’s not really a technology problem,” he says. “There’s lots of technology out there already. It’s really more about how you use and implement it in order to take advantage of new opportunities.”
Case study: GLH Hotels
GLH Hotels has employed technology in a deliberate attempt to stand out from the crowd in a hospitality industry that has invested little in the area for the past 10 years.
The company, which operates the Thistle, Amba and Clermont hotel chains, employs about 2,000 staff.
It began its technical transformation in 2012 after new chief executive Mike DeNoma joined from the banking sector.
He brought in Chris Hewertson as his chief technology officer to head what was seen as a necessary shift from a traditional IT department with an ageing infrastructure that spent most of its time fire-fighting, to a modern function that could help support business growth.
Hewertson says: “The hospitality industry was disrupted years ago by the online travel industry and was very slow to adapt, but it’s further down the disruption route now than many other sectors. So the disruption caused by organisations like Airbnb is now second generation.”
His idea was to use technology to become “a leading hotel company with a successful brand that would attract other hotels to be managed by the business”. Another goal was to optimise customer service and make it a key differentiator.
To do this, rather than go for a traditional technology roadmap that started with the focus on head office, it was decided to begin with the company’s key revenue earners – its hotels.
To upgrade the hotels’ “antiquated” technology and processes, the firm asked three competing teams, comprising mainly hotel staff, to find the best tools and systems to allow them open a new hotel within a month, says Hewertson.
Chris Hewertson, GLH Hotels
They were given a framework to ensure all the technology would be compatible, as well as three months to do the discovery work.
The overwhelming decision was to move everything to the cloud, not least because it fitted in with key “ease of use” and improved service levels criteria, he says. So GLH spent the next couple of years decommissioning its existing systems and rolling out the new ones, 95% of which are now cloud-based.
Another key element of the initiative was to upgrade the company’s online and e-commerce infrastructure and expose its application programming interfaces (APIs) using Apigee’s API platform. The idea here was to share availability and pricing information directly with online travel agencies rather than pay intermediaries to do so.
The move has not only saved GLH money on transaction fees, but speeds up the booking process and reduces the number of errors by removing manual processes such as faxing or emailing booking data, freeing staff time up to help guests more effectively.
The company has also used its APIs to build a platform called chooseyourownroom.com. This enables guests to choose exactly which room they would like to stay in at any of four London hotels, based on what the room looks like, the view from the window and other guest reviews.
More hotels and website features will be added in the first half of 2016 and the eventual aim is to expand support to third-party hotel chains.
“Digital touches everything these days,” says Hewertson. “It’s about how we help our employees to be more productive and how our guests interact with us to get the best possible service. Digital is everything we do.”
Case study: Ignition Law
“Practising law is a fixed cost-intensive business and is very traditional in how it operates,” says Alex McPherson, co-founder and partner at Ignition Law. “So we re-imagined the model in a lower-cost, more flexible world that would be attractive to talented lawyers.”
The company was established near Tech City in Shoreditch, east London, at the end of 2014 by McPherson and David Farquharson, both of whom were trained by traditional law firms. It has since grown to 15 staff and has 220 clients, about 70% of which are technology companies, 20% operate in the media space and 10% in energy, ranging in size from early startups to £80m businesses.
All the technology that Ignition Law uses, from office applications to telephone conferencing (from MeetingZone) and document drafting systems, are cloud-based. Taking this approach not only made the business more cost-effective to set up, but also makes it easier for staff and associates in countries such as the US, New Zealand and South Africa to work flexibly and remotely under a “white label brand”.
“These technologies are changing the way we practise law as they allow us to communicate more effectively with clients and to share knowhow,” says partner Rob Stevenson. “So we can now deliver the quick response times that are expected at the top end of the market, but less so in the mid-market where we operate.”
Before the company was set up, McPherson and Farquharson had asked clients what they were unhappy about in the existing legal model. The main dissatisfaction was feeling that lawyers were operating in an “ivory tower” rather than being as “lean and cost-effective” as the businesses they were servicing.
Alex McPherson, Ignition Law
As a result, McPherson and Farquharson decided to use technology such as alerts and telephone conferencing to keep clients abreast of what was happening in real time. Monthly retainers rather than traditional hourly rates were also introduced, with overall rates 40-50% lower than normal.
“The macro-economic climate is changing and we’re one of a number of law firms changing with it,” says McPherson. “But we welcome the different entrants as they are effecting behavioural change. It’s like turning an oil tanker – it’s only just starting to happen and it takes time, but the reality is that what we’re doing is taking a disruptive approach to the industry.”
Another key consideration when setting up Ignition was to enable lawyers to work more flexibly than is usually the case in the profession. “We are trying to enable people to have more fulfilling lives that can be adapted to their lifestyle so they don’t have to put up with the status quo – and that’s only possible due to technology,” says McPherson.
Interestingly, although the firm had expected to be of most interest to “newly qualified millennials”, its top recruits have actually been “high-calibre mums and dads” either returning to work or wanting to be employed on a part-time basis. As its stands, only six people work in Ignition’s London office, with the rest located elsewhere.
The company’s aim is to at least treble the number of employees next year – and double revenues. “Our clients feel more empowered as they have more transparency, and we are more cost-efficient purely because of technology,” says McPherson. “But as lawyers, we also feel more empowered and rejuvenated as we are more in touch with our clients and feel we are genuinely part of a wider community here.”