“Digital economy” has stirred a lot of buzz within the region. This new economy is undoubtedly triggering a business and IT transformation across all industries, and the results are visible to all, whether it’s using Airbnb for our next vacation or using Uber or Careem for rides across town.
At the heart of the digital economy is innovative business models and use of massive amount of data (unstructured data) by companies like Uber, Airbnb, Zomato etc. Digital economy is generating heaps of data that, when captured and analyzed, will be indicative and predictive of business value, and can drive business growth. Data is the backbone of an innovative business model, and in a market where businesses can be as quick to fold as they are to succeed, actionable insights can make a lot of difference between sinking and swimming. As these innovations change consumer expectations of products and services, businesses are feeling a strong sense of urgency to either adapt to this new order, or risk being disrupted by new players.
So what lessons can organizations learn from this digital phenomenon?
The digital economy was possible due to the onset of the cloud. Because of the cloud, inaccessible infrastructure capabilities and can now be leveraged by companies, as well as startups looking to disrupt existing business models without the sizable capital. All in all, small players can successfully use technology as a catalyst to meet unmet needs in new ways.
However, writing “cloud-native” apps requires a very different approach compared to developing traditional applications. All of this requires a new approach to thinking about technology, what data centers look like and, most importantly, the collection and analyzing of data. Therefore, going “cloud-native” is a much harder shift to make for large organizations than it is for ‘born in the cloud’ startups.
A great example is how traditional taxi companies have responded to Uber. Many of them now have apps that provide customers with a far better experience that they did before Uber. However, launching a mobile app is not enough – many of these apps are developed using legacy infrastructure (contact centers, dispatch systems and radio). Besides incurring high costs, these systems don’t capture and analyze customer data, which can result in a missed opportunity to assess customer behavior and align business growth strategy with the same. Finally, many of these apps are just Band-Aids that will only delay the inevitable, unless these organizations make the necessary investments to transform their business model. It is critical that incumbent businesses realize that trying to co-opt the digital economy is not a check-mark activity, but one that requires a transformation across all business functions. The company’s IT infrastructure is no exception to this.
The digital economy is currently dominated by a few industry players—but don’t wait until the haze lifts. As more organizations grasp the value of data and analytics, the digital economy will become a sea of new services and opportunities for businesses and customers alike.