Pay-as-you-go model cuts upfront costs

There was a lot of hype about digital transformation in the UAE last year as consumers became more digitised with digital payments reaching record adoption rates.

The hype will continue this year. Online searches for “digital transformation” have grown four-fold in the past two years and more technology companies are capitalising on this interest. Here are five reasons why your company should be prioritising its own digital transformation:

1. To meet customer expectations

The rise of marketplace platforms such as Alibaba, Careem or Airbnb have set a very high bar for customer-facing businesses to deliver an instantaneous and smooth experience to customers. Digital transformation can have a positive effect on your business, widening the reach of the information you share in terms of volume, customisation and interactivity. In a study by Bain & Company, the trade-off between scale and intimacy to the customer is no longer viable. Giants such as Starbucks are investing in superior mobile experiences, personalisation and value based on loyalty insights to bring them closer to their customer. A quick scan of the market shows that technology-orientated companies are steadily eating market share away from incumbents across all industries. The likes of WhatsApp and Skype, for example, have shaved off more than US$385 billion in revenue from big telcos around the world, according to the Indian School of Business lecturers.

2. It’s a great marketing tool

Customers expect businesses to invest and advertise in innovation to bring them more convenient solutions. Emirates NBD, a regional pioneer, has launched its Future Lab platform to provide customers with innovative banking products and services through a range of channels. Another is Dubai Electricity and Water Authority (Dewa), which has also implemented a robust digital transformation. It aims to install one million smart meters across Dubai by 2020 (of which 200,000 have already been installed). It means customers are served quicker and more efficiently and satisfaction improves.

3. No more constraints

Digital transformation allows businesses to transform into cloud-based enterprises, which rids them of resource constraints and reduces their capital expenditure in technology. Across the value chain of computing, business is choosing to adopt a pay-as-you-go model rather than an upfront cost model. The days of maintaining a server room in the company headquarters or buying hardware like computers or smartphones are long gone; even telcos such as the UAE’s du provide office devices on a monthly lease basis. Similarly, Alibaba Cloud, through its UAE data centre, allows businesses to migrate computing workloads to the cloud without any upfront fees. Service-orientated or digital goods businesses can benefit from the upwards and downwards scalability of the cloud to minimise their expenses. This creates a fluid manner of billing that moves with the company’s needs.

4. The value of data

Many industries understand the value of the data they acquire about their customers or internal processes. The reasons are simple. Firstly, data is becoming a profit centre rather than a cost centre: for example, the Starbucks app in the US enables the company to serve more customers through pre-ordering and store pickup, gather more data through their loyalty programme and promote new products to select customers based on their purchasing habits. Secondly, data provides facts rather than opinions; businesses can now optimise their product portfolio and investments by tapping into instantaneous information. For example, Alipay – the leading mobile wallet in China – lets users receive instant microloans through the app with no human intervention or approvals based purely on big data analytics of their previous transactions.

5. Lower costs and instant upgradability

Digital transformation allows businesses to reduce their operational costs over the long term. By migrating to the cloud, funds allocated for technology capital expenditure can then be diverted to other needs and changes can be made instantaneously.

Amir Atiatalla is the strategy manager for the cloud computing, managed services and digital transformation company Yvolv, a JV Company by Alibaba Cloud and Meraas.

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