Disrupting the Travel, Transport and Logistics industry
We have all witnessed how the likes of Uber and AirBnB have upended world markets, disrupting the established organizations that are still steeped in traditional business models. This is a wake-up call in a good sense: with today's IoT, digitalization and automation technologies, startups can now quickly build up a hugely scalable enterprise with their great ideas, while existing organizations can tap on that same potential to revamp and reorganize to avoid obsolescence.
As recent data shows, the global economy appears to be tripping and re-setting itself. Yale Professor Richard Foster recently concluded that the average lifespan of a Fortune 500 company fell from 61 years 50 years ago to just 18 years by 2010. And one third of the Fortune 500 firms of 1970 no longer existed in 1983.
The urgency of business adaptation in the face of accelerating technological advancement is what Manoj Gupta, Vice President & Head of ITO and Diversified Industries at HCL, shared with roundtable participants from the travel, transport and logistics (TTL) industry earlier this month.
"In traditional business thinking, we concern ourselves with minimizing cost per transaction, streamlining the operating model and workflow. The result is that business transformation leads, and technology follows," said Gupta.
But with digitalization, automation, crowdfunding, 3D printing, cloud-based and IoT technologies and whatever is next on the digital horizon, the customer is increasingly connected via technology. That same technology empowering the customer is exactly what businesses need put in the lead, and to adapt the business around it. "In the next-gen digital process thinking, user experience is key, and we need a digital ecosystem that facilitates business agility, elasticity and scalability."
The logistics and airline business can already tap mobile technology, Radio Frequency Identification, IoT and other technological advances to improve operations. But if the underlying ecosystem is still traditional, then bottlenecks are inherent in the patchwork of digital solutions added to keep up with the younger, nimbler upstarts that boast daring new business paradigms that circumvent legacy problems of yore.
"Now, we have the likes of Uber and AirBnB, which are shaking up global markets with their asset-lean, value-added customer propositions. Is it a matter of time that organizations that are slow to reinvent themselves will wake up one day to find themselves overtaken by fourth party logistics operators or Uber-like airline operators?" said Gupta.
In his presentation, Gupta cited customer experience, platform rationalization, process simplification and standardization as the ways to reap the innumerable benefits of digital business process. The TTL industry, in particular, also has to constantly keep a watch on last-mile delivery, data monetization, predictive analytics and speed to market as indicators of their progress in attracting long-term customers.
The problem is that many businesses are traditional at the core but are digitalizing in dribs and drabs without the holistic, concerted philosophy needed to make digitalization truly integrated. This is "legacy modernization", and it could lead to unpredictable and unsustainable outcomes.
While mobile gadgets and cloud-based efficiencies are being used to achieve modest improvements and to accumulate massive amounts of business intelligence data, all this information is being left untapped and un-monetized because an agile digital ecosystem has to be in place to integrate the benefits of technology.
The baggage of huge unwieldy infrastructures strung together under a traditional business model can lead to a leadership quandary: the high cost of plugging in a patchwork of new technology to keep up with the lean and fast next-gen competitors — which are built from the ground up to embrace digital process thinking and data-driven business workflows — will mean reduced profitability and cost cutting elsewhere in the business. Is this risk worth taking, or do they even have a choice? In the end, large corporates finding themselves in this untenable situation may end up losing, either way.
Reflecting HCL's digitalization philosophy that has driven difficult business transformations into success stories worldwide, Gupta posited that the future of business can only be totally digital, totally hinged upon the customer experience in terms of "anytime, anywhere, any device", and fully premised on alignment with the pace of technological advancements.
"In the 21st century enterprise, the connected customer is linked to connected digital operations, which in turn are linked to a connected digital back office — all orchestrated in perfect symphony with the cadence of technological and social trends," he suggested.
The underlying driver of digitalization and transformation is the rapidly evolving customer, so everything else has to adapt to keep in positive alignment. By moving away from traditional business process thinking and towards the customer-centric digital business process, the TTL industries — and indeed others — will finally be leveraging technology in alignment with the customer's technology-transformed journey. Only then can platform efficiency, DevOps clarity, data monetization, predictive analytics, speed to market and end-to-end integration be fully tapped to attract the customer's continual business and loyalty, according to Gupta.
One perennial question, often raised at such roundtable discussions, was: does digitisation and massive business transformation of an enterprise necessarily equate to staff redundancies due to automation and streamlining? To this end, Gupta asserted that the only way to make automation work right was the ‘pro-human’ way. It must be in sustainable layers, and in partnership with people. A methodical and analytical approach to applying ‘autonomics’ can help stakeholders stop focusing on the hype and apprehension and instead start looking at making positive impact with real, repeatable and consistent outcomes.