By Manoj Jha, Director, Advisory Services, EY, India.
India has been quick to embrace digital technology and is one of the top three countries in the world in terms of its internet usage.
Startled by the power of internet
India is rapidly adopting digital technology with a focus on providing internet connectivity to a larger user base. It is expected to have surpassed the US and become the second-largest country in terms of internet user base as of December 2015 (402 million, up 33% year on year).1 The mobile internet user base has grown at a robust rate of 77% year on year to 306 million during the same period.2 Widespread availability of low-priced smartphones has enabled users to mobilize their digital world. The average consumption of mobile data per smartphone user in India is expected to reach 2.08GB per month by 2020, compared with to a mere 430MB in 2015.3 With such rapid growth, India is all set to adopt the next-generation digital technologies.
Enterprises are eager to join the rush for digital
In August 2014, the Indian Government launched the Digital India program with an estimated investment of INR1.13t over three to five years to widen digital access for India’s population.4 This opened up a plethora of opportunities for various companies to build broadband infrastructure, create identity solutions, design mobile-based payment systems and develop remote health care solutions. To join the rush for digital, various enterprises are looking to adopt next-generation technologies as a means to open up new channels for product and service delivery, improve employee productivity, customer experience and vendor satisfaction, and bring agility into the business model. However, many companies are so overwhelmed by the digital phenomenon that they are embracing the technology without understanding what their needs are and the best way to generate returns. They fail to understand which technologies should be deployed to suit the business’s requirements best and what kind of data needs to be analyzed. As a result, they are exposing themselves to multiple risks.
Does abrupt digital adoption result in digital transformation or digital chaos?
Digitalization is necessary, but the inability of organizations to articulate clearly their digital enterprise strategy and digital governance approach is creating digital chaos. This is because, currently, there are no established best practices for how to digitalize a business, only a few scattered examples. One India-based company provides an example of how digital chaos can impact the business. The organization puts new areas of technology, such as cloud computing and enterprise mobility, at the heart of its strategy. The idea was good in theory but, in practice, it proved to be the wrong move, as the company lost focus on its core business, resulting in a fall in both revenue growth and operating profit.
How can firms make sure they are benefiting from digital?
To drive the benefits from digitization, organizations should draw up a road map that puts digital thinking at the heart of the business. The objective is to define a clear digital strategy together with metrics that can measure the anticipated differential created by a digitalized versus traditional business. The expected return on investment should be calculated on implementation, as this will help the company decide on the feasibility of digital solutions (based on the nature of the business), secure money from investors and build a relevant digital strategy.
Data security is one of the key pillars of a digital strategy, as the threats of cybersecurity (e.g., identity theft, phishing, snooping and cyber terrorism) have become an increasing cause for concern with the adoption of next-generation technologies.
For example, one Indian conglomerate wanted to transform its existing IT setup so that it could automate some of its processes. While doing so, it focused primarily on implementing an information security environment to avoid any cybersecurity risks. It conducted a thorough review of the security architecture of its infrastructure components, sales management information system (SMIS) and marketing and distribution portal to assess any vulnerable areas and address any gaps in security. As a result, it could quickly identify areas in the IT environment where there was information leakage and create security frameworks to prevent the possibility of unauthorized access to critical data.
Digital governance is also vital, as it helps to establish rules and processes for sharing, editing, distributing and consuming data, thereby reducing the possibility of misuse.
A comprehensive digital governance model will require investment, but the benefits are worthwhile: improved performance, reputation and competitive advantage. An additional consideration for organizations is whether to adopt a dual-speed IT operating model. This would enable CIOs to focus on an IT ecosystem that comprises rapidly evolving digital solutions and robust enterprise IT that would sustain core business processes. This approach would help bring an element of balance between the company’s current technology and emerging disruptive technologies.
It is not all in the hands of business — governments can also play an important role in the successful implementation of digital technologies. By providing regulatory support to the ecosystem with adequate laws on data privacy and data handling, and by levying heavy fines in the event of data breaches, governments can help facilitate better governance for businesses and avoid abrupt or unplanned digital adoption.
Adopt digital, but with caution
Digital is no longer a distant dream. It is here. But any haste in its adoption can lead to more harm than good. A well thought-out digital strategy, together with adequate government support, can help organizations flourish in the digital era and translate their digital investments into tangible benefits.
1R.P. Nair, “India to have the second-largest Internet user base in the world by December 2015: Report,” Yourstory website, http://yourstory.com/2015/11/india-internet-userbase-2015/, accessed June 2016.
2Neeraj M., “Mobile Internet Users In India 2016: 371 Mn by June, 76% Growth In 2015,” Dazeinfo website, http://dazeinfo.com/2016/02/08/mobile-internet-users-in-india- 2016-smartphone-adoption-2015/, accessed June 2016.
3Neeraj M., “Mobile Internet Users In India 2016: 371 Mn by June, 76% Growth In 2015,” Dazeinfo website, http://dazeinfo.com/2016/02/08/mobile-internet-users-in-india- 2016-smartphone-adoption-2015/, accessed June 2016.
4S. Ghosh, “Digital India: Govt to spend up to Rs1.13 trillion in three-five years,” Mint website, http://www.livemint.com/ Politics/lBu1iUcwZNOYs9cXJCO7qM/Digital-India-Govt-tospend-up-to-Rs113-trillion-in-three.html, accessed June 2016.