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Transforming an analog-based, paper-intensive organization into an automated, digital-first, revenue-generating business is a daunting task. Every organization has a different starting point and degree of difficulty to overcome depending on the type of industry, business, infrastructure, customer base, culture and leadership. But there are universal truths -- agility and resiliency -- that can dictate the success or failure of a digital-first business model. And failure is not an option.
Digital transformation success depends on technology transformation, said Yoav Boaz, head of product management at ServiceNow, during an interview with TechTarget's Sabrina Polin. "[Y]ou have to do technology transformation to enable digital transformation," he noted.
In addition to faster, more reliable operations and workflows, advanced technologies and automation provide enterprises with the intelligence to feed new and flexible business models that can adjust to the changing times. "By 2023," IDC predicted, "60% of enterprise intelligence initiatives will be business-specific, purpose-built for business, shortening the data-to-decisions time frame by 30%, driving higher agility and resiliency."
Much of that indispensable intelligence will originate from customer data that's collected from multiple channels, analyzed through AI and machine learning models, and monetized in endless ways. Among its FutureScape 2022 predictions, IDC reported that "digital-first enterprises enable empathetic customer experiences and resilient operating models by shifting 70% of all tech and services spending to as-a-service and outcomes-centric models."
Boaz cited two types of digital transformation: "One is [the] evolutionary approach, where you digitize your processes, but the business model, more or less, stays the same. And the other is [a] revolutionary approach … literally rethinking your business model."
In this video, Boaz demonstrates the importance of agility and resiliency in a digital-first business model with examples of how Disney and Peloton opted for a revolutionary approach, reinvented themselves and thrived during unprecedentedly difficult times.
Sabrina Polin: Hi, I'm Sabrina Polin with TechTarget, and I'll be talking with Yoav Boaz of ServiceNow about transforming business models to fit the digital age. To read more about this kind of transformation, click the link above or in the description below.
Traditional companies realized during the pandemic that they must be able to generate revenue digitally in order to succeed in today's economy. Yoav, what are the first steps a company needs to take to figure out how to generate revenue digitally?
Yoav Boaz: Sure. Hi, Sabrina. So first, I would like to mention the two misconceptions about digital transformation. One, many customers confuse that with technology transformation. And these are cause and effect -- you have to do technology transformation to enable digital transformation. And the second thing is companies need to understand that there are two types at the high level of digital transformation. One is evolutionary approach, where you digitize your processes, but the business model, more or less, stays the same. And the other is revolutionary approach, right? Literally rethinking your business model.
And I can give you an example. I would assume you or someone you know is a car owner, right? And when you go and fill up the gas today in your car, you're just driving to a gas station and you have the experience that we've all been having for the last decade, or two or three, right? But as you move, we all move, to electric vehicles, it's an opportunity for this company to reenvision the business model. So, for example, you're driving in your electric vehicle. The immediate question is, okay, the vehicle, I understand that it needs to get charged in the next, let's say, an hour or two. Immediately, those gas stations can promote their locations to you as a driver. So you would know, for example, which specific electric vehicle charging station is available around you. So the question to them: How do they attract you to their location? The second: What is the experience that you have while you're doing the charging, right?
So, charging an electric vehicle takes more time than just gas. You spend there between 15 to 30 minutes, depends on the car, and so on. So what experience can they deliver you while you're waiting for the vehicle to get charged? What experience, for example, they can have for the next charging for you? Can you pre-reserve a charging spot for yourself, or maybe for someone else in your family, to do that charging? So these are the two examples of if I'm an energy company and I have a gas station, do I invest in the traditional gas fueling experience that I have and improve it, or do I go and revolutionize how I interact with my customers as they move to electric vehicles? So these are the two areas which I want to emphasize that customers need to assess when they talk about digital transformation and how they want to approach it: Is it evolution or revolution?
And the last thing I mentioned here that the most critical piece is to understand why you're doing it and what you're trying to achieve. Is it about improving customer satisfaction? Is it about improving the top line? Is it about delivering faster products to the market? Is it about market share? So you need to be very crisp in what you want to achieve, you know, to make the journey successful for yourself and for your customers.
Polin: Is AI going to play an important role in this conversion of business models? And if so, how? What about machine learning and bots?
Boaz: Absolutely. So we see those technologies coming together to deliver that superior user experience. In the past, you know, machine learning and AI was technology that looked for a use case. But even when we talked about that gas charging or fueling of your car, you can see a lot of technologies that play a role in that. For example, predictive -- or predictive analytics. The idea of knowing when Sabrina is going to charge her car, and what does she like to do when she is charging? What is that experience that she's looking for? Does she like to hear music or see advertising or maybe see the last sports edition, you know, the last sports event that happened over the weekend?
So the more I know about you, the more data I have, the more I can apply machine learning and AI to deliver you that superior customer experience, the better for me and for you as a consumer. That's on the front side of the house, or front door of the house. But even in the back end, if I can apply machine learning and intelligence to understand people like yourself, what do they like, and drive insights from that, I can go and deliver those experiences to others. So AI, machine learning of fundamentals, in delivering that user experience -- and all of this is baked into the Now Platform ... and we as a company are leveraging that. So we were able to shift about 30% of our Opex from "keep the lights on" to "growth initiative." And that's a huge achievement to our balance sheet. All that by leveraging hyperautomation and intelligence.
Polin: For companies not at the leading edge, is there any way for them to ever keep up? Or is there always going to be a digital elite changing the rules and disrupting?
Boaz: Sure, so what we see with our customers is that there are opportunities everywhere. And I can give you a few examples from customers we work with, and examples that you probably use as a consumer. So we're all familiar with Disney, right, and their main source of revenues were their theme parks. But then COVID hit, and that revenue stream simply shut down immediately. Luckily for them, they've worked before the pandemic with ServiceNow on launching Disney+. And as the pandemic hit, immediately Disney+ became a focus area for Disney, became one of the main revenue streams, and today all of us -- or many of us -- enjoy the Disney+ movies and series. So that's an example of a company that was in the traditional world, so to speak, a brick-and-mortar world that reinvented itself and was able to save itself from what happened during COVID.
Another example I can give is Peloton, right? Up until a few years ago, we all went to the gym next to our house and did the workouts and enjoyed everything. Then Peloton came in and instead of selling gym equipment to my house or to me, they are now selling a service, and obviously that became a huge hit during the pandemic. And now they're selling a service that is an experience. Who doesn't want to do workouts with those amazing people that host those sessions? So we can see that opportunities, those opportunities, in every industry. And what we're doing here at ServiceNow, we partner with those customers and with those leading technology vendors and brick-and-mortar vendors to help their dreams come true, and walk them and help with them during that digital transformation journey they've gone through.