Digital transformation starts reflecting in revenue growth of organizations

Investment in digital transformation initiatives has enabled some of the global organizations to improve their business revenue and cost optimization.
Digital transformationBut there’s no specific information on the growth in investment in digital transformation and returns on digital transformation.

Research firm Gartner says global IT spending will grow 2.8 percent to $3.846 trillion in 2019 as against $3.74 trillion (+6.2 percent) in 2018 and $3.521 trillion (+3.8 percent) in 2017.

Saudi Ministry of Justice

Saudi Ministry of Justice says digital services not only managed to save time and effort for clients, it helped judges as well as legal employees and workers perform their duties more effectively.

Saudi Ministry of Justice has achieved 40 percent increase in productivity in general due to efficiency in procedures. It helped better organize procedures, limiting hearing sessions in a number of courts, reporting a steady increase in the number of decisions and verdicts reached by judges.

NIKE

Revenues for NIKE increased 10 percent to $9.4 billion during the second quarter of 2018.

Revenues for the NIKE Brand rose 14 percent to $8.9 billion driven by accelerated growth across all geographies and in NIKE Direct, led by digital.

“NIKE’s ambitious digital transformation is driving strong results and momentum in North America and in our international geographies,” said Mark Parker, chairman, president and CEO of NIKE.

Gross margin increased 80 basis points to 43.8 percent driven by higher selling prices and margin expansion in NIKE Direct, partially offset by higher product costs.

Selling and administrative expense increased 14 percent to $3.1 billion. Demand creation expense was $910 million, up 4 percent primarily driven by higher advertising and marketing expenses.

“As we invest in digital transformation, we are driving consumer-centric disruption in our industry and unlocking new opportunities for growth,” Andy Campion, executive vice president of NIKE, said.

Operating overhead expense increased 18 percent to $2.2 billion driven primarily by wage-related expenses, which reflect critical investments to drive key transformational initiatives for the Consumer Direct Offense.

AUDI

Germany-based automobile major Audi, which started investment in digital transformation, says it is actively shaping the transformation of the automotive industry.

Audi in 2018 said it is recruiting technology experts for the strategic future areas of activity such as electric mobility and digitalization. Audi is focusing on hiring employees for new technologies and task areas such as big data and artificial intelligence. Audi has increased the budget for further training by one-third to a total of EUR 80 million.

WALMART

Retail giant Walmart has invested heavily in digital transformation. Walmart, which set up an online retail unit in 2011, increased its spending on equipment and 3,600 human resources for online sales to $1 billion by 2015.

Walmart developed new buying functions to respond to customer needs, with more phone options and more price transparency for better customer experience. Walmart’s online revenue grew 150 percent between 2011 and 2014. Walmart’s online sales in the US rose 63 percent in Q1 2017, making Walmart America’s second-largest online retailer – behind technology firm Amazon.

LEGO

LEGO’s digital transformation journey has assisted the company to achieve an EBITDA margin of 37.1 percent in 2014, an increase of 15 percent since 2007. Revenues for LEGO have grown at a CAGR of 20 percent from €1.6 billion in 2009 to €3.8 billion in 2014.

The first LEGO movie in 2014 achieved revenues of approximately $468 million with a production budget of only $60 million.

HUAWEI

Huawei’s digital transformation investment has assisted the telecom network and phone maker to improve the operational capabilities and efficiency of sales teams.

“Digital transformation should be led by business departments. Business managers should know how to support business development and resolve business problems through digital transformation,” Huawei said.

Huawei has unified online and offline management to thoroughly support sales teams’ operations. Huawei’s sales managers at all levels can use mobile phones to view the real-time activities of more than 200 subsidiaries in more than 170 countries and regions.

Huawei has a service delivery platform as against more than 20 IT systems earlier. Huawei built a delivery command center in Xi’an, China, where managers can view the progress of global delivery projects and implementation status of each site

Huawei’s IT team in 2017 launched WeLink to hold meetings, use service applications, and view shared files.

TATA COMMUNICATIONS

Tata Communications, which released a study, said the Indian company is using Artificial Intelligence (AI) to sharpen recruitment processes.

“Previously, our hiring managers used to skim through job descriptions to shortlist candidates. Now, they save time and effort by using an AI-based automated tool that auto-matches a candidate with best-in-class individuals, with the latter acting as the benchmark,” Srinivasan CR, chief digital officer, Tata Communications, said.

A recent Gartner report on digital transformation said business leaders look to digitalization to create a higher-performing workforce. HR teams will be making investment in digital platforms this year.

“CEOs are looking to the HR function to drive digital transformation efforts and increase innovation across the organization,” said Brian Kropp, group vice president of Gartner’s HR practice.

“The organizations are able to improve their innovative effectiveness can increase annual revenue by as much as $8,800 per employee.”

CATALINA

In a report IBM announced that Catalina, a provider of shopper intelligence and personalized digital media, has adopted the IBM Integrated Analytics System (IIAS) to provide its clients increasingly more relevant shopper insights.

Wes Chaar, chief data and analytics officer at Catalina, said: “Catalina is leveraging IBM’s technology to power more meaningful outcomes from Catalina’s analytics solutions, from personalization and consumer choice modeling, to revenue management and multi touch attribution.”

Siemens PLM Software will be assisting Heilongjiang Feihe Dairy for focusing on the digitalization of Feihe Dairy’s research and development, simulation and testing, as well as quality monitoring, supply chain management and production execution.

With Siemens’ leading digital innovation platform and industry expertise, this cooperation can help Feihe Dairy to realize its digitalization strategy and set a benchmark for digital innovation in the Chinese dairy industry.

Feng Hailong, CIO of Feihe Dairy Group, said: “We trust Siemens PLM Software to help us overcome the challenges in the journey to digital transformation.”

Ecopetrol

Ecopetrol Business Group expects to invest nearly $4 billion in 2019. It will promote the incorporation of renewable energy sources, the company’s digital transformation program and the development of technologies to optimize the operation through the value chain.

Western Digital

Oracle said Western Digital selected Oracle Cloud to help modernize its business processes as part of its digital transformation journey. Western Digital has combined numerous applications, reduced approval times by 70 percent, rationalized suppliers by 50 percent and improved acquisition agility.

Steve Phillpott, CIO at Western Digital, said: “We consolidated applications, automated key financial workflows and radically improved productivity. Oracle has been the catalyst for change and is pivotal in our digital transformation journey.”

Pizza Hut, a subsidiary of Yum! Brands, is set to acquire QuikOrder, an ordering software and service provider for the restaurant industry. Pizza Hut U.S. will improve its ability to deliver a personalized online ordering experience and accelerate digital innovation across its base of more than 6,000 restaurants in the U.S.

A latest CenturyLink report said top drivers for digital transformation include improving efficiency and productivity at 60 percent, reducing costs and modernizing systems at 39 percent, increasing accuracy and reducing human errors at 37 percent, and increasing revenues and enhancing the customer experience at 30 percent.

Valley National Bank deployed Salesforce Financial Services Cloud and nCino’s Bank Operating System to transform its operations, and digitize its commercial lending business and online deposit account opening processes.

Valley National Bank created a single view of its customers across its nearly 240 branches and multiple lines of business, including retail and commercial. Valley National Bank achieved increase in employee productivity as well.

A report in Wall Street Journal said that the term digital transformation has been overused and misused to the point where it has become a meaningless catch phrase, says Scotts Miracle-Gro Company CIO Marc Sims.

Rajani Baburajan