Is Your Business Ready for a Digital India?
The COVID-19 pandemic has accelerated India's digital shift. To seize the opportunities it presents companies will need to excel in four key areas of digital transformation.
- Article |
- 17 December, 2020
The journey toward a digital India has been a fitful one but in the last few years rapid growth in internet penetration, rising private and public investment in digital technologies, and enthusiastic adoption by Indian consumers has made the country a global force in the worldwide digital revolution.
In the last four years alone the country has added an astonishing 420 million internet connections, that's more than 50% of the 750 million total connections. To put it in an even starker context, in the last 3 years alone India has added more internet users than the entire active user base in the USA. This rapid growth has been powered by the world's fastest-growing smartphone market and a nationwide rollout of 4G networks.
As a result, India is one of the world's highest growth e-commerce markets, expanding from less than $1bn in 2010 to more than $30bn in 2019 and projected to reach over $100bn by 2024. And the rise of e-commerce is not restricted to the consumer internet. The Government of India's e-marketplace GeM is targeting $100bn in transactions in the next 5 years, up from $3.5bn last year as it transforms government procurement.
What is more, all of this was before COVID.
COVID-19 has accelerated the digital shift
The impact of COVID-19 has been a dramatic and broad-based acceleration of the digitalisation trend in India.
While the initial weeks of lockdown saw many e-commerce companies suspend deliveries, as restrictions eased Indian consumers turned to their apps in unprecedented numbers. E-commerce growth is now projected to accelerate from around 50% CAGR over the last few years to over 80% in 2024 as a result of COVID. This is compared to a growth rate of 24% globally. Grocery is expected to be the biggest driver of growth, contributing 40% of the incremental gross merchandise value (GMV) between now and 2024.
Other low penetration categories are being targeted from personal health to consumer durables and even automobiles. With Hyundai becoming the latest auto brand to facilitate a fully online buying process from customising trim to arranging financing.
This online shift is not restricted to consumers. The digitalisation of B2B commerce has rapidly accelerated during the pandemic. For example, the large wholesale trade that supplies millions of kirana (mom and pop) stores around the country is witnessing an equally dramatic revolution as store owners shift from physical to digital channels. Embracing its offer of greater convenience, lower prices and even access to working capital finance. Bangalore-based start-up ShopX saw retail sign-ups double and average order size rise 40% between April and July. Other leading players like Udaan and Jumbotail have accelerated their expansion plans with the former now valued at over $7bn. And leading FMCG brands have been quick to embrace the new channel. Retail Association of India expects 30-40% of B2B commerce to shift to digital platforms in the next 3 years.
Powered by the conversion of consumers and traders to digital platforms the share of digital payments has also risen during the pandemic. By 2023 it is now predicted that $271bn of transactions in India will switch from cash to cards and digital payments.
Meanwhile, with millions of school children homebound for months on end, the pandemic has turbocharged India's already rapidly growing e-learning space. Making it the world's second-largest market and expected to be worth $1.9bn by 2021.
Lastly, the most profound impact of COVID-19 has been on the healthcare system and one of its most enduring effects may well be to transform one of the least digitalised sectors of the economy. Take for example telemedicine, a technology that has been a much-vaunted solution to India's health inequalities for years but that finally came into its own during the pandemic. A recent survey found that 80% of clinicians have used telemedicine in 2020 and 77% of patients would like to continue using it after the pandemic. As a result, India’s telemedicine market is projected to reach $5.5 billion by 2025, driven by a rise in teleconsultations, telepathology, teleradiology, and e-pharmacy caused by the pandemic. Furthermore, to facilitate a broader digital transition in healthcare the Indian government announced plans in August for a digital health identity with full interoperability.
Business has been forced to adapt
As the pandemic spread Indian business was forced to rapidly adapt to the new digital reality. Organisations had to facilitate an overnight shift to remote working for most white-collar workers, marketing and sales activities had to move online, and business operations had to rely on remote communications to manage manufacturing and supply chains.
The abrupt transition led to significant innovation and fast adoption of new digital tools but it also exposed widespread gaps in firms' systems & processes, IT infrastructure, and data management. The crisis also put strains on outdated organisation structures and exposed an absence of digital skills caused by low prioritisation of digital over recent years. More fundamentally still, the digital shift challenged the existing business models and strategies of many companies that had failed to consider its impact on the creation of business value in their industry.
Consequently, digital now presents both a huge opportunity for companies that can seize it but an existential threat to those who fail to quickly learn the lessons from the crisis.
4 areas that make you ready for a digital India
To adapt your organisation to the realities of digital India you need to focus on transforming your business in several fundamental areas. Drawing on the learnings from many large-scale digital transformations we have identified four pillars of digital that are crucial building blocks in creating a digitally-enabled business.
To start the transformation journey you should first evaluate where you stand in each of these four areas.
Vision and Strategy
Success in digital requires an integrated strategy powered by an ambitious vision. By defining a clear aspiration on digital that is linked to the creation of business value, leaders can establish digital's importance to the overall business strategy and position it as a priority for the whole organisation. Most digital initiatives tend to fail because leaders are unable to articulate an overarching vision to their teams and therefore their connection to the business strategy remains unclear. Consequently, employees see digital initiatives as a fad that quickly falters when senior management attention is diverted to seemingly more pressing issues.
Further, operationalising any digital strategy requires strong governance and coordinating mechanisms and a high level of engagement across the organisation. Most companies still consider digital the remit of the IT department rather than a firm-wide priority. Hence, it falls through the gaps of departmental silos. Instead, leaders need to define high priority digital use cases across business areas with clear outcomes, committed deadlines, and accountable business owners. The role of IT becomes one of facilitator and enabler but the ultimate responsibility often lies with the business owner who derives the most value from the initiative.
Digital transformation initiatives are complex because they often involve multiple dependencies distributed across the organisation which means that important digitalisation efforts often get held back by a lack of responsiveness in other parts of the business. Therefore as a leader, it is vital that you first set out a clear digital transformation roadmap of prioritised initiatives. The roadmap brings transparency across the organisation and spells out the activities, deliverables, timeline, along with the financial and human resources that will be needed at each step.
This transformation roadmap should be accompanied by a dynamic process to govern its implementation including regular C-level progress reviews.
While vision and strategy are the brains of digital transformation technology is the backbone. During the crisis, many Indian companies found their current capabilities were unfit for a fully digital world. To successfully digitalise organisations require a strong and flexible technology spine encompassing systems and processes, infrastructure, and data.
The most successful companies are leveraging emerging technologies such as robotic process automation, blockchain, artificial intelligence (AI), and the internet of things (IoT) to reimagine their core business processes. Delivering dramatic gains in efficiency, productivity, and customer experience. However, before these innovations can be explored many firms still need to standardise, digitise, and automate core business processes. Whilst manufacturing operations have often achieved a basic level of digitisation thanks to the widespread adoption of ERP in India, many functions like sales and marketing, finance, and HR have huge scope to digitise.
Once processes have been digitised companies can start to automate them to remove the bottlenecks caused by manual intervention. Next, they can leverage the data generated from the digitised processes to gather analytic insight to further optimise them. Thanks to the power of AI and machine learning this process of analysis and improvement itself can be increasingly automated, rapidly accelerating the rate of improvement.
Effective digitalisation also requires a robust technology infrastructure to enable real-time data flow across the organisation in a world of remote working. A large number of Indian companies are operating with legacy technology that was designed for office and factory-bound workers and limited amounts of data that was rarely analysed. Today, leaders need to conceptualise their digital infrastructure for total workforce mobility through cloud-based solutions, along with big data capabilities to gather and analyse huge amounts of data generated from every business function and countless processes, captured by an ever-increasing number of IoT devices.
Along with the right technology infrastructure, companies must adopt suitable platforms for data management and analytics that balance the need for real-time insight with appropriate data security and cyber-attack defences.
Organisation and People
A sharp vision for digital and the right technology will not be sufficient to achieve effective execution unless your businesses' digital priorities get reflected in your organisation structure, hiring, and training.
The pandemic has exposed the limitations of traditional hierarchical organisations, slowing down decision-making and impeding agility in the fast-moving crisis. Successful organisations have struck the right balance between autonomy and alignment - facilitating higher performance while team members have been forced to work from home. Given the popularity and effectiveness of remote working, some form of hybrid home-office work environment is likely to emerge once the pandemic recedes rather than a return to business as usual.
In this new digital world, leaders will need to accelerate the transition to more distributed teams focused on projects rather than functions along with streamlined decision-making processes.
The acceleration of digital trends has also highlighted the glaring talent gaps in many organisations in skills ranging from software development to web design, and data analytics to digital marketing. To thrive in a digital world companies will need to redesign their hiring practices to prioritise digital skill sets and design new digital roles that will become critical to business growth.
Along with hiring new digital talent companies must take steps to upgrade the digital capabilities of their existing workforce. Through benchmarking current capabilities they can identify key gap areas as well as the internal talent that can be tapped to mentor and coach colleagues alongside more structured training programmes.
Last but by no means least, to succeed in a digital India you will need to transform your culture to embrace a digital-first approach across every level of the organisation.
Cultural change begins at the top. From the CEO down leaders need to demonstrate a visible commitment to digital transformation on a daily basis. Reinforcing the digital vision, reminding people of its importance, and recognising the actions and achievements that contribute to its progress.
The performance appraisal of senior leaders should include metrics related to digital transformation and senior executives must be actively engaged in the review process for digital initiatives.
Evidence of a mindset change on digital will be seen when people in the organisation adopt digital as the default way of doing business, when they collaborate across functions on digital initiatives, and when they see digital as primarily a business rather than a technology issue.
Furthermore, Indian businesses need to foster a test-and-learn culture that encourages experimentation with new digital approaches. When the pace of technological change is only accelerating there are no once-and-for-all solutions. Success in digital will come from making changes in quick increments in response to continuously emerging technologies and evolving customer needs.