A commissioned research by Tata Consultancy Services (TCS), a leading global IT services, consulting, and business solutions organisation, finds that that 60 percent of companies globally – which have adopted the full range of business behaviours needed to thrive in a Business 4.0 world – expect to grow over 10 percent in the next three years.
TCS’ global study, titled ‘Winning in a Business 4.0 World,’ surveyed senior business decision makers from more than 1,200 large enterprises spanning 11 industries and 18 countries.
With the rapidly evolving business landscape and increasingly sophisticated customer expectations, businesses face constant challenges to quickly adapt and stay ahead. This global survey benchmarks large companies in their Business 4.0 growth and transformation journeys, by mapping their adoption of four critical business behaviours: driving mass personalisation, creating exponential value, leveraging ecosystems, and embracing risk. The study found that:
- Almost one in ten (9 percent) survey participants or ‘Leaders’ have adopted all four behaviours.
- More than eight out of ten (82 per cent) companies or ‘Early Adopters’ have embraced one to three of the behaviours, with mass personalisation being the most prevalent (78 percent).
- European businesses accounted for the most number of Leaders, followed by Asia Pacific and North America, when adjusted for the respondent mix.
- Leaders are three times more likely than ’Followers’ — 9 percent of participants that have not yet adopted any of the Business 4.0 behaviours — to have embraced AI, blockchain and IoT technologies, and twice as likely to have embraced automation.
“The study reveals a strong link between Business 4.0 maturity and technology adoption. Leaders are more likely than other participating companies to have driven digital growth and realised double digit revenue gains,” said K Ananth Krishnan, Chief Technology Officer, TCS. “Agile methodologies, cloud, automation, and AI are examples of tech pillars that enable leaders to change course and adapt to shifting market dynamics much better than companies with inflexible ‘idea to execution’ timelines of months or years.”
Business 4.0 Characteristics: Key Findings
Driving Mass Personalisation
Mass personalisation is the most familiar behaviour to business leaders, classified by digital technologies allowing companies to offer personalised products and services at scale, which significantly improves the customer experience and leads to higher revenues.
- More than three-quarters (78 percent) of all survey participants claim they can customise experiences at individual transactions. This has led to the following benefits:
o Higher customer profitability (60 percent).
o Increased value (59 percent) and volume (58 percent) of customer transactions.
o Reduced customer churn (32 percent).
- Personalisation is more widespread among North American firms, with more than four-fifths (84 percent) adopting the practice.
Creating Exponential Value
Businesses can drive more value – and even new products and services – from a single transaction, using the power of data analysis, IoT and AI to forecast future customer needs and points of engagement. By integrating digital or online channels and creating new business models, organisations can unlock new revenue streams and expand their customer base by shifting from selling one-off products to offering subscriptions to products and associated services.
- All surveyed companies identified the top benefits from operating an exponential value model:
o Ability to target a wider range of potential customers (64 percent).
o An expanded geographical marketplace (62 percent).
o Higher profitability (54 percent) and revenues (50 percent).
o New business models through collaborative ventures (50 percent).
- This adopted behaviour has progressed furthest among insurance providers and telecom firms.
- Nearly four out of ten (38 percent) survey respondents cite concerns regarding data security as the biggest barrier to adopting this behavior.
When businesses increasingly collaborate with multiple partners – beyond just their supply chain networks – they are leveraging ecosystems. Companies are no longer forced into silos by the limits of their resources, and instead can bolster their innovation capabilities and offer consumers broader propositions through existing and new partners. Among all of the companies surveyed:
- More than half (54 percent) leverage their wider ecosystem by collaborating with multiple partners to create new products and services.
- Almost half (46 percent) access a dispersed workforce or the ‘gig economy’ when they need to boost their skills base.
- The largest number of firms adopting this behavior are found in the health and life sciences, telecom and manufacturing industries.
This is the most difficult behaviour for many organisations to adopt, as it goes against traditional management approaches. Business leaders are accustomed to undertaking initiatives with the least risk and fewest resources. In the digital era, however, it is important to embrace risk to stay ahead of the competition and provide better value to customers.
- Almost seven out of ten (68 percent) organisations have not introduced agile practices widely – integral to embracing risk in establishing a culture that is conducive to transformation.
- By contrast, 70 percent of Leaders say agile underpins every process in their organisation today.
- One-third (33 percent) of all survey participants said they plan to transform their business model within one year to embrace risk – and 47 percent plan to do so in the next three years.