IT Brief New Zealand logo
Technology news for New Zealand's largest enterprises
Story image

Breaking down digital transformation: Business model transformation

Mon 10 Jul 2017
FYI, this story is more than a year old

In part one of this two-part series, we discussed process transformation as the first step in an organisation’s digital transformation.

Part two focuses on the second step: business model transformation.

Traditional approaches to business transformation involve the development of new products and services, but now the scope of innovation – and disruption – is much wider.

Digital technologies have made it possible for organisations to fundamentally alter the ways they create and capture value.

And this is exactly what they need to do because, at the same time, these technologies have lowered the barriers to entry in many industries and led to the emergence of more agile competition.

There is a need to adapt business models to respond to the changing digital environment. This is far more challenging than product innovation or process transformation, but it delivers superior and sustainable returns.

The extent to which an organisation undergoes business model transformation will depend on its own industry and competitor set – a large-scale reinvention or small scale evolution may be required.

Reinventing the wheel

A total reinvention of the business model is the best – or only – option when established organisations are threatened by industry disruption.

Every industry has a dominant business model that reflects the most efficient way to allocate the asset portfolio – usually involving the production of closely related products or services, and marketing to attract customers.

If new entrants use a new model to displace incumbents, or if competitors adopt it, then the industry has been disrupted.

Traditionally, however, high start-up costs have acted as a deterrent to new entrants, particularly those wanting to challenge the status quo, as failure is likely and has serious financial implications.

But digital technologies have revolutionised the go-to-market strategy for modern businesses and accelerated the reach of new markets.

Now, a start-up can achieve in a few years what used to take decades, and with much less capital.

There are many well-known examples of incumbent companies who failed to change their business model in the face of disruption and were subsequently displaced.

One that we’ve seen is Netflix, who entered the movie rental industry with an Internet-based business model that used streaming media to provide the latest films on demand.

Market leader Blockbuster couldn’t match Netflix’s agility and user experience with its franchise model but rejected streaming as the future of video rental.

This failure to innovate at the business model level ultimately led to its bankruptcy.

It is important to note here that technology was not the determining factor in Netflix’s success, but the fact that it identified a way to enhance the customer experience.

No industry can be disrupted by technology alone – a new business model must somehow add value to the consumer for it to have a chance at success.

To maintain competitiveness, Blockbuster needed to alter its business model to create online subscription-based business and embrace the cloud and platform technologies Netflix built itself upon.

Though it would have damaged profitability at first, the alternative was clearly much worse. In terms of execution, reinventing the business model requires an external ecosystem of partners as well as substantial skill acquisition.

Since technology enables digital transformation, organisations can benefit from consulting with a managed IT service provider who will help them identify where they are on their transformation journey, and assist them with the technology and organisation changes required to stay competitive.

Evolving with the times 

For organisations in ‘safer’ industries, there are ways to transition the business model without creating massive shifts and risk to current operations, and while still generating significant business returns.

This is a proactive approach to business model transformation, whereas reinvention is generally reactive.

Designing new economic models, exploring new routes to market, and entering new customer segments are all ways in which a business model can be optimised for the digital age.

An example is designer fashion brand Burberry, who after years of declining revenue, used social media, analytics, and mobile technologies to target millennials and move away from its traditional mature customer base.

At the same time, it shifted the revenue focus of the company to Asia and other emerging markets and experienced explosive growth.

Since they do not necessarily demand a fundamental restructuring of the existing value chain, these evolutionary changes can be rolled out in a reasonable time frame, and risk can be managed by using proof of concepts and experimentation.

Nevertheless, organisations still require the expertise of a partner who will help them transform into fully digital businesses by offering them consulting and advisory services.

End-to-end transformation

While process transformation is about working with existing assets to make the business run more efficiently, business model transformation is about adopting entirely new ways of working.

Those who need to completely reinvent themselves are in the minority, but just because an organisation isn’t at risk of disruption does not mean its business model isn’t vulnerable.

With tougher and more widespread competition, every organisation can benefit from becoming more customer centric and finding new digital ways to deliver value to consumers.

Article by Naveen Shettar, national practice manager, Consulting & Advisory, Thomas Duryea Logicalis

Related stories
Top stories
Story image
Wireless
Cradlepoint expands its Cellular Intelligence capabilities
Cradlepoint has announced additional Cellular Intelligence capabilities with its NetCloud service.
Story image
Customer experience
Research unveils precarious customer loyalty for retailers
New research has found customers are reassessing established brand loyalties as their priorities and behaviours shift.
Story image
Cybersecurity
NCSC advisory highlights poor security configurations
The GCSB's National Cyber Security Centre (NCSC) has released a cyber security advisory identifying commonly exploited controls and practices.
Story image
Digital Transformation
Trading up: It's time to swap core systems for flexible digital applications
This year will see more oranisations planning and commencing high tech renovations that will shake up the way they operate.
Story image
Microsoft
PwC NZ unveils new Cloud Security Operations Center
PwC New Zealand has unveiled its new Cloud Security Operations Center for the entire Microsoft technology stack.
Story image
PaaS
New digital traffic light system to tackle construction defects
Smarter Defects Management launches its PaaS digital system and says it will revolutionise managing defects in the construction industry.
Story image
Talend
Talend introduces new data health solutions for businesses
Talend has announced its latest version of Talend Data Fabric, with the release of Talend Trust Score enabling data teams to establish a foundation for data health.
Story image
Hawaiki Cable
BW Digital completes acquisition of Hawaiki Submarine Cable
BW Digital has completed its full acquisition of Hawaiki Submarine Cable, with all applicable regulatory filings and approvals now received.
Story image
Cybersecurity
Managed service providers: effective scoping to avoid costly vendor pitfalls
Managed security services are outsourced services focusing on the security and resilience of business networks.
Story image
Sustainability
Siemens showcases new automated solutions for data centers
Siemens has implemented new automated solutions and AI in the Baltic region's largest data center, providing insight into the future of data center management.
Story image
Fortinet
Fortinet's Security Fabric hits new record for integrations
The Fortinet Security Fabric has surpassed 500 technology integrations with more than 300 Fabric-Ready Technology Alliance Partners.
Story image
Application Security
What are the DDoS attack trend predictions for 2022?
Mitigation and recovery are vital to ensuring brand reputation remains solid in the face of a Distributed Denial of Service (DDoS) attack and that business growth and innovation can continue.
Story image
Sustainability
Grasping the opportunity to rethink the metrics of a sustainable data centre
A data centre traditionally has two distinct operations teams: the Facility Operations team, and the IT Operations team. Collaboration between them is the key to defining, measuring, and delivering long-term efficiency and sustainability improvements.
Story image
SaaS
Cloudflare launches instant serverless database for dev teams
"Today we’re announcing our first serverless database which we expect will quickly become one of the largest databases in the world."
Story image
Microsoft
Microsoft backing Māori and Pacific wāhine in tech industry
A new initiative focused on getting Māori and Pacific wāhine into the tech industry and backed by Microsoft, NZTech and the government is calling for tech companies to get involved.
Story image
Commerce Commission
ComCom appeals $2.25 million fine in Vodafone FibreX case
The Commerce Commission has filed an appeal in the High Court against a $2.25 million fine imposed on Vodafone NZ for its offending under the Fair Trading Act.
Story image
Fonterra
Fonterra to use automated guided vehicles by Dematic
New Zealand's dairy giant Fonterra is upgrading its manufacturing facility in Edendale with new automated guided vehicles (AGVs) from Dematic.
Story image
Data Center
Preventing downtime costs and damage with Distributed Infrastructure Management
Distributed Infrastructure Management (DIM) can often be a lifeline for many enterprises that work with highly critical ICT infrastructure and power sources.
Story image
Artificial Intelligence
AI-based email security platform Abnormal Security valued at $4B
"A new breed of cybersecurity solutions that leverage AI is required to change the game and stop the rising threat of sophisticated and targeted email attacks."
Story image
Attain
Revenue operations is taking centre stage
As the business world continues to evolve, new demands need to be met to keep up with the ever-changing landscape. 
Story image
Cybersecurity
A10 Networks finds over 15 million DDoS weapons in 2021
A10 Networks notes that in the 2H 2021 reporting period, its security research team tracked more than 15.4 million Distributed Denial-of-Service (DDoS) weapons.
Story image
Ransomware
A third of companies paying ransom don’t recover data - report
Veeam's report finds 76% of businesses who are victims of cyberattacks paid the ransom to recover data, but a third were still unable to get their information back.
Exabeam
Find out how a behavioural analytics-driven approach can transform security operations with the new Exabeam commissioned Forrester study.
Link image
Story image
Sustainability
Power at the edge: the role of data centers in sustainability
The Singaporean moratorium on new data center projects was recently lifted, with one of the conditions being an increased focus on power efficiency and sustainability.
Story image
Safety
Voxel hits total funding of $18M following ongoing wins
Since raising its seed round in September, Voxel has grown at pace, by decreasing on-site injuries by upwards of 80% and increasing operational productivity.
Darktrace
Threat actors are exploiting weaknesses in interconnected IT/OT ecosystems. Darktrace illuminates your entire business and takes targeted action to stop emerging attacks.
Link image
Story image
Ransomware
Cybersecurity starts with education
In 2021, 80% of Australian organisations responding to the Sophos State of Ransomware study reported being hit by ransomware. 
Story image
Remote Working
How zero trust and SD-WANs can support productive remote working
The way people connect with applications and data has changed, users are remotely accessing resources that could be stored anywhere from a corporate data center to the cloud.
Story image
Public Cloud
Cloud adoption still a work in progress, NetApp finds
NetApp has announced the results of the annual Cloud Infrastructure Report based on a survey of public cloud business and IT decision makers.
Story image
Sisense
Data and analytics could be key to higher selling prices in APAC
Sisense's latest report has found that almost half of data professionals in APAC think customised data and analytics can create better selling prices for their products.
Story image
Collaboration
Meadows exits Ingram Micro New Zealand on a good note
We look at the resignation of Danny Meadows from Ingram Micro's New Zealand Unified Communications & Collaboration business unit.
Story image
Excel
Could your Excel practices be harming your business?
While Excel has been the de-facto standard for budgeting, planning, and forecasting, is it alone, enough to support organisations in the global marketplace that’s facing rapid changes due to digital transformation?
Story image
Artificial Intelligence
Clear Dynamics closes $35M funding round, invests in global growth
The funding is a major milestone and speaks to Clear Dynamics’ vision for AI-enabled ‘composable’ enterprise software, the company states.
Story image
Artificial Intelligence
SAS unveils AI experience to improve kids' batting abilities
SAS has created The Batting Lab, an interactive experience using AI, computer vision and IoT analytics to help kids improve their baseball and softball swings.
Story image
Cybersecurity
The 'A-B-C' of effective application security
Software applications have been a key tool for businesses for decades, but the way they are designed and operated has changed during the past few years.
Story image
Workato
Workato unveils enhancements to enterprise automation platform
"The extra layer of protection with EKM, zero-logging, and hourly key rotation gives customers a lot more visibility and control over more sensitive data."
Story image
Apple
Apple previews new features for users with disabilities
Apple says new software features that offer users with disabilities new tools for navigation, health and communication, are set to come out later this year.
Softiron
For every 10PB of storage run on HyperDrive vs. comparable alternatives, an estimated 6,656 tonnes of CO₂ are saved by reduced energy consumption alone over its lifespan. That’s the equivalent of taking nearly 1,500 cars off the road for a year.
Link image
Story image
Microsoft
SAS Viya on Microsoft Azure to deliver 204% return - study
The Forrester Total Economic Impact study finds SAS Viya on Microsoft Azure brings a 204% return on investment over three years.
Story image
Artificial Intelligence
CFOs using digital workers and AI to prevent unnecessary loss
New technology is now allowing CFOs to use digital workers to automate their accounting processes, making it easier for them to avoid unnecessary losses.
Story image
Sift
Sift shares crucial advice for preventing serious ATO breaches
Are you or your business struggling with Account Takeover Fraud (ATO)? One of the latest ebooks from Sift can provide readers with the tools and expertise to help launch them into the new era of account security.
Story image
Wireless Nation
Wireless Nation, N4L provide 4G network to remote NZ schools
Wireless Nation and Network for Learning (N4L) have rolled out the Rural Connectivity Group’s (RCG) new 4G network to better connect three Chatham Islands schools.
Booster
Booster Innovation Fund. A fund of Kiwi ingenuity – for Kiwi investors.
Link image
Story image
Digital Transformation
The impact of COVID-19 on healthcare environments and care delivery
The COVID-19 pandemic has revolutionised the healthcare industry while overcoming staff shortages, social distancing requirements, and lockdowns.