As the Development Practice Lead at Michigan Software Labs, I’ve had the unique opportunity to have a small role in most of the digital products that we develop for our clients. This has given me the perspective that nearly anything is possible when it comes to what a client wants to develop - technology is rarely the barrier stopping progress. Because of this experience, I like to encourage our clients to think “much bigger” than they currently are to achieve the results they desire.
Boston Consulting Group (BCG) released a report last week talking about how digital champions invest. The report showed how the companies who were investing more aggressively in technology were outpacing their industry counterparts. The research surveyed 1,817 companies in 27 countries for the eight industries of automotive software development, consumer app software development, energy software, financial services (a.k.a. “Fintech”), insurance software, manufacturing app development, technology (including IoT or the “internet of things”) and telecommunications software development.
The results of the study showed how digital champions devote more than 5% of operational expenditures (OPEX) annually to digital product development. Those that invest at this level scored much higher (nearly 16 basis points) in the Digital Acceleration Index (DAI) than did the laggards. So what does this mean for the business?
In the consumer and retail sector, online players such as Alibaba, are improving the shopping experience more than their peers in other regions, thanks to their innovative digital offerings. An even wider gap can also be observed in insurance, where insurers’ DAI score in Asia is 8 points higher, on average, than in Europe and the United States. This disparity is due to the fact that Asian insurers have been more technologically aggressive, such as in digitizing the customer experience. Morgan Stanely found that 50% of consumers surveyed would be willing to switch insurers in order to have a better digital experience. Rather than looking at a large group of industries, let’s focus in on just one company.
Ping An, a large insurance company in China, has revenues of $163 billion (USD). They have developed apps to build connections with consumers in ways that are beyond just insurance. For example, they have 153 million financial services customers and wanted to find ways to increase their reach to prospective customers. As part of a new technology initiative, they developed health care apps, real estate apps, and shopping loyalty apps. As a result, they now have more than 400 million users to be able to cross-sell to. This has helped Increase unrealized revenue (+7%) and improve customer retention.
No matter where you find yourself on the digital transformational journey, you should not be discouraged. The investments you are making in the future of your department or your business could lead to new customers and better experiences. That’s enough business talk from me though...now back to coding apps.