December 5th 2019
Digital transformation is often dismissed as a technology buzzword that many do not understand. In reality, it is a concept that is essential for any company to stay competitive moving forward. Below are three examples to help illustrate what it is, and show the value that a successful transformation can bring.
In 2008, Domino’s stock prices were dropping significantly, and their presence in the market was slipping. Management was quick to recognize that a change in strategy was needed. Moving forward, they set out to focus on reducing their operating costs and enhancing the customer experience. This marked Domino’s transition into what it is today; a technology company that makes pizza.
The company’s main initiative was to roll out their e-commerce platform (the first of its kind in the pizza industry) to streamline the ordering experience for customers. Pizza can now be ordered on the Domino’s website with tracking information displayed from the time it is placed to the time it arrives at your front door. Further building on the digital strategy, Domino’s has implemented “no click ordering” in which you are able to order a pizza by speaking to your Alexa or Google Home device. With Dom the Pizza Bot, you can order from a number of third-party platforms, such as Slack, Facebook Messenger, or Twitter.
As a result of the company’s digital strategy, four fifths of their sales come from digital channels and they have passed Pizza Hut as the biggest pizza chain in the world. From 2010 to 2018, stock prices rose over 2000%, even outperforming the tech giants, Amazon and Google.
UPS has grown to around 100,000 trucks that ship over 4 billion items per year. As one can imagine at that scale of operation, unnecessary fuel costs and delivery routes began to take a toll on operating expenses. The company calculated that by reducing route distance by as little as one mile per day for each driver, they could save as much as $50 million per year. To tackle the problem of unnecessary costs, UPS pursued a digital strategy.
As with any successful digital transformation, UPS recognized that to begin their path to success, they must first collect quality data from the trucks. Their solution; On-Road Integrated Optimization and Navigation, also known as ORION. ORION collects a vast amount of data points from the company’s trucks, such as package deliveries, pickup times, and past route performance, and aggregates it all to a centralized database for analysis. The analyzed data provides drivers with optimized delivery routes to significantly reduce the costs associated with fuel and travel time.
As a result of digital technology, daily deliveries per driver rose from 90 to 130. By 2020, the company is expecting up to $75 million in savings.
In the mid 2000s, Disney Parks began to see a drop in the customer experience. Ticket prices were rising, lines for attractions were growing longer and longer, and customers were expressing their frustration. As an attempt to address the problems, Disney shifted its focus to technology as a source for a better theme park experience.
One of the main solutions was Disney’s MyMagic+ — a wristband designed for customers to book rides, reserve restaurant seating, make payments, use as admission, and open hotel rooms. Overall, the technology has effectively created a more streamlined experience for the customers with minimal time spent lining up and an easy, all in one platform for managing time at the parks.
As a benefit to Disney in the back end, the wristbands also collect data on customer behaviour. The data is analyzed to send targeted offers to customers as a way to increase sales. Additionally, with less time spent lining up, visitors have more time to explore gift shops and spend money elsewhere in the parks.
Disney Parks’ digital transformation has seen huge success. In 2013, during the Christmas season, the new system helped handle an extra 3,000 daily visitors. The operating profit and total revenue of Disney Parks alone now provides around 20% and 33%, respectively, of Disney’s total operations.
As illustrated in the three examples, digital transformation is the process of investing in digital technology in order to drive new value for the business. Domino’s, UPS, and Disney Parks are all excellent case studies that show the potential for significant increases to a company’s bottom-line through reduced expenses and new sources of revenue.