CIOs and other corporate IT leaders are accustomed to looking at companies such as Amazon Web Services, Google, Apple, and other digital platform providers as vendors that deliver products and services that help customers build their own digital strategy.

But in some industries, such as financial services, retail, and healthcare, these companies are emerging as competitive threats as the concept of value chain continues to evolve. As a result, IT leaders will need to address the risk, and make numerous decisions quickly on how they can help their organizations enhance customer experience and offer services that are equal to or better than what these digital behemoths will offer.

A 2017 McKinsey study, “Remaking the Bank for an Ecosystem World,” points out that financial services firms need to quickly embrace digital, and highlights the risk they face from platform providers.

The report notes that these non-banking platform companies are targeting the most profitable parts of the banking value chain. New digital entrants are having an impact on bank performance, “particularly by threatening the customer relationship and margin erosion across retail segments,” it says. New heavyweight competitors include platform companies such as Alibaba, Amazon, and Tencent.

“Amazon continues to confound rivals with moves into the cloud, logistics, media, consumer electronics, and even old-fashioned brick-and-mortar retailing—and lending and factoring for small and medium-sized enterprises,” the report says. “Such companies are blurring traditional industry boundaries.”

Much of the global economy might eventually be reshaped by ecosystems enabled by the platform companies. Banks can’t afford to wait any longer to extract the potential of digital to industrialize their operations, the report says. Neither can other types of businesses.

So how should organizations adapt to fend off these powerful new competitors? By becoming more like them. They need to totally embrace the concept of digital throughout their operations and accelerate their digital transformations.

The McKinsey report makes some suggestions, and although they are aimed at finance firms they can apply to just about any type of business.

One is to create a customer-centric, unified value proposition that extends beyond what customers could previously obtain, by bridging the value chains of various industries to create ecosystems that reduce customers’ costs, increase convenience, and provide them with new experiences.

This can be achieved by leveraging the latest technology tools, such as artificial intelligence/machine learning, predictive analytics, the Internet of Things, robotic process automation, and a host of cloud services that can provide the agility and scalability companies need to compete today.

This new focus begs an important question, however: how will IT leaders govern the technology investments that shape the digital strategy?

They will need to continuously analyze costs and technology utilization to reduce run costs and maximize their return on every dollar spent on technology, and look for opportunities to improve efficiency. They will also need to quantify the value of these digital investments to demonstrate their value to business leaders.

By taking steps to govern IT investments in the most effective ways, IT leaders can help transform their companies and prepare them for the coming wave of new competitors.

Bob Violino is a freelance writer who covers a variety of technology and business topics, including cloud computing, mobile technology, big data/analytics and the Internet of Things. 

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