Digital transformation needs to be growth driven: ManageEngine’s Shailesh Davey

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Digital Transformation strategy remains one of the top priorities today for enterprises and their CIOs. Although, the digital transformation strategies adopted by many enterprises and businesses in the same or diverse domains may have some commonalities.

But the question remains – Are enterprises and their CIOs today facing a digital transformation dilemma? Simply to put forth – Does every enterprise need a digital transformation strategy or Is there a mega hype across business domains to adopt and implement digital transformation strategies?

Every organization led by its management including the top business and IT leadership need a thorough assessment and evaluation of all business functions, internal and external aspects including their customers. This helps the organization in gathering vital business information and data sets that would play a crucial role in making key decisions and resolving the digital dilemma substantially.

In this interview, Shailesh Davey, Engineering Head and Co-Founder, ManageEngine talks to to discuss digital transformation in enterprises, its business impact and goals; and how small businesses can benefit from digital transformation. He also talks about the whole notion of IT budgets and digital transformation strategy in large enterprises and shades light on ManageEngine’s overall business and much more.

Edited excerpts …

Q1. In recent years, a lot of enterprises, businesses and their CIOs are emphasizing on digital transformation strategies. But what is the most important element of digital transformation and are Indian enterprises and CIOs facing the digital transformation dilemma?
Shailesh Davey:
As you said, there has been a lot of hype around this word (digital transformation) so much so that sometimes IT teams don’t prefer using it (digital transformation) as if it is a bad word. So we surveyed IT groups who use third-party services to understand the initiatives the teams were taking as part of digital transformation and then we categorized them based on three aspects –

  • What they do on behalf of the customers
  • What they do on behalf of the employees
  • What they do on behalf of the developers

Based on the survey, we found out that most of the initiatives are in the business and customers spaces. This is obvious, as anything that helps bring in more customers, retain existing customers, avoid customer churn, up-sell and cross-sell will always be welcomed. It is easier to get a budget for it. This is driven by two trends:

  • We are surely moving from a seller’s world to a buyer’s world. Nowadays, it’s very easy to make a product than trying to market or sell it. So, engineering is easier nowadays.
  • The second trend is driven by customers. The customer is living in a connected world where they would expect a similar kind of experience across all the touchpoints.

These two trends drive consumerization of IT and this, in turn, leads to digital transformation. And the digital transformation in a business-customer interaction would typically mean that your investments in CRM, digital marketing, self-help, chatbox, mobile apps will all fall under the IT category now.

For example, a bank or hospital, where everything is possible on mobile. We hardly visit banks these days. Similarly, in hospitals, your appointments can be scheduled on mobile and your x-ray records are available on mobile. You can easily take it for the second opinion to another doctor. So all these things show that the interface is affected when digital transformation is happening. So that is one case where it must be very successful.

Where it might not be this successful are places where you see a sudden hype, like process optimization. Businesses are not looking at it from how it is affecting the top or bottom line. In any digital transformation initiative, we have to look at it from the perspective of growth in the top line or bottom line. By topline, I mean if you’re able to bring in more customers or up-sell and cross-sell. With some process optimization, you bring down the cost.

Q2. Can digitalization of processes be considered as part of digital transformation?
Shailesh Davey: I would say anything done through process optimization would have a bottom-line impact. For example, previously to open a bank account would require you a bank visit and submit photos, ID proofs, and other documents and wait for verification which would take two weeks.

However, now all that information can be uploaded from your mobile phone for verification. And this verification process will take less than 3 hours or maximum a day.

So digitalizing the entire process has helped to accomplish this, where the information is moved to the cloud and then an engine runs a quick check on applicant’s social media profiles to look for any negative remarks or check government records from the past. So, a task that took human two weeks but machines do it within hours through process optimization.

From a customer perspective, it does affect the top line and bottom line, but if one doesn’t have this clarity and gets into digital transformation, then it gets dicey. Sometimes, what you do as a part of process optimization not only helps you in the bottom line but helps you in the top line as well.

Let’s take an example, in a hotel chain, whenever guests check out they will come and submit the key to the front desk. The front desk will call the housekeeping staff who will go and clean up the room. Now after they automated the whole process using IT service management, a mobile notification goes to the housekeeping staff once the guest checks out.

It’s a very simple process optimization instead of the receptionist informing the housekeeping, the information goes to them directly using a mobile app. The process optimization of cleaning the room got converted into a live inventory which can be used in the top line, so as long as you take digital transformation initiatives and look at it from these two values and be clear about it, you can see its impact.

Q3. While digital transformation remains a megatrend, what are the main reasons for its failures rather than success?
Shailesh Davey:
I would say that if there is no clarity about the top and bottom then the chances of failure are very high. Now let’s assume that there is clarity but even then only 40-50 per cent succeed. This is because along with transformation, there has to be a culture.

If the digital transformation initiative is failing, I would say it’s more because of culture – which is the willingness to try, give feedback, do agile practices and be in a less hierarchical culture. All these could be reasons why some of them fail.

Let me explain, what cultural changes mean. Assuming that somebody is traditionally doing something (working) and they are moving to this new digital way. Then first, there has to be a culture of accepting and trying out new things. Apart from that, if somebody at the top decides to roll out an initiative to the people, which are the frontline workers.

Since they will be using it (initiative), they should be in a position to give fearless feedback to their superior. Assume it as a very hierarchical organization and juniors are not giving them proper feedback, then that’s a cause of failure.

Q4. How do you co-relate digital transformation from a small business perspective?
Shailesh Davey:
Let me take a specific example, assuming that I have been using an excel sheet for maintaining all my customer info. But then I am moving into a CRM system. So the advantage a CRM system gives — if I have a shoe shop. When the customer comes and buys, I will ask what is his birthday and stuff. All these data will now go into my CRM system. I will have the account information, the birth dates etc.

The CRM system is a kind of digital transformation thing because it sends out mails on (customers) birthdays and new stock arrival based on the buying behaviour. I am not talking about e-commerce here but talking about a normal shoe shop. If a new stock comes and two years ago you had bought it then based on the comparison you can give recommendations to buy the new one.

So in this case, if you see to do all these it doesn’t take a big budget because a lot of SaaS applications is available. In past to do something like this, we would have to buy a server, an app and other stuff, but now irrespective of whether your IT budget is shrinking or not a lot of these apps and technologies originally which was available for big enterprises are available today for small-medium business.

Q5. Are you saying when it comes to digital transformation, it’s not much of a budget concern?
Shailesh Davey: Yes whether a digital transformation initiative is succeeding or not, the budget cut doesn’t have to be cited as a reason. If you see the examples that I had quoted were more of a greenfield and now assume that it’s not a greenfield so most of them would like it.

I will give a very practical work example we did for ICICI Bank. They had interfaced with us and put some of our applications as part of their mobile app. If a customer has a current account it’s easier for them to avail loans and maintain books of accounts.

The idea was, if somebody maintains an account with ICICI Bank, then they would have more visibility into the business so that the business loans could be offered at a convenient rate. All this wouldn’t have cost much for them. But if they had to replace the legacy system than that would surely come with a cost.

I am saying at least from a top-line perspective, where you want to make a start in terms of regaining customers, reducing the churning, cut in the budget doesn’t have to be a reason. The bank could have the old system running and can plug in something that interfaces the old system to give a very good experience to the customers.

Q6. From ManageEngine perspective, can you brief about the company’s overall business growth and demands in India?
Shailesh Davey:
In India, we have recorded a 30 per cent year-on-year growth. It is one of our top 5 markets worldwide in revenue. We have around 3,000 organizations in India using ManageEngine tools and we have set up datacentres in Chennai and Mumbai.

We also see a lot of enterprise-level customers approaching us and using the ManageEngine tools for IT management. Around 60 per cent of our sales are direct and 40 per cent is via partners.

In India, we are close to 8,000 employees including engineers, sales support marketing, and most of us are based out of Chennai. We also have two branch offices in Tenkasi and Renigunta. We have small sales offices in Delhi, Bangalore, Mumbai.

Our sales strategy has been two-pronged: Partner driven and direct, the latter is prevalent in English speaking countries. Banks are driving demands because they under tremendous pressure to digitize faster and also small upcoming startups in the fintech space.

Q7. What’s your observation on the kind of demands around digital transformation today and are these mostly happening in greenfield projects or also to an extent in legacy fields?
Shailesh Davey:
Whenever the enterprise goes about doing digital initiative — at the end of the exercise their mobile access increases. And mobile access is not just mobile phones but also means laptops, anything which creates mobility, then there is no boundary.

Hence the most important thing is the endpoint management, which is your mobile phone, laptop, desktop and browser have to be managed. The word manage here means ensuring that the operating system is upgraded and the correct password is set.

Let’s take a salesperson’s example. He may have to access the CRM system from home or any location like roadside and need not even visit his main office. But in doing so, he is using the same laptop to access the CRM system as well as browse any cricket site. So the onus now falls on the company to ensure the laptop is secured.

The next biggest demand is for security and privacy-related solutions. Digital Transformation enables mobility and leads to an explosion of data. Now privacy regulations are also becoming strict so data security and endpoint security are both equally important.

The next biggest demand is for security and privacy-related solutions. Digital Transformation enables mobility and leads to an explosion of data. Now privacy regulations are also becoming strict so data security and endpoint security are both equally important.

Going forward we will continue our investments in these technologies and lots of the solutions are available. You can either install in a private cloud within your datacentre or can consume as a cloud application from our datacentre, so we are giving solutions in both the ways.

(Image source – ManageEngine)

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