Today's business world relies more on digital technology than ever before, with recent innovations like cloud computing, big data analytics, machine learning, and artificial intelligence providing corporate executives and small business owners with new ways to use computer technologies in their businesses.
According to a Gartner survey of around 240 nonexecutive members of corporate boards, nearly 9 in 10 say digital strategies are a key part of growth strategies. Similarly, a 2022 McKinsey survey of business leaders found 9 in 10 C-level and senior leaders had pursued at least one large-scale digital transformation in the past two years.
The same McKinsey survey found that digital transformations grew revenues by about 31% and reduced costs by another 25%. The promise of higher revenues has even led some business leaders to become more willing to take on risk: The Gartner survey found 64% of corporate directors planned to increase their appetite for risk through 2024.
To gather a full picture of how businesses are digitizing—and how those transformations could affect the business landscape—Bonsai compiled insights from Gartner and McKinsey, among other research. Keep reading to discover five key ways companies are digitizing their operations.
Though it might sound shocking to digital natives, some small businesses haven't digitized their operations at all. A 2022 Top Design Firms survey of more than 1,000 small businesses in the U.S. found 27% didn't have a website.
Creating and maintaining a professional website for a business has myriad benefits, including giving prospective customers a positive first impression and generating leads through search engine optimization and marketing. Social media profiles and online reviews on digital sites like Yelp or the Better Business Bureau can also help spread the word about a business.
Of course, building and maintaining a website does come with some start-up costs. However, there are ways to keep things affordable, such as making price comparisons and optimizing the sizes of images and videos. It's valuable to note that a website can take some time to build traffic from search engines.
The more information a business has about its customers and target demographic, the more effectively it can appeal to them. Many companies today collect first-party data directly from their users, combine it with second-party data—another organization's data about its customers—and sometimes even incorporate third-party data collected, aggregated, and sold by another company.
Pixels or cookies allow businesses to track customers' clicks on their website or product links, while transactional tracking can provide valuable data about how users shop. Analyzing this data can lead to more effective targeted advertising, personalized service offerings, and more efficient workflows.
Once a company decides to digitize its operations, it has to decide where it will store the data: on-premises on its servers or by leasing data resources from a third-party provider for cloud computing.
Moving to a cloud-based system can allow a business to use innovative software and platform features without hiring staff to build them in-house. It can also provide enhanced security for customer data through automatic backups and easy syncing. Organizations, including major corporations like Western Union, nationally recognized academic hospitals, and even the U.S. Navy, have shifted to cloud computing.
Small businesses with just a few employees often rely on off-the-shelf software solutions licensed by a larger company. But some businesses require a niche or particularly sophisticated solution and might need to develop their own internal software.
Creating their own code can be expensive, but the return on investment could be worth it if it meets a unique need. For example, real estate marketing company Corefact developed software that creates a unique web landing page for each client. When the company released this code in 2005, there was nothing else like it on the market, and clients loved it.
AI is the latest technology creating a buzz in the business world. Some experts predict that between 2023 and 2030, artificial intelligence will see an annual growth rate of 37.3%. Many businesses have already begun dabbling in artificial intelligence, from using AI-powered chatbots like ChatGPT for instant messaging with customers to using generative AI to brainstorm new ideas in creative fields like fashion more quickly.
AI can also power more accurate algorithms through machine learning, automating tedious tasks and freeing up more time for high-level strategy or more skilled work. Although some consumers and business leaders alike may still be wary of AI—and with good reason—it is already affecting how companies do business. The AI market is predicted to be worth $407 billion by 2027.
Additional research by Paxtyn Merten. Story editing by Jeffrey Smith. Copy editing by Kristen Wegrzyn. Photo selection by Clarese Moller.
This story originally appeared on Bonsai and was produced and distributed in partnership with Stacker Studio.