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Digitization is a mega trend which is significantly changing the way in which we live, work and create value. Digitization is revolutionizing the economy and the corporate world of business. More and more data is being linked together, leading to new services, new products and new business models. At the same time, business processes are being affected. “Industry 4.0”, networked production, has the potential to fundamentally reconfigure value chains and have a substantial influence on business models.

Regardless of industry, the transition to a digital future will significantly affect each and every company. The decisive factor here is developing the right strategy and the right abilities to pursue that strategy in order to adapt to the changing environment and to utilize the potentials of the digital world. This will bring about sweeping and radical changes in companies’ organizations, processes and cultures.

Thus, for example in sales in consumer goods, all available internal and external data on customers will be analyzed for relevance to derive behavior patterns which in turn will be used to contact customers about specific, peer-based needs. The use of predictive analytics allows us to be more accurate in our forecasting of future needs and wants, thereby increasing the effectiveness of sales activities and marketing measure considerably.

In the automobile and manufacturing industries, integrated planning approaches which include production and suppliers lead to a marked improvement in the quality of planning and performance management, as well as to more efficient process flows (including reduction in warehousing and optimization of interactions with suppliers) and much faster and more accurate decisions.

Banks and insurance companies will radically change their sales strategies and their communication with customers as a result of digitization. Customers use diverse channels in parallel (traditional and online), are becoming more self-service savvy and purchase customizable products. These forms of bespoke interaction and products place the customer more firmly in the spotlight and this trend is leading financial institutions away from performance management based on product and sales channel towards a customer-centric sales organization.

Some pioneers have recognized the potential of the digital age and turned it to their advantage. The business models of these companies are characterized by strong customer centricity. Further characteristics are the extensive use of Big Data and analysis methods for performance management, as well as fact-based decision-making support in sales, in production and in supply chain management. Additionally, they also have flexible corporate structures and enter into alliances with partners.

We at Horváth & Partners support companies in their endeavors to increase competitiveness through the use of possibilities for Corporate Performance Management and Performance Optimization arising from digitization. At both overall company level and for specific divisions and functions, we develop profitable solutions for our clients and implement them together with a best-of-breed partner network.

Interview with Thomas H. Davenport – Visionary on Big Data