Digital technology is redefining business models

Digital technology is redefining business models

Digital technology is redefining business models


Digital capabilities will increasingly determine which companies create or lose value. Digital technology is redefining competition and changing even the business models across industries.

Micro-chipped clothes today could tell washing machines how to treat them. Smart traffic systems are reducing the waiting time at traffic lights and better distribute cars through the city. Data from factory robots allow algorithms to predict when the machines will break down and schedule maintenance to ensure that they don’t. Implanted censors are enabling early signs of illness in farm animals and micromanaging their feeding.

Business models

Rolls Royce, a British maker of Jet engines, launched its “Power by the Hour” service, offering to maintain and repair its engines for a fixed cost per hour. Real-time data mean that the firm’s engineers can watch engines wear out as they fly.

When something needs fixing, they can arrange for repair teams to be waiting on the ground. The firm’s data offer flying tips to pilots that can result in fuel savings worth hundreds of thousands of dollars.

Competitors are also emerging from unexpected places, as digital dynamics often undermine barriers to entry, and long-standing sources of product differentiation — as a result of plug-and-play business models — are emerging. Amazon offers business logistics, online retail “storefronts,” and IT services. In the travel industry, new portals are assembling entire trips: flights, hotels and car rentals.

Banking and fintech

Digitisation of India’s banking sector has shifted from “conventional banking”, to “convenience banking”. Fintech, already a potential transformation force in the Indian market, works on the intersection of finance and technology and has helped to revolutionise, e-commerce, online service and much more.

We have several fintech companies which have completely transformed the digital payment business. Paytm has already launched an investment and trading platform called Paytm Money, and also entered e-commerce with Paytm Mall.

Partnerships between banks and fintech companies in India are evolving from mere vendor-customer relationships to that of mentorship and investment by the incumbent banks.

Goldman Sachs invested in Kensho, a cloud-based software that can find answers to more than 65 million question combinations in an instant, by scanning more than 90,000 actions such as drug approvals, economic reports, monetary policy changes and political events and their impact on nearly every financial asset on the planet.

ICICI Bank is planning to deploy artificial intelligence chatbots as loan advisors to its customers.


While precision farming, as in abroad, may take time due to land-holding size, smart farming is certainly beginning to take place in India, and could save significant input cost and improve productivity. TAFE Ltd, through its J Farm Portal, is helping small farmers hire tractors and implements. It is certainly helping the government’s objective of increasing the farm mechanisation amongst the small and marginal farmers through a fair and transparent rental process and has helped the farmers to earn crores of income through the rental model.

Digital technologies create near-perfect transparency, making it easy to compare prices, service levels and product performance; third parties have jumped into this fray, disintermediating relationships between companies and their customers. In Europe, a chain retailer, which traditionally dominates fast-moving consumer goods, has seen itd revenues fall as customers flock to discounters after comparing prices even for staples like milk and bread.

TN initiatives

The Tamil Nadu government has achieved commendable progress on e-governance and ease of doing business. And to tap the power of AI, IoT, blockchain and drones in addressing the needs of the people, it has collaborated with IIT-Madras for harnessing the power of technology in the areas of health, education and agriculture.

In order to encourage the MSME towards use of digital technology, the government is proposing cloud computing services in the areas of manufacturing design, regulatory compliances, including the GST, enterprise resources planning through various service providers with a good amount of subsidy.

Skill development

While the pace and speed of digital technology will continue to impact the entire spectrum of society positively, there is a growing fear that digital technology will replace human labour, which may not be true.

During the ‘IT Connect 2019’, which was held recently, several speakers emphasised that it is critical to re-orient our curriculum, right from the school level to colleges, and upgrade employee skills continuously in the digital technology space, where there is still a huge supply/demand mismatch. The CII would continue to work with the Tamil Nadu Government in this space to promote growth and employment.

The writer is Group President (Finance & Investment), TAFE. Views are personal


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