Digital Business Models

How Digital Business Models Are Affecting IT – The Case For “On-Shoring”

Changing digital business models in the information age have proven to be revolutionary, and they are transforming the way that companies do business in every industry. The rise of the digital business model is so significant, many are calling the phenomenon of “digital disruption.”

Just as the original concept of disruption specified a process in which innovative and new forms of competitive businesses swept away old, outdated practices, the new digital businesses are quickly gaining ground in the marketplace and tapping new demographics, leaving slower businesses in the dust. This broader trend is leading to a growth in investment in all sorts of information technologies, and savvy businesses are going digital at a rapid pace.

This tremendous growth has been driving serious advances in IT for the last decade. So much so that IT departments are growing beyond their original capacities, and becoming independent firms themselves. The wide adoption of digital business models has greatly increased the demand for IT support services, and now professionals specializing in all types of technologies and software platforms are offering their help on the market.

Businesses looking to upgrade their IT support are now looking towards domestic IT firms for their support services. This is because “on-shoring,” as opposed to offshoring, is rapidly gaining ground as a viable option. Let’s take a look at each of these developments in more detail.

Getting Disrupted

Digital disruption is not just about abstract notions of competitiveness: the businesses that adopt digital models are enjoying real gains, while the businesses that fail to adapt are getting left behind.

One study from the MIT Sloan Management Review found that companies that had 50% or more of their revenues from digital channels enjoyed 32% higher revenue growth and 27% higher profit margins than industry averages.

Higher revenue growth and profit margins translate into increased competitiveness, so the early adopters are literally eating slower business’ lunch.

The Digital Shift

IpadTo really understand the far-reaching effects of digitalization, all you have to do is look at the companies that are going digital. We’re no longer just talking about savvy tech companies from Silicon Valley; it is literally everybody.
Financial institutions are busy developing web-based banking and investment tools. Restaurant businesses are completely digitizing their menus and partnering with tech ventures like Grubhub and Yelp’s Eat24. Food companies are expanding their digital marketing and R&D efforts. Entertainment companies are investing in streaming and other online technologies. Appliance and electronics manufacturers are increasingly turning towards smart devices, expanding the Internet of Things economy, and so on.

Demographic changes play a large part in this trend. Many businesses are increasingly courting Millennial and Generation Z consumers, two huge segments of the population known as “digital natives” unafraid of automation or remote communication. In fact, most consumers under 30 prefer to engage with commercial outlets solely online, and businesses are learning this fast. However, companies have to develop the technical and organizational capacities to make this transition, a role that IT support services are well-positioned to fulfill.

The Role of IT

These developments explain why so many businesses are anxious to adopt digital models, and fast. But there are obstacles. As one survey recently revealed, 78% of the survey respondents viewed digital transformation as critical to their organizations, but 63% said that the pace of changes in technology within their organization is too slow.

So, what’s going on? Many professionals feel that there is a lack of urgency in their organizations, and many CEOs, in particular are less interested in automation and digital solutions. There can be many reasons for this, but one compelling reason, in particular could be that businesses simply lack the resources to make such a transition in the short term.

IT departments are complex entities of their own, and making the digital transition may appear to be intimidating to many business leaders who are focused on day by day competition. Fortunately, there are great IT support services firms popping up all of the market, eager to fill this niche. With modern communication systems, collaborative software, and cloud computing technologies, IT professionals can provide businesses with much-needed technical support and digitization services without businesses having to invest in additional infrastructure and staff.

The Case for On-Shoring

For the last two decades, offshoring was seen as the most economic and viable way to outsource certain business operations. American companies would court various services and suppliers in various regions in Asia, such as China, India, and Taiwan. Mexico was another popular choice for its proximity.

However even this trend is rapidly changing. Wages are going up in the developing world, and businesses now have to contend with various rising costs that may have been hidden, such as dealing with extended supply chains, time delays, and transportation issues. There are other costs to take into account as well, such as natural disasters, security issues, and political instability.

In terms of IT support services and customer service in general, many companies were sourcing their tasks to countries like India in particular, a country which encourages the technology professions. Problems with outsourced tech services include time delays, coordination problems, and lowered quality, among others.

Many businesses are moving away from the offshoring trend, and pursuing what experts are calling “on-shoring.” The economics of hiring U.S. based IT firms makes much more sense today, with lowered domestic wages, improved logistics and shipping systems, and powerful communication and collaboration technologies. With U.S. IT support services, companies are getting the results they want at reasonable rates.

Surviving Digital Disruption

The time is now for businesses of all sizes to adopt a digital business model. Companies must act sooner rather than later, as competitors are moving swiftly to capture the digital market. There is no longer any room for business leaders to wring their hands over costs associated with overhauling in-house IT departments. With accessible and innovative IT support services firms all over the U.S. market, many businesses are now able to adopt more effective digital business models. On-shoring is the future for businesses looking to modernize their organizations and capture a greater share of the market.

No matter how large your company may be, it’s bound to encounter some opportunities for growth when it comes to doing business online. So, if you’d like to learn more about how your business can succeed in the digital space, feel free to contact us today. At NIC, we have the expertise and resources to support your business. From comprehensive cloud hosting and disaster recovery plans to day-to-day IT services, we’re prepared to help your company any way we can.

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