A digital transformation strategy is a plan of action
outlining how a firm should reposition itself in the digital economy. Winning
companies operate in ways that evolve with changing consumer habits. They use
developing technologies, innovate, and alter business and operational methods.
From a technology sector perspective, a digital
transformation strategy often entails leveraging technology to automate
formerly manual processes. The problem with this idea is that, since the
beginning of trade, firms have improved how they offer their goods through
digital transformation.
A digital transformation strategy that can assist the
organization in achieving its goals is necessary for digital transition.
Businesses worldwide are implementing enterprise digital transformation
strategies to enhance corporate operations and develop new business models and
capabilities. A digital transformation roadmap and a robust digital
transformation plan are the new currencies in an era of rapid sectoral change.
Digital marketing and user experience are examined in
digital transformation strategy from the viewpoint of the creative sector. The
popular notion is that consumers increasingly use the benefits of digital
transformation to search for, evaluate, and choose goods and services that meet
their needs. Although this is the case, creating a website, an app, or an
e-commerce strategy rarely constitutes a shift and essentially paves the way
for digital transformation projects.
Information and data have become the primary sources of
income, corporate assets, and vital drivers of digital business transformation
services. Companies must create a consistent digital transformation strategy,
considering data, processes, information, digital transformation technologies,
human factors, and many other factors, to profit from these new digital
transformation technologies. Management consultants view digital transformation
strategy as an opportunity to alter a firm from their perspective. If
approached correctly, a company’s goods and services may incorporate more
digital transformation goals. As a result, profit increases while operating
costs decrease.
Technology is required to develop a changed firm and create
a digital transformation plan. The plan calls on the creative sector to
articulate the newly created value in a way that appeals to consumers.
Management consulting is necessary to implement a more effective digital
transformation framework.
Digital businesses are no different from others in terms of
creativity. However, they invest time and effort in understanding their
customers’ needs by listening to feedback and developing solutions to address
these needs.
You alter a business by using technology, not the technology
itself. Digital transformation management consultants don’t help your company
succeed. You achieve this by implementing their advice. Creative specialists
will express only the distinction you generate. Changing oneself is the first
step in developing a successful digital transformation strategy.
Assuming that what brought about your success is all
required to continue is unjust and could be considered arrogant. Establishing a
plan for business as usual is very different from making a digital
transformation strategy. The company’s goal is not to improve its digital
operations.
A digital transformation strategy also considers the
building blocks and bridges that link them, as well as the barriers and new
bridges that circumvent them, because digital transformation projects are, by
definition, comprehensive and necessitate integration and cooperation.
What is
Digital Transformation?
Digital transformation involves restructuring a company’s
operations to enhance efficiency and effectiveness through digital technology.
Rather than reinventing services from the ground up, the goal is to refine
existing processes. You may wonder why digital transformation is essential. In
short, it future proofs companies and gives adopters a competitive advantage.
While the concept may seem simple, implementing a digital
transformation strategy can be resource intensive and complex. Strategies vary
by sector and project, with critical components often including refining
business models and updating technological stacks. A crucial aspect is
improving customer experience, which may necessitate a significant cultural
shift within the organization.
Contrary to common belief, digitalization is not just about
adopting new systems; it reimagines entire processes and models. However, many
businesses struggle to bridge the gap between innovative ideas and their
execution, as a study by Cass Business School highlights. This gap has led to
the association of digital transformation with agile methodologies, though not
all initiatives follow this approach.
To address this, the Digital Transformation Maturity Model
is a guiding framework for assessing and advancing an organization’s digital
capabilities. This model outlines a progression from basic process automation
to full digital integration, helping enterprises drive innovation and gain a
competitive edge. Following this structured approach, companies can map their
digital journey, focusing on leadership, culture, data management, and
technology integration.
Adopting this model provides a clear roadmap for digital
transformation, aligning technological efforts with business goals. As
organizations move through the stages of maturity, they enhance operational
efficiency, improve customer experiences, and foster innovation, becoming more
agile and prepared for future challenges.
What are the
Four Main Themes of a Digital Transformation Strategy?
It might be intimidating to think about digital transformation
strategy as a process that applies to all businesses, as it doesn’t imply the
same thing to everyone.
Organizations should consider utilizing one of the four
primary forms of digital transformation framework in their transformation plan.
It’s crucial to understand that the digital transformation plan needs a long
term commitment and can change along the way rather than being a single, binary
goal in the form of a product or solution.
1) Process Transformation
Businesses can make internal revisions to their digital
transformation strategy to cut costs, boost quality, and shorten cycle times.
Adopting cloud connections makes it easier to connect various operations and
places. Robotic process automation, for instance, can change manual processes
found in supply chain management, procurement, and other administrative
operations. Bettering your logistical network and supply chain by digitizing
these procedures and using machine learning and artificial intelligence can
help you identify and include data trends in your digital transformation
strategy for insights.
2) Business Model Transformation
One of the leading digital transformation goals is to alter
how businesses provide value to their clients radically. For instance, whereas
a blockbuster failed to transition from sending DVDs to online streaming,
Netflix succeeded, ultimately leading to the latter company’s demise.
Technology OEMs are also converting to XaaS, where the “X” stands for
“Everything” from a sales and support strategy. With the freedom to choose the
technology that best meets their clients’ demands, technology businesses may
reconfigure their go to market strategy and aid in the digital transformation
projects of their customers. Customers frequently express their openness to a
different connection through their purchase habits.
3) Domain Transformation
Organizations frequently adopt new digital transformation
solutions to reimagine their goods and services. They could expand their
current offers to a broader consumer base or create new ones supported by
technology. For example, if you rent out equipment instead of selling it
outright, you can reach a market that wasn’t previously served and may only
require your technology momentarily. An example would be organizations selling
industrial equipment that can expand by giving digital transformation solutions
to their client base and consumers utilizing other equipment.
4) Cultural Transformation
Adopting a digital first culture may allow organizations to
implement an agile digital transformation framework, foster a propensity for
testing and learning, and encourage decentralized decision making. However, a
successful shift to a digital first culture necessitates the redefinition of
mindsets and procedures and incorporating new skills and capabilities. For
example, managing manufacturing output is shaped by focusing on customer
service and innovation. When internal teams embrace digital transformation
technologies and see the ability to alter organizational norms, cultural change
frequently happens naturally during other transformation activities.
How Do You
Create a Digital Transformation Strategy?
In the integrated and connected meaning that it needs, a
digital transformation framework can, among other things, touch upon the
transformation of:
1) Business Operations
Multiple interconnected operations, tasks, and sets work
together to accomplish a single corporate objective; here, three elements are
focused on: management, optimization, and automation of processes. These
processes are bettered by technologies such as robotic process automation.
Optimization is pertinent to the digital transformation strategy as it blends
internal and customer facing objectives.
2) Business Models
How firms operate, from the value proposition and go to
market strategy to how they try to generate money and successfully alter their
core business by utilizing innovative income sources and techniques,
occasionally even abandoning the conventional core business after a period.
3) Business Ecosystem
Information and interconnected ecosystems bridge different
sectors and are the foundation of the digital transformation strategy. These
ecosystems bring insights that become assets for creativity.
4) Asset Management
Wherein traditional assets are prioritized, but other
components such as information and customers are also given equal priority
(improving customer experience is a crucial objective of many digital
transformation projects, and since we know information holds the key to various
activities now, businesses can function better with the technological
advancements brought forth by the digital transformation). Customers and information
must both be considered tangible assets from all angles.
5) Working Culture
By having a clear, customer centric, agile, and hyper aware
goal, one may acquire essential capabilities across the board in areas like
leadership, knowledge worker silos, digital maturity, and so on that enable one
to be more future proof. The IT component of the digital transformation plan
intersects with processes, commercial activity, collaboration, and culture.
Changes are required to sell applications more rapidly.
6) Customer Experience
People and strategy come before technology in the digital
transformation strategy. Considering how a stakeholder’s behavior,
expectations, and demands change is crucial. Digital transformation initiatives
that represent this include customer centricity, user experience, worker
empowerment, new workplace models, channel partner dynamics, etc. It’s
important to remember that there are always other ways to address these human
issues, from enhancing the customer experience to raising employee satisfaction.
First and first, people include, respect, and empower others; technology is
only an additional facilitator and part of the equation of choice and
fundamental needs.
Why Does
Digital Transformation Strategy Matter?
The power of digitization won over many doubters regarding
the advantages of digital transformation during the coronavirus outbreak. When
lockdown and social isolation started, a digital transformation strategy
enabled businesses to function regularly under the most challenging conditions.
IT staff had to offer technology solutions to the issues that businesses faced
immediately.
Solutions for digital transformation strategies advanced
quickly. Executive teams have tasked their IT divisions with developing
solutions for remote work in days or even hours. In contrast, they would have
hesitated to approve a multi-year investment in collaboration and
videoconferencing solutions.
CIOs and their IT teams shouldered the duties. They
delivered digital transformation solutions by supporting remote work, offering
online education, setting up online e-commerce channels, and developing entirely
new business models.
Monetary Aspects of the Initiative
According to tech researcher IDC, global investment in
digital transformation strategies of business operations and goods will reach
USD 1.8 trillion in 2022, a 17.6% rise from 2021. Through 2025, the researcher
projects a five year annual growth rate of 16.6%.
According to Gartner, most IT organizations will continue to
grow their overall spending on digital transformation technologies through 2022
and beyond. The analyst estimates that worldwide IT spending will reach USD 4.4
trillion in 2022, up 4% from 2021.
But keep in mind that digitization is not simple. According
to Futurum Research, the typical business has more than 200 technological
solutions. Yet, according to the advice firm’s data, most digital
transformation projects fail to consider users and are adopted ineffectively.
Digital
Transformation Strategy Duration
Projects, including solutions for digital transformation,
have often been paired with long term strategies. With their peers in this
field, CIOs have considered how technology may help their firms adapt to the
threat of digital disruption. Since then, they have created a long term
business strategy using technology to help the organization achieve its goals.
Many of those long term plans have problems because they
have taken too long to succeed. While incumbents may flourish in developing
discrete digital transformation initiatives, such as initiating infrastructure
migration to the cloud or creating new digital marketing channels, they move
far more slowly when it comes to restructuring the entire business to fit new
operating models.
Multi-year digital transformation initiatives are too slow
at a time when quick witted digital competitors could quickly join a new
sector. As illustrated by the multiple challenges in dealing with a global
pandemic, new geopolitical conflicts, and financial limits, flexibility, and
agility are the watchwords for the current digital transformation strategy.
According to McKinsey, most companies accelerated their
digital technology investments by three to seven years during the pandemic.
This accelerating pace has a strong effect. The expert claims that what was
once considered the industry norm for corporate digital transformation four to
five years ago is now perceived as moving more slowly than typical.
Examples of
Digital Transformation Strategies
One frequently mentioned digital transformation strategy is
migrating traditional systems to cloud platforms. When older systems are moved
to the cloud, it is simpler for organizations to update and modify apps in
response to new user needs. In this instance, digital transformation solutions
assist with agile and adaptable IT operations; in other words, they
dramatically improve an already existing process.
Another excellent example of digital transformation is using
technology to alter or eliminate an ineffective working procedure. Again,
consider the digitization of paper records. By modernizing how an organization
retains its information, it is now possible to search digital data and run
reports in ways that would possibly be cumbersome in an era of paper records.
Although utilizing digital transformation platforms and
digital transformation solutions is expected in the digital transformation
strategy, adopting cutting edge technology is also a choice. As the metaverse
transitions from the lab to the real world, we may anticipate hearing more
about these use cases. According to researcher GlobalData, such as the amount
of hype that 48% more firms referenced “metaverse” in their company
registration paperwork during the first quarter of 2024.
There has already been some development. For instance,
imagine a shop enabling clients to view furnishings via virtual reality apps
while relaxing in their homes. In this instance, digitization changes the
conventional physical retail connection into a virtual relationship, allowing
consumers to try and purchase things from a distance.
What are the
Key Trends in Digital Transformation Strategy?
Today’s goal for organizations is to discover new technology
initiatives to get their teeth into, given that digital transformation
solutions have shown to be valuable in these trying times. According to
Gartner, CEOs are seeking more direct digital connections with their consumers,
as they recognize the need to accelerate the adoption of digital business. In
addition, managers seek to be effective and safeguard profits and cash flow
while monitoring economic risks. Current trends in digital transformation
include:
1) Cloud
Although IT has been at the center of efforts to change
businesses digitally over the past few years, the task is far from finished.
While many businesses strive for a cloud first strategy, very few have fully
migrated their systems to the cloud. Modernization continues to be
significantly hampered by legacy technology.
2) Artificial Intelligence (AI)
Over the past few years, businesses have gathered several
data. It is necessary to eliminate data silos, combine data, and apply insight
to decision making processes and consumer experiences. Expect a significant
investment in machine learning and artificial intelligence as digital
transformation solutions are only growing.
3) Automation
Executives are starting to reap the benefits of their
robotic process automation investments. Companies will employ automation to
eliminate monotonous chores and free up personnel to focus on work that adds
value, whether by eliminating the need for software coding or introducing bots
to handle service requests.
4) UX
Companies will invest heavily in creating fantastic customer
experiences, from enabling employees to work effectively from home to offering
innovative methods to help clients engage with the firm. Expect investments in
the metaverse to play a significant role in this.
5) Security
All of these attempts at digital transformation strategy are
supported by the ongoing need to invest in IT defense measures. According to
Gartner, the emergence of the cybersecurity mesh allows standalone security
solutions to collaborate and enhance an organization’s overall security
posture.
What is
Digital Transformation Strategy?
What is Strategy? is an article by Harvard Lecturer Michael
Porter published in HBR in 1996. He makes the case that operational
effectiveness is insufficient despite being required for improved performance
since its methods are simple to duplicate. Emeritus Professor of Business and
Society at UCLA Anderson School of Management is Richard Rumelt. He emphasizes
that a strategy is not a set of objectives or goals in his 2001 book Good
Strategy/Bad Strategy. Instead, the battle plan for action created based on a
unique collection of characteristics or circumstances (kernels) distinguishes a
business from its rivals (leverages) and generates extraordinary and long
lasting profits.
According to him, a sound strategy will first diagnose the
existing infrastructure and then point out the areas that are ailing or need
improvement. Another crucial element of the strategy is identifying critical
points for improvement. Based on this information, management can create a
policy to guide the progress of the company’s objectives. Finally, a practical
action plan must be created and implemented.
Conversely, there is always a bad strategy, so let’s examine
the elements. Jumping the gun by not taking cognizance of the excellent
strategy components would create a counterproductive solution. Without tarrying
further, let’s understand why diagnosis, guidance policy, and practical action
plan are vital and what happens when these are skipped.
1) Skipping Diagnosis
Digital mayhem, unreasonable expectations, chaos, and
unpredictability. People are prodding in the dark in search of anything
fruitful. You could observe discrete business segments growing increasingly
“digital.” Although digital transformation technologies are in place, people
don’t use them as they should be; sporadic initiatives are in motion but have
no connection to anything substantial, and individuals don’t honestly know what
they’re doing or how to assess efforts.
The ideal outcome is increased operational effectiveness.
The worst case scenario involves frustration, difficulty, and resource waste.
No digital transformation strategy occurs either way; the same processes,
goods, and services are just digitalized. The goal of the diagnostic phase is
to comprehend the current condition and the obstacles that must be overcome to
arrive at a desired new scenario. This phase provides a great deal of clarity
and aids in maintaining the course of events.
2) Skipping Policy
The firm often falls short of its digital transformation
strategy goals. If they are, it’s not because of wise instruction but good
luck. A plan is only a wish list without a guiding policy. Without a governing
policy, how can a plan be determined? By asking just one question: How do you
want me to go about doing that?
You can tell you’ve found it if you hear tumbleweed drifting
through the hallways. Please beware of the misleading policies that might lead
you along the garden path; it is advised. How can you distinguish between
leading and misguiding policies? So, if differentiation creates a competitive
advantage, a good guiding principle will include an “if this, then that”
clause. On the other hand, your guiding principle is probably not very
beneficial if any organization can use it at any time and in any situation.
3) Skipping
Planning
Chaos. Let’s face it: intentions may be good, but digital
transformation strategy goes awry without planning anything. While this would
not upend the enterprise’s digital transformation, much time would be lost
going back and forth regarding the aspects. Let’s not forget that this new
initiative would reshape the company and pave the way for better times. But,
what can be a memorable voyage can become harrowing if the planning aspect is
skipped or done shoddily. You should never skip this step or any other three
components.
Due to the rapid effects ushered in by the pandemic, the
adoption of the digital transformation strategy has increased as the world
increasingly becomes one with technology. The economy of the digital age is
booming. The methods used to find, influence, and create consumers, suppliers,
goods, and services have evolved. Everything that can be digitalized already
is. However, just digitizing current goods and services is insufficient. It
goes against Porter and Rumelt’s philosophical maxims.
Porter contends that operational effectiveness is achieved
by simply digitizing existing processes. He suggests this, but it is not a
plan. Rumelt contends that while a company should have a vision, the strategy
should only last three months. It should be viewed as an ongoing series of steps
that provide understanding through diagnosis, guidance, and effective action.
Many companies consider a to do list to be a strategy.
Plans for digital transformation solutions, capital
investments, or operations are considered strategic. However, Rumelt and Porter
disagree that they are strategic despite their importance. A digital
transformation strategy is a plan to reposition a firm in the digital economy.
Data makes it much simpler to identify new possibilities. Building a company
that can use new technologies and respond to change quickly, skillfully, and
resolutely frequently necessitates a transformed work methodology.
How to
Initiate a Digital Transformation Strategy?
Sometimes, doubling down on efforts to achieve something
that may seem minute is pertinent. But one should not skimp on efforts just
because an aspect is small; the importance of pursuing or executing the aspect
should be determined by its significance. For example, how will the enterprise
digital transformation aspect affect your business operations? Will you perform
smoothly without it? Therefore, asking these questions before deciding which is
minute would be best.
This is one of the factors you need to include in your
digital transformation strategy. Given the specifics, your strategy should
emphasize Data Analytics in Digital transformation to derive actionable
insights, improve organizational culture, and foster continuous innovation.
In this fast paced world, technology has become one of the
crucial building blocks, and digital transformation is about making an
enterprise future proof. Therefore, your strategy should include technological
upgrades to boost and support your future needs.
Thirdly, engagement should be boosted by the digital
transformation strategy. This engagement should include employees and
customers. The former should be catered to, as developers and employees are the
ones who create software solutions. The latter is the audience with whom you
should engage. If any sects are not included in the digital transformation
strategy, the idea of a successful strategy is thwarted. Never ignore these
folks; always create a digital transformation solution that works best for
employees and customers. Lastly, make your office mentally ready to mold the
digital transformation strategy.
Transforming an organization into a digital one is not only
about digital transformation strategy. Every change block must exist, and
technology and strategy are the two apparent building blocks of enterprise
digital transformation. However, a sound plan and the appropriate technology
result in digitization rather than transformation.
When developing a digital transformation strategy, a team
with the proper digital mentality will produce a significantly different action
plan than a traditional business perspective. Therefore, it is essential for
attitude and strategy to work together. In addition, for the strategy to work,
you must have communications, a culture fostering innovation, and a compatible
infrastructure with new digital transformation technologies.
1) Communications
To develop a digital transformation plan, we must be able to
explain the altered condition and the benefits it brings. Customers won’t
purchase from us if we can’t persuade them of their worth. Our internal teams
won’t change until we persuade them. Therefore, we must take them along. A
minor alteration in the digital transformation framework won’t likely be
revolutionary or go far enough. By producing a “business of the future” paper
or movie, it is usual practice to gauge the worth of the newly changed state.
It describes the changes the company is going through. If the client shrugs,
the trip will be lengthy. It won’t happen if the leadership team doesn’t
provide its full backing.
2) Innovation
Innovation must be considered in a digital transformation
plan. The ultimate objective is to foster an innovative culture. It’s simpler
to say than to accomplish. It is necessary to foster creativity. Like a painter
gains skill over time, inventive talent develops through practice. Many
companies confuse innovation with good ideas. They invest in tried and true
digital transformation solutions and put them to use, saying it has completely
changed their company. Usually, they’ve improved their effectiveness. Even
though this is a noble goal, it doesn’t produce a sustainable competitive
advantage, it’s not strategic, and this sort of marginal benefit has occurred
since the company’s inception. It does not transform.
There should be a list of identified “unknowns” in the
approach. The unknowns produce experiments. These studies produce new insights.
Innovations are a result of the insights. Innovations are not one off ideas or
out of the box concepts. It’s not making an app, even if that might be required
just to keep things going as usual.
Innovation begins with a client’s need, problem, or
complaint. The technique centers on locating suffering or unfulfilled needs,
and communications concentrate on expressing that requirement. Through
purposeful innovation processes, creativity provides the finest solutions to
address that need. Technology meets this requirement, and data is utilized to
assess the outcome. A company with a culture of innovation may methodically
perform the tasks above.
3) Technology
Unfortunately, managers, decision makers, and leaders lack
technical knowledge. Compliance and financial mismanagement are less concerning
to most firms than the new business models made possible by AI, Blockchain, and
IoT. It would be absurd to argue that the finance and legal departments handle
all financial and legal duties in the boardroom.
Technological advancements are the catalyst for new business
models and an inspiration for innovators. There is a solid financial case for
leaders, managers, and decision makers to be familiar with evolving
technologies. We don’t anticipate them to be able to change the jet engine’s
fuel pump, just like the pilot. To launch and land safely, they must comprehend
the engine’s capabilities. The same is true for CEOs who are not technical and
wish to execute an enterprise digital transformation.
Who should be
Involved in Creating Digital Transformation?
The ability to alter a firm is complex. The strategy
ingrains creativity, technical leadership, empathy, and many other qualities.
The stool’s three crucial elements are communications personnel, technology
experts, and management.
1) Communications Personnel
When a firm is transformed, there are often two main groups
of stakeholders: internal and external. Employees make up the internal group.
They are the most challenging group to persuade that the new state is
preferable to the old. A superb communicator comprehends and empathizes with
people’s innate reluctance to embrace change.
People are frightened of the unknown more than they are of
change. Understanding the unknown requires persistence and vision. And from
where does this visionary clarity come? The plan for digital transformation, of
course. Even the most exemplary communicator will struggle to sell the concept
internally if the strategy doesn’t clearly define the firm’s future condition.
2) Technology Experts
Nobody has ever called the IT division to express gratitude
for protecting the network. The mail server has had 100% uptime for the past
year, so no one has ever brought a cake to the IT department. The same applies
to network engineers, data specialists, systems integrators, and app
developers. Frequently, this is a thankless profession, and attention is only
drawn when systems fail. The more effective they are, the less the rest of the
company interacts with them.
The communications specialist enlists the technologists to
assist with experiments that might go wrong or result in data breaches.
Typically, technicians’ attitudes are resistant. They receive a kick for each
time a digital transformation solution has failed in the past.
First, the organization’s thinking has to shift. The
capacity to experiment, assess results, learn from mistakes, and accept that
results may not be what we expected. Unfortunately, many companies falsely
pretend to take this type of risk. Instead of thoroughly examining them,
technologists and communications specialists try to cover “mistakes.” Even the
most excellent technicians won’t be able to innovate and improve a firm if
their attitude isn’t changed.
3) Management
Create a data driven plan of action to make things clear to
everyone and remove obstacles. Easy enough? It isn’t. Setting sales objectives
is not part of a data driven approach. It doesn’t involve acquiring additional
resources or rivals. It involves identifying where new emergent business opportunities
will arise in the short term and having the resources in place to capitalize on
them using predictive models.
When the opportunity is ready, it must fit into the bigger
picture, replacing business as usual and rebuilding the company to provide the
consumer with new, improved services. We consistently find that current
business silos are inadequate to meet consumer demands in the context of new
digital business models. Creating teams based on client tasks and calls for
natural company agility is difficult.
Many citizen requirements in government institutions don’t
stop at the door of one Ministry but rather span multiple ones. The leader’s
job is to create these coalitions and ensure the most outstanding citizen
experience is realized. Unfortunately, politics is frequently mind numbing.
The firm will struggle to successfully undergo
transformational change without these three having a significant, personal role
in developing and implementing a digital transformation plan. It’s not unusual
for a single person to have many responsibilities in a small organization. This
works as long as the wearer knows they are donning two hats and allows each hat
sufficient time on the head.
What Happens
When You Don’t Have a Digital Transformation Strategy?
The quick answer to this is that nothing happens a lot of
the time. There is a misconception that every company must undergo a digital
transformation. Not at all. Some companies are innately curious and constantly
look to innovate and transform. However, most medium sized and bigger companies
have difficulty adapting and implementing enterprise digital transformation
projects. They are not to blame. These companies have developed a digital
transformation strategy to safeguard their current cash cow, and there are also
quarterly results. The shareholders are the only ones with the authority to
fire the CEO.
Other times, politics and opportunistic shareholders prevent
the implementation of a digital transformation plan. As the video above and
this blog mention, Blockbuster didn’t fail because of poor management;
shareholder protectionism caused it to collapse. A firm will not necessarily
survive and prosper because it has a digital transformation plan, but it won’t
be disrupted without one. However, weak digital transformation projects do
ensure poor results.
Advantages of
Digital Transformation
Your business exists globally and for the world’s benefit;
thus, it must have cutting edge technology to remain competitive and provide
your customers with high quality service. Here, we’ll discuss the advantages of
digital transformation strategy to assist your business in implementing new
technology profitably and safely.
1) Production Amplified
Your workers are the starting point in the digital
transformation strategy; if their performance is raised via the efficient use
of digital transformation technologies, so is the entire company. Production
automation has always positively impacted both white and blue collar workers.
Automating procedures, assembly lines, and AI have all freed up time for humans
to engage in more cerebral work.
Modern technology is made to streamline business operations.
For instance, CRMs were initially developed to streamline repetitive operations
in marketing and sales while combining and facilitating accounting and client
administration. These accelerators aim to enable employees to reach their full
potential. Even essential tools like messengers or cloud services can improve
workers’ productivity by easing access to information.
2) Bettered Customer Experience
A superior customer experience is one of the guiding
principles of company management (CX). The typical American spends roughly 12
hours daily online, engaging in various activities, including information
mining, leisure pursuits, and financial transactions. The simple solution is to
be present for your customers, easing their buying process by providing a
smooth digital transformation platform user experience.
Through the intelligent application of technology, digital
transformation solutions enable businesses to serve their consumers’ demands
better. Enterprise application modernization is crucial, helping companies
update their systems for better performance and usability. Innovative
technology combined with quick client acceptance is the secret to CX’s success,
whether through an improved website, new app, or other digital product.
3) Heightened Transparency
An ERP or SAP system integration will also illuminate existing
procedures, allowing you to spot trends and patterns you would not have
otherwise noticed. The capacity to delve deeper into daily data in real time
makes it possible to keep a steadier pulse on all areas of the business that
keep the wheels rolling.
Teams’ openness should also be taken into account. For
instance, rather than waiting for Accounting to notify everyone, the Customer
Success Team and the Accounting team could identify which clients are
delinquent on payments and resolve the issue more immediately.
4) Cost Effective
Many business outlets are unwanted or are compelled to spend
a lot of resources and effort to keep their outdated infrastructures running.
However, by integrating more effective procedures and speedier problem
detection, executing a digital transformation strategy may not only result in
financial savings upfront.
The appropriate ERP software offers several chances for cost
savings in general operations. A product based business, for instance, can
learn more about the volume requirements and delivery schedules of raw
materials. Cost reductions are inevitable when buying raw materials in an
innovative, data driven way.
5) Revenue Booster
Lowering expenses simplifies growing income. Driving a firm
ahead requires maximizing possibilities by identifying problems with existing
business procedures. Employees and management may enhance best practices,
increase income through pattern detection and trend appraisal, and capitalize
on data driven opportunities by increasing transparency in many business
related areas.
6) Fostering Employee Engagement
To find and retain talent, one might use human capital
management software. Such a system may manage performance evaluations,
guarantee that workers receive the required coaching, training, and support
from their leadership, and focus on individual areas that need development.
ERP software may enhance human resource opportunities and
the natural working environment. If the processes in place make it easier,
faster, and more intuitive for employees to do their work, their employment
will be less stressful. By providing them with practical, transparent, and
seamless technology, you are, in a way, laying the groundwork for the success
of your current and future workers. They will be better organized and see
trends in their work. As a result, they are increasing the value of their
production.
7) Flexibility
If an IT transformation is completed effectively, you can
respond rapidly to changes in the market and customer needs. As we can recall,
2020 has brought the most significant disruption to conventional business
procedures. Situations like this highlight flexibility and adaptation in the
corporate world. To ensure that activities are not disrupted throughout the
transition and that you can be sure that your company is becoming more
adaptive, the appropriate software must be chosen for your business and
properly integrated.
8) Ease of Operations
Effective supply chain management results in a more
transparent supply chain, better vendor management, and a grasp of the
microeconomics of your products, from raw materials to customer delivery. If
your company offers shipping and logistics services, consider how this division
may affect your requirements during the ERP transition process.
9) Robust Operations
Operations are capturing the spotlight now due to various
reasons. Due to outages or breaches, various companies fall prey to hackers and
unexpected demands. This can be partially attributed to the obsolete
infrastructure, which does not have the latest security updates. As a result,
outdated infrastructure is an easy target for hackers. Digital transformation
strategy allows the companies to address these issues as the transformation
effectively means overhauling aging structures.
Disadvantages
of Digital Transformation Strategy
In recent decades, digital technology solutions have wholly
transformed every area of human life. A few sectors that have changed are long
distance communications, long distance transportation, office work, retail,
music, movies, television, photography, and entertainment. However, there are
other drawbacks to digital transformation. The list below includes seventeen of
the drawbacks.
1) Complexity
Our daily equipment and devices operate in a way we no
longer comprehend. Today, repairing an automobile requires communication with a
computer; it is no longer just mechanical. Dealing with a phone’s numerous
settings might be challenging. Minor errors in a laptop’s functionality can
cost money and effort.
2) Privacy Issues
Maintaining personal privacy has become much more complex in
the digital age, considering the risk of stealing or selling personal
information. For instance, anyone may use their smartphone to shoot images and
videos, which they can then upload online. When searching for candidates
online, employers could see unpleasant photos of them or notice that they have
expressed unpopular beliefs on blogs or social media.
Digital cameras track and capture our movements in public
spaces. Minor transgressions may potentially haunt a person for the rest of
their life if they are posted online. Controlling your data is highly
challenging and even impossible.
3) Work Imbalance
Today’s workers often spend their days juggling the hundreds
of emails they receive each week. All of them need to be read, and some require
responses or other actions. In addition, people may never be able to escape
work because of texts they get from coworkers on nights or weekends.
Organizing the enormous quantity of digital data acquired in
various positions, such as meeting minutes, training videos, images, reports,
and directions, can be challenging.
4) Data Breaches and Misuse of Infrastructure
The worldwide scope, enormous size, and relative anonymity
users may experience make the internet a favorable environment for evil forces.
Examples of this include:
Pedophiles use chat rooms and other locations to groom
potential victims and exchange photos, videos, and other information.
Terrorists use social media to promote themselves and
encourage others.
Drug dealers use the dark web to trade.
Authoritarian regimes try to influence or sway elections in
democracies.
5) Unending Cycle
Becoming obsolete is one of the biggest fears of any
innovative company. Today’s cutting edge technology will undoubtedly become
obsolete, thanks to the iterative inventions we witness daily (thanks to
DevOps). This one cannot be avoided regarding the drawbacks of our digital
revolution. For the foreseeable future, technological advancement will continue
apace. Your digital transformation must thus be a continuous effort. The growth
rate of the digital transformation strategy market is rapid. You must act
swiftly to prepare for additional digital transformation projects when new
products based on scientific discoveries enter the market.
6) Time Consuming
Most people know how to use cell phones and send emails, but
implementing modern corporate management tools takes longer and more work.
According to The Telegraph, finding the correct technology
is one of businesses’ most urgent problems. Using too many digital
transformation platforms might cause unrest. Investigating and trying different
digital transformation technologies takes time to find the ones that work best
for your company. The adoption period is also required to teach staff members
how to use them efficiently. In this case, a Digital Adoption Platform (DAP) is
strongly advised to shorten the time to competency. A DAP is a piece of no code
software that seamlessly connects with apps to aid users in becoming familiar
with them. DAP offers in app assistance to lead users through every step of an
application, including walkthroughs, task lists, intelligent suggestions, self-help
options, and more.
7) Newness
Your staff must carry the weight of ongoing technological
advances. While 87% of workers say they’re prepared to acquire new skills,
everyone’s threshold for stress is different. This is why teaching staff
members how to utilize digital technologies requires a tailored strategy. This
is excessively costly and a logistical headache when done using conventional
training techniques. Instead of leaving the system, they are currently using,
employees may obtain individualized training in real time by utilizing a DAP.
In this era of ongoing technological change, providing employees the backing
they need to feel inspired to give their all and secure their positions is
critical.
Successful
Digital Transformation Examples
Let’s examine how well known brands could overcome the
significant obstacles to digital transformation and revolutionizing their
industries.
1) McDonald’s
“Customer led transformation” is another name for digital
transformation strategy. It involves realigning your business to utilize
digitalization to suit client expectations. Today, the digital revolution has
fundamentally altered the market we operate in. Customers expect more from us
as they instantly get accustomed to receiving and using products and services.
Unfortunately, this means there will probably be a massive gap between what
customers want and what you provide. McDonald’s immediately discovered this.
Concentrating on CX (customer experience), they decided to
improve in store, drive through, and home delivery (ordering, payment, mobile)
processes. They started to question themselves (as well as their clients) where
those gaps were expanding. How might they improve the procedure for ordering in
store? Customers might be able to place orders using their mobile devices.
Would that cut down on wait times? How about digital ordering kiosks in store?
Are buyers likely to be interested in that?
What about drive through lanes? Is it secure to integrate
ordering into the ecology of a smart car? Thanks to digital transformation
technologies, including interactive ordering kiosks, AI drive thrust, and
clever mobile app experiences, McDonald’s has closed the customer experience
gap.
2) Domino’s
Pizza isn’t the first item that comes to mind when
considering creative uses of technology and digital transformation examples.
But Dominos perfectly illustrates how a digital transformation strategy may be
successfully implemented. The company was in a crisis around the middle to the
end of the 2000s. Customers complained about multiple difficulties, from bad
ordering experiences to problems with the pizza dough.
In addition, stock prices were also falling. So, the future
of pizza delivery service didn’t seem promising. Domino’s, however, made a
turnaround under the direction of CEO Patrick Doyle. They admitted their pizza
was terrible, enlisted the help of a focus group, and determined what had to be
changed to improve it. After interacting with the focus group, Doyle
highlighted the need for improved customer involvement and the delivery
process.
Doyle took a digital bet to do this. He thought that
creating rock solid IT and R&D divisions would free up funds for the
company to invest in and create new digital technologies. As a result, Domino
became the first delivery service to introduce its “Pizza Tracker” system,
which allows consumers to stay informed about the status of their orders.
3) Netflix
A standard error CEOs make is to become so preoccupied with
the product that they neglect their customers’ needs. Your product has to grow
along with the user experience. Otherwise, the gap in customer experience will
grow until you finally become irrelevant (without any customers). Netflix and
Blockbuster are, of course, the two most well-known examples of this.
The dramatic growth and collapse of the video rental
business serve as a cautionary tale for everyone about what might happen if you
don’t adjust to quickly shifting client demand. At its 1994 peak, Viacom
purchased Blockbuster for USD 8.4 billion. Everything appeared to be running
smoothly.
In 2010, Blockbuster CEO John Antioco was approached by
Netflix co-founders Marc Randolph and Reed Hastings with a merger proposal:
They would oversee and develop the retailer’s online offerings. Unfortunately,
Blockbuster wasn’t diligent enough to take them seriously. As a result, we know
how Netflix has swiftly changed the global scenario of video consumption, and
Blockbuster has faded into history.
4) Spotify
Organizations occasionally need to be willing to adopt a
sound digital transformation strategy to fulfill client requirements. Spotify
is one of the best examples of this. There is no formal hierarchy in the music
streaming business. Instead, Spotify has chosen a strategy that promotes
innovation, effectiveness, and accountability. The Spotify Model is comparable
to an Agile Matrix Organizational Model, with engineers and team members
working in cross functional teams while reporting to a single area (product
owner).
Put another way, individuals are organized into Squads,
working together to produce a fantastic feature or product. People spend most
of their time on the matrix’s vertical dimension, while the knowledge, tools,
and code sharing aspects are horizontal. At first glance, Spotify could appear
to be a straightforward music streaming service. You log in, search for a song,
playlist, or genre, and press play.
Of course, implementing these features in practice necessitates
a very intricate mix of behavioral prediction algorithms, creativity, and
practical cross departmental cooperation. Nevertheless, the Spotify Model is so
effective at identifying possibilities and swiftly adapting them to the
platform that it has fended off the mighty Apple.
Case Study:
Revolutionizing Financial Services through Digital Transformation
To showcase how a strategic digital transformation can
reshape an industry, let’s look at a leading financial services firm that
partnered with Digital Strategy:
Challenge: The client struggled with outdated legacy
systems, slow service delivery, and a lack of personalized customer
interactions.
Solution: Digital Strategy implemented a comprehensive
digital strategy that incorporated cloud technologies, AI driven analytics, and
automation, enabling streamlined operations and an enhanced customer
experience.
Results:
Improved customer satisfaction through digital first
services
Faster decision making with real time data insights
Increased operational efficiency via automation and cloud
integration
This case illustrates how a well-structured digital
transformation strategy can enable businesses to overcome legacy challenges and
unlock new growth opportunities.
Read the Full Case Study: Revolutionizing Financial Services
through Digital Transformation
Conclusion
Every company or organization must implement one or two
digital transformation strategies to succeed in the digital world. This article
covers various topics, including digital transformation plans, different
digital transformation projects, creating a solid digital transformation
strategy, real world applications for such strategies, and much more. These are
a few examples of companies using digital transformation to enhance customer
experience and increase sales and revenue.
The examples show businesses may benefit from the digital
revolution by changing their innovation processes, plans, and tools. These
businesses and executives have experienced increased stock values as a result
of deliberately investing in a workable digital transformation plan.
Understanding the impact of digital transformation is crucial for leveraging
these changes effectively. We hope the information in this post will help you
better comprehend the digital transformation strategy and how to use it for
optimum business development and efficiency. Regardless, not everything can be
put in the text; we did our best to cram the vital information to the extent
possible. To avoid unwanted snafus and roadblocks, reach out to the Stevie
Award winning Digital Strategy and walk away with a sound digital
transformation strategy that suits your company.
