Key Factors for a Successful Digital Transformation
In the 21st century, the digital environment has expanded to encompass almost every aspect of our personal and professional lives. From the wireless Internet, smartphones and social media, to machine learning-enabled AI and cloud-based SaaS in the workplace; consumers and businesses alike, depend on technological innovation like never before. Reports from Ericsson suggest that there will be over 29 billion connected devices throughout the world by 2022. For organizations faced with this rapidly evolving landscape, the choices are clear. Either achieve a successful Digital Transformation or stand by as more digitally agile competitors make you redundant.
What is Digital Transformation?
Many CEOs mistake Digital Transformation with digitization. The latter is a one-time implementation that involves taking analog business processes and changing them into a digital format. In and of itself this process adds only limited value to a business. Essentially, it makes data easier to collect, record, and search through. But to actually draw any insights from these records further steps are required.
To derive real value from digitization, businesses must move to digitalization. This means leveraging digital technologies to enable business process transformations. For example, you might replace traditional line workers with CAD engineers who can oversee the production process from computers rather than working to optimize each product by hand. There is a large element of automation involved in digitalization, the increased intervention of machinery and computing in day-to-day operations means more standardized processes and ultimately more operational efficiency. Digitalization helps businesses create new revenue and reduce existing overheads.
Yet digital transformation takes this concept one step further still. A Digital Transformation means far more than just improving upon your existing business model, it entails a complete redesign of the company’s purpose and vision. Unlike digitization or digitalization, a digital transformation strategy cannot be built on one-time implementations. Instead, the idea of constant innovation must become a core objective of the organization.
Characteristics of a Digital Transformation
In 2014, researchers at MIT established three key focus areas for any digitally mature organization. They are as follows:
A digitally transformed organization must put people at the center of any innovation. In a marketplace where digitally empowered customers are able to access detailed information about businesses from all over the world with just a simple Google search, the balance of power has clearly tipped in favor of the consumer.
Modern day customers are no longer satisfied with handing over their money to industry-leading brands in exchange for commoditized products and services. These buyers want personalized experiences that are tailored to their exacting demands, and when companies like Amazon are willing to make good on those promises with free delivery and same-day returns, what excuse do other businesses have to keep up?
In order to service these growing demands, businesses must look to leverage customer data from a range of digital sources including web traffic, social media, CRM software and marketing lists to develop a fully rounded picture of their target audience. These insights must then be used to create personalized advertising that truly speaks to these buyers’ needs. A digital marketing consultant may be required to enable this sort of understanding.
Once insights have been gathered, they must form the basis of an omnichannel outreach strategy that engages customers across all devices and platforms. From smartphones to laptops and retail outlets you must transform the customer experience at every step of the buying journey. This transformation cannot end at the front-end either. Wherever necessary, the businesses’ capabilities must also be reorganized to better serve people rather than processes.
We have already mentioned how important digitization and digitalization are to digital transformation. But neither of these processes place people at the center of their implementations. A digitally mature organization must enable its workforce to deliver the kind of innovation it needs to stay competitive in the years to come.
A digitally transformed workforce is:
- Hyper aware – Everyone from operational staff to top-line management is aware of what’s going on in the organization and the industry at large. Each employee must have the tools to access insights from across every function, and they must also be able to communicate their own data to other employees in real-time.
- Data-driven Decision Making – All of these insights must be collected, recorded and used to power business transformation solutions that can aid decision making at every level. The insights drawn from these applications cannot just be historical in nature, predictive and prescriptive insights are a necessity for any digitally transformed business.
- Workforce Agility – Employees should be able to work cross-functionally across locations and departments with ease. Competencies of every kind should be brought together to create end-to-end improvements that touch every area of the enterprise.
Transforming Business Models
Finally, the organization must become truly global in scope and vision. When searching for suppliers, partners, markets, and future business opportunities corporations can no longer be confined to a particular country or State. They must be able to shift production and delivery to any point across the world on a few days’ notice. This helps businesses to reduce the risk of changing customer preferences and economic volatility in the local market.