Technology is rapidly changing, causing markets and consumer expectations to evolve. In order to adapt, organizations are accelerating their digital transformation efforts, leveraging digital tools to create new processes, services, products, and business models.
What’s interesting about this is that it’s not the companies that are driving this change.
Instead, this change is being driven by the customer.
Today, customers expect relevant content in relation to what they are doing anytime, anywhere and in the format and on the device of their choosing. It’s their journey that dictates your strategy. And in order to keep up with this new kind of “always-connected” customer, your business must embrace technology to deliver an unmatched customer experience.
The net global spending on digital transformation in 2018 was approximately $1 trillion.
This number is expected to increase to more than $2 trillion by 2022.
The need to transform is clear. A 2020 study by Deloitte Insights found that an organization’s financial success was directly related to the organization’s level of digital maturity. Companies with a high level of digital maturity had three times the net revenue growth of companies with a low digital maturity.
What is Digital Transformation?
Put simply, digital transformation is the application of digital technologies to create new business models. The aim is often to solve business pain points, improve efficiencies, and deliver a more personalized customer experience.
Digital transformation is based on the notion that digital tools, such as ERP solutions, can benefit every area of a business. In other words, these tools can help companies improve their processes and culture so they can remain competitive and relevant.
For many companies, digital business transformation is necessary for long-term survival in a competitive market. As time goes on, companies are becoming more data-rich and connected. By moving in this direction, you can derive the following benefits:
- An improved customer experience
- Richer, more actionable data
- Improved flexibility, agility, and innovation
2020 has delivered a series of unexpected challenges. From remote work to virtual experiences, organizations have had to quickly roll out new services, upend the traditional workday, and rethink key operations. As a result, 69% of organizations are accelerating their digital transformation initiatives, realizing that short-term survival is linked to long-term success. And quickly adapting to new pressures in 2021 means developing the capability to quickly adapt to future challenges too.
According to IDC, 30% of organizations will increase innovation and reinvent their business model in order to future-proof their business. The next few years will see several technological advancements that further complicate IT’s already-complex environments. This includes new technologies and advancements made possible through 5G, including the internet-of-things (IoT), rapid development of artificial intelligence, blockchain, and emerging technologies to sustain the growth of big data. IT teams must develop the ability to rapidly integrate and orchestrate new tools and technologies into existing systems.
The companies that do transform digitally are creating highly engaged customers. And these customers are:
Six times more likely to try a new product or service from their preferred brand.
Four times more likely to have referred your brand to their friends, family and connections.
Two times more likely to make a purchase with their preferred brand, even when a competitor has a better product or price.
Benefits of Digital Transformation
Digital transformation refers to the creation or optimization of existing business models and processes with digital technology. This can include everything from company culture, written policies, customer experience, marketing and sales, product development, and a number of other business functions.
Be in sync with your audience
These days, almost everyone has a smartphone, which they use to search for brands and products to purchase or learn more about. Mobile internet usage has made its way to the everyday life of smartphones and tablets, allowing people to access and share information on the go. According to Statista, mobile devices (excluding tablets) accounted for 50.44 percent of web page views worldwide as of May 2020. Organizations are under greater pressure to digitize services quickly at scale to meet rising customer demands and create new revenue channels.
The ability to understand your target audience
Everything users do online leaves a footprint and this data is readily available to you using different analytics tools. This enables you to better understand your audience and make intelligent, data-based decisions for your digital marketing campaigns. Line of business users is trying to develop digital customer experiences faster. IT needs to drive cultural change by empowering the business to self-serve and deliver solutions quicker.
The ability to reduce operating costs
Depending on your needs, there are technological advancements you can utilize to cut costs. Chatbots, for example, can be built into your business’ Facebook Messenger. This allows you to immediately respond to simple customer queries 24/7. Organizations are using automation to drive operational efficiency and improve business processes.
The ability to measure your business success
Again, there are a number of analytics tools you can use not just to understand your audience, but also to measure how you are performing. When you have a clear understanding of how your efforts are doing, you can improve what doesn’t work and build on what does. To succeed in the path of digital transformation, you must be able to develop and set a smart, comprehensive, and successful digital strategy that aligns with your current business strategy. Eventually, your digital strategy should successfully integrate with your business strategy.
As with other corporate matters, having a strategy with well-defined objectives is essential to get digital transformation on the right track. Implementing isolated measures without being clear about the sought-after aim may prove utterly useless.
Here are some steps to set your company’s goals up in the digital world:
Assess your company’s current situation: what your brand is, who your customers are, SWOT analysis of your company, etc.
Analyze the market. What are your customers’ needs? What are they demanding your company to deliver? What are your rivals in the industry up to on digital channels?
Stay up-to-date regarding technology trends. Which emerging technologies can I apply to my business? Has technology had an impact on customer behavior?
Sketch the customer journey that your customers will follow after implementing your company’s digital transformation. This way you will be able to come up with new business ideas and to analyze and test them. The results will indicate if this is the way to go or if certain changes are still necessary to continue improving.
Digital Transformation Challenges
For every digital transformation success story, there are many more failures. Even with the best intentions (and a substantial IT budget), large enterprises in particular face complex challenges that get in the way of innovation.
So what can be done to improve your chances of a successful transformation? When a digital transformation initiative doesn’t go as per plan, teams must be willing to learn from their mistakes. This means identifying what went wrong, and finding the confidence to try again.
Here are few reasons why transformations in the enterprise fail, and how teams can use this to inspire better practices on the next try.
Innovation efforts are not aligned to business outcomes
Businesses tend to focus more on technical outcomes than business outcomes. But to stand any chance of success, you must find your “why” before you get started. Build a solid business case and a cross-functional team of business stakeholders and technologists. Make your business case transparent and inform people of progress frequently.
Lack of C-level support
At the end of the day, if the mandate for change does not exist, true transformation is not possible. You need to have C-level support or innovation initiatives will struggle to scale beyond a small team or silo.
The “It’s the way we have always done it” mentality
Many organizations make the mistake of lifting and shifting all of their procedures and controls from the last 50 years into their innovation project.
But “It’s the way we have always done it” is not the right response when innovating. This is the time to automate your checkpoints and compliance validation, and illustrate this with dashboards and visualization. While it can be difficult to shift mindsets to new ways of working, embracing change is critical to the success of any digital initiative.
Overly ambitious targets that don’t deliver ROI quick enough
Don’t boil the ocean with digital transformation projects. Make sure your innovation efforts can demonstrate business value in three months. Apply design sprint thinking, cross-functional teams and minimum viable products to test your hypotheses with real customers.
Focusing more on the technology than your customers
Your customer is not going to care about how you configure your service mesh. They want beautiful products that are stable, reliable and remove friction from their lives. Aim to deliver working increments of software to customers in every sprint. Make sure your “show and tells” have real customers in them and use their feedback to inform your next sprint goals.
Proceeding without a clear business model
When it comes to building your innovation project, you need to be clear on your strategy. There are two options. Either you build a ‘newco’, a breakaway project separate from your core business, premised on modern technology and rapid innovation that will feed insights and learning back into the ‘mothership’. Or you can start as you mean to go on, by invoking changes bit by bit and bringing your whole business with you over time. This is slower but can be transformative.
Denying your people decision-making power
Experimentation and entrepreneurship need to be encouraged and rewarded across the business. Your people should be empowered to make decisions as part of the innovation efforts. Establish environments in the cloud that allow your teams to be creative without breaking compliance. Make sure that digital transformation efforts don’t drift aimlessly, without being aligned with business outcomes. Break your effort into three-month planning increments with outcomes and key results clearly defined, captured and agreed with your teams.
Choosing Vendors not Partners
Technology should never constrain any business from experimenting with or launching new imperatives. The right tools can enable you, but if you are not getting the most from them you are likely dealing with vendors rather than partners. Your team, or your systems integrator, can never have the same level of insight into a tool as the people who build it. Include partners as part of your transformation team.
Are you planning on a Digital Transformation initiative?
A genuine digital transformation project involves fundamentally rethinking business models and processes, rather than tinkering with or enhancing traditional methods. Digitalization is not, as is commonly suggested, simply the implementation of more technology systems and services.
Digital transformation should create something new – that might be an improvement to customer experience (for example by allowing customer self-service), streamlining the supply chain, or using insights from data to offer new products.
Digital transformation offers organizations an opportunity to engage modern buyers, and deliver on their expectations of a seamless customer experience regardless of channel or place.
Talk to our experts and let us create a Digital Transformation solution tailored to meet your organization’s requirements.
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