What is Digital Transformation?
It is the process of using cutting edge technologies to create new, or modify existing organizational processes, culture, and user experience to meet changing market demands. The goal isn’t to leverage technology to replicate an existing service in a digital form, but to transform that service into something much better. Digital transformation can involve many different technologies, but the trending topics right now are: Cloud Transformation and Data and Insights. Below are the five key drivers of digital transformation:
- Digital Twin- The digital twin is the key tool that is driving industry 4.0 as it integrates and ties information of human assets in manufacturing industries. Leveraging applications of IoT, machine learning, and subsets of AI have changed the way industries operate on real-world operational and environmental data.
- Artificial Intelligence (AI)- Artificial Intelligence is another key driver that pushes businesses toward digital transformation. AI in the business context refers to practical systems that automate tasks once governed by humans. AI comprises of the following core ideas- comprehension, sensing, analysis, guidance.
- People & Culture- People are essential to the digital transformation process and are key to its success. By creating and developing a culture that encourages a digital mindset, a workforce will be better placed to drive an organization’s digital maturity.
- Data- Data is critical in automated, digital environments. With focus on Big Data involving Machine Learning and Advanced Analytics, data is more important than ever before.
- Digital product management- Digital product management is critical to digital transformation. Organizations should start aligning with the industries they serve.
Why is Digital Transformation So Important?
Staying competitive in this rapidly changing global marketplace depends on an organization’s ability to quickly adapt to new technologies. According to IDC, worldwide spending on technologies and services that enable digital transformation will reach almost $2 trillion in 2022. Businesses that embrace digital transformation are focused on engaging their customers and thereby creating digital customer experience across multiple channels. Here are few areas of the business where digital transformation plays a crucial role.
- Customer experience: These days stakes are high for companies to not only provide innovative products or services, but to provide meaningful interactions and experiences that please customers and promote brand loyalty. Consumers today have more choices than ever, and they want a seamless experience wherever they go across channels.
- Data Based Insights: One of the great benefits of going digital is the ability to track metrics and analyze business-critical data. And using these insights allows businesses to optimize their strategies and processes for even better results. This helps to understand customers and builds a business strategy that enables hyper-personalization, relevancy, real-time feedback, and agility. This allows businesses to make use of both structured and unstructured data by pulling data together from all sides of the business to help drive the transformation journey.
- Process Optimization: An organization’s ability to deliver great employee and customer experiences relies on its ability to seamlessly function at the backend. Streamlined workflows, digital processes, and automated tasks are all means by which an organization can create efficiencies.
- Product Digitization: This refers to leveraging technologies to enhance a product or service, like smart-connected or voice-activated devices. Digital transformation not only helps organizations to stay on the cutting edge of technology, but also creates an agile infrastructure required to constantly innovate and adapt to rapid changes in consumer demands.
What are the benefits of Digital Transformation?
The proliferation of computer and mobile technologies has made it necessary for businesses to go digital. Business benefits of digital transformation include:
- Encourages data driven insights
- Fosters collaboration across departments
- Increases agility & innovation
- Better customer experience
- Digitalization of business processes
- Reduces operating cost
What are the challenges of digital transformation?
Here are some of the challenges of digital transformation:
1. Lack of leadership buy-in: Reports suggest most digital transformation happens because of poor strategy and undefined scope and implementation by leadership. CEOs should have a clear strategic plan based on digital transformation metrics. Who will be affected and how will it affect performance and efficiency? Also, discussing with employees and briefing them about the transformation planned would help business heads understand the real-time problems they face and measures to fix them.
2. Poor understanding of digital culture: Many companies do not understand the need to create a digital culture within an organization, even before planning for a transformation. Though it is extremely critical, most stakeholders in the firm may not be ready for a change. As a result, a potential decline in performance and employee efficiency can be anticipated during the transitional period. The reason for the failure is often because most companies support the transformation process without considering the stakeholders on the transformation path. This frequently hits hard on the efficiency of these businesses. Creating a digital culture across the organization and encouraging employees and other stakeholders to grow accustomed to the culture, tools and technology will help businesses convince the work force during the transformation phase.
3. Lack of clarity on the transformation budget: The lack of clarity on a budget slows down decision making and forces business leaders to step back when it comes to digital conversion funding. Therefore, having a long-term budget strategy in mind is recommended to avoid potential financial risks to the company.
4. Lack of understanding of end user experience: Most organizations that plan to develop an advanced solution fall short of expertise and may not be able to develop solutions that address client needs. Understanding the end user’s demands is extremely critical during the transformation stage.
5. Lack of resource management planning: A shortage of resource availability can act as an obstacle for the business. Therefore, before even developing a product roadmap, it is a must to analyze the resources available to set the project in motion seamlessly. Digital transformation requires a careful approach and having a beginner’s team can make the job difficult during the transition phase. It is crucial to have a clear blueprint for the resources available and use them to move forward.
How to Get started as a Digital Transformation Company?
Here are few steps that enable you to become top digital transformation company:
Step 1- Defining business objectives: The first step is to decide the business outcome that the organization hopes to achieve. Based on that the right technology can be chosen. For example, if the business goal is to serve clients better through quicker response time, then by working backward, the organization can choose a technology that offers quick responses and flexibility to accomplish the goal.
Step 2- Involving the internal stakeholders: It is always advisable to take views of the stakeholders who are involved in the daily operations, as there are no-size-fits all solutions when it comes to digital transformation.
Step 3- Automating the cumbersome tasks: Resistance to technological change in the organization is inevitable as employees fear that technology will replace them. As a result, they are slow to adopt it, which often has a negative impact on performance. Technology needs to be used to increase employee efficiency.
Step 4- Adopting inside-out approach to customer experience (CX): Digital transformation is the key to digital customer experience which can act as a differentiator. Therefore, it is critical and advisable to gather inputs from customers to understand their expectations. Rather than formulating strategies based on the company’s internal objectives, it makes sense to take an outside-in approach and get inputs from clients, agents and other stakeholders who regularly interact with clients.
Still not sure how to get started? Not a problem! We’re here. Talk to one of our Digital Transformation experts today: