Things are radically different today than they were a few years ago. Changes are happening in business and they’re happening quicker and more thoroughly than ever before. If businesses fail to keep up with the movement towards the integration of digital technology, they will fail to stay relevant. This is why digital transformation is key.
Digital transformation allows for better efficiency in overall organisational structures, more value to customers and better-equipped processes to stay ahead of competitors and adapt to any changing landscapes and shifting markets. Digital transformation, in a nutshell, means processes can be better with the right implementation of digital, technologically-driven systems in place.
What is digital transformation?
Digital transformation, as a raw definition, is integrating digital technology into all aspects in a business. This has a crucial change, but not overhaul, in the way operations take place which leads from a systematic approach to a cultural shift. Essentially, a digital transformation is when a company transforms elements of the company to include new, better digital systems.
From a broader sense, digital transformation starts within the company and has an impact – which should be sustainable and positive – on the employees and the customers at the end of the day.
What are the 4 main areas of digital transformation?
Four key areas exist in digital transformation. These are:
- Business process,
- Business model,
- Domain, and
All four of these are important for a company to successfully experience digital experience. If only one area exists, the company will face a lack of smooth systems in the transition as digital means are integrated.
Business process transformation
This is the process of shifting operations and systems in a business to enjoy a more digital focus. The business process transformation in digital transformation refers to using the data, such as through all analytic measurements, APIs, machine learning and artificial intelligence software to look at ways to create or reestablish new, better ways of conducting operations throughout the company. The purpose here is to decrease costs, reduce time, cut down inefficiency, promote quality, and save time in all business processes.
Business model transformation
Business models and the digital transformations refer to the fundamentals of a business and how value is experienced from the business. In a sense, the business model relates to the business’ building blocks. Digital transformation here is less easy to identify, as it’s not all about putting a digital system in place or using technology to increase output. Instead, this process is about the culture of the company as systems integrate with technology. This is critical as it leads to innovative thinking, a culture of curiosity and the hunger for growth. If more employees feel more comfortable using digital methods and are given the freedom to experiment with software and technology, the room for innovation increases.
Often overlooked, but extremely important; domain transformation refers to expansion, redirection, or carving of new products and services that a company offers. With new technology that allows companies to break barriers and traditional operations and marketing, it’s important for a company to constantly look for new, fresh ways to add to its offerings. An example of this would be the addition of Gmail, Google Maps, Google Drive as a cloud storage to the search engine’s offering. This transformation and additional services means the giant has moved from what would have been only one service (the search engine) to a multi-service suite.
Similar to business model transformation, cultural and organisation transformation happens within the internal structure of the company. This shift happens with the right processes in place to allow employees to work in a way where agility, flexibility, and innovation are encouraged. If a culture of innovation and experimentation is encouraged in a workforce, it can lead to novel ideas which can have a massive impact on both the products or services delivered as well as the efficiency of the systems.
One important thing to note when making a cultural shift in a company to enable more digital thinking is allowing employees to feel comfortable in experimenting; even if something doesn’t work. If failure of an idea is frowned on too harshly, the workforce won’t try anything new for fear of reprimand. If there is a culture of innovation, however, there is much more likely an opportunity for agile thinking which leads to digital success in both internal skills and better systems.
Digital transformation strategy
A digital transformation strategy refers to a plan of action which defines how a company will move itself to align more with a digital world of business. Basically, the digital transformation strategy is how the implementation of the company will become more digital successfully without breaking down systems in the process. It is important that this strategy is planned initially and followed with tweaks along the way.
One fundamental factor when outlining and executing the digital transformation strategy is keeping an eye on the vision of the company and considering the customer at all times. Since customer habits change over time, it’s important that businesses think about how best to align this with their mission.
The three components in a digital transformation strategy:
- The shift in processes
- The shift of operations, and
- The shift of relationships with customers.
Why do we need a digital transformation?
People rely on the internet for work, for shopping for banking. Technology is used in industries across the world. The digital world is not a luxury any more, it’s integral to communication, customer service, retail, and so much more. If companies don’t take advantage of the technology available, they won’t keep up in the moving world.
There are clear-cut reasons why a digital transformation is critical for companies looking to both remain relevant and stay ahead in the fast-paced world.
Five reasons why digital transformation is essential
- On-demand and instant expectations
People don’t only follow a price-tag when it comes to their choice of company. Giving the user or customer a good experience when dealing with your company is critical in retaining their business. This means having more agile systems, whether operations or software, is important in staying on track with expectations and communication with the customer.
Working with IT services and internal networking to improve systems in place can enable companies to scale up more rapidly and sustainably, giving them the best chance to manage expectations.
- Employee effectiveness
The better tools in place for efficiency, the more easily an employee can be effective. It sounds simple, and it is, but it’s got to be done right. With the right software and digital tools, core business functions such as logistical administration, finance, human resources and project management can move away from manual protocols. If automated systems are in place, key areas such as task management and payrolls can happen digitally and management and the leaders can focus on more important things.
- Security should be a focus
If a customer feels safe or that their data might not be at risk, they will more likely opt to use a company’s platform. Having updated security strategies and consistent focus on safety should be a crucial priority. Information and security officers for companies – especially in the online space – should look to implement digital transformation strategies which look after themselves as much as possible.
With technology such as artificial intelligence and machine learning becoming more widely available, reducing human error should be a focus for user security and it’s only possible with a priority on the digital transformation of security systems.
- Stronger business partnerships
If a company is able to build and hone quality digital processes early and implement systems across the organisation, it can focus later on developing business partnerships. With strong internal processes in place which are flexible enough to adapt and scale, the resources available will be able to filter into external partner relationships.
Digital transformation in a business also helps lend itself to new partnerships which might not have been possible without a technological scope. For example, a business which might have had a focus on retail and selling only could branch to ecommerce, which opens up partnerships which are only in the digital space.
- More information and better decision-making
With more access to data and information than ever before, there are incredible resources available to make informed customer-centric decisions. The right tools and correct implementation thereof can ensure that any available data can be turned into business insights. These can be used to make more informed decisions in order to offer customers more of what they might want and alleviate and reduce elements that don’t perform. Not only are these decisions better, but they can also be analysed and implemented quicker with the right software and tools in place too.
What are examples of digital transformation?
How can companies practically implement digital transformation? What does it look like in motion? There are a few examples which show how digital transformation can look:
The launch of an app
Developing and launching an app dedicated to making the life of a customer easier is an example of how digitally transforming an element of a company can look. If a company is an online commerce store, having an app with push-notifications and easy check-outs can make it much easier for customers on their mobile devices to purchase a product. The easier the system for the customer, the more likely they are to use the company.
Moving from traditional stores to online retail
It’s not necessarily new, but it’s a crucial step for retail companies to take. Digital transformation, in its essence, is transforming systems and methods from traditional to digital. Having a space online where customers can shop is an example of how the internet can offer new methods of widening an audience base.
Looking for omni-channel opportunities
An example of a company that successfully integrated digital systems in an omni-channel approach is toy manufacturer Hasbro. Hasbro uses the combination of digital storytelling, marketing video content, social media platforms and other marketing techniques to engage with its audience and connect with consumers. Making use of multiple platforms to reach different audiences is a fantastic way to see the benefits of digital transformation in action.
Five digital transformation elements
Practically, there are countless ways to implement digital transformation into a business. Fundamentally speaking, here are five different platforms to introduce and execute digital transformation in your business from marketing, processes, and operational approaches:
- Social media platforms
Social media offers a means to communicate to and with customers. The use of platforms can also act as a way to advertise and gain wider data into what a company’s audience might want to what they are not interested in. Having the right tools in place to monitor customer interactions, engagement, identify and analyse trends and respond to any feedback can go a long way in gaining a loyal customer base.
- Cloud computing and software as services
Cloud computing can be a crucial way to promote digital transformation in a company. This is especially true with user-friendly collaborative tools in place which encourages team-work and enables a central system of information for company’s resources.
- Remote access and mobility
If a company can exist away from the brick-and-mortar approach, it opens up a much wider range of audience and opportunity. This can refer to customers, clients, and partnership possibilities. Taking a business online is a significant step in digital transformation and stands as one crucial to take to get an edge on competition.
- Internet of Things (IoT)
The Internet of Things comprises of devices that have integrated technology with the ability to sync and connect to online data and cloud-based systems. Integrating tools and devices using IoT and internet-based software opens up room to collaborate easily and seamlessly across users, apps, and devices.
- Artificial intelligence and machine learning
The technology behind Artificial Intelligence (AI) and machine learning introduces a new ability for people to use machines and software with human-like thinking without human resources. This means computers can be used to experiment, make decisions, set ranges and work within the scope presented by the information technology (IT) teams.
What is the goal of digital transformation?
The main purpose of digital transformation in business is to optimise and improve systems using technology. This includes automated processes, using intelligent software, using data available, and reducing manual input in order to make time for more thorough work. Successful digital transformation overhauls should put technology in charge of tasks which don’t require much thought and putting human resources in positions where they can collaborate, innovate, think and develop.
In a nutshell, the main goal of digital transformation is to shift a business from manual and traditional methods to digital and technologically-based methods.
12 steps to digital transformation
It’s fantastic to know the benefits of digital transformation and the platforms available to implement a digital transformation strategy, but without the right steps in place to fully integrate technology into business operations, the knowledge is wasted.
- Shift to become more customer-centric
The most important first step is for a company to move from a product-focused approach to a customer-focused one. If a company can realise what a customer’s needs and wants are and adapt the product and service from that (with tweaks along the way), they’re far more likely to set up for success. This means harnessing the technology, tools, systems and software available to understand the perspective of the customer and plan from there.
- Reorganise the company’s structure
Transparency and innovative culture is key to effectively adopt a digital transformation in business. To fully adjust to a successful digital transformation, the team needs to be on board change of both systems and thinking. Any internal barriers or obstacles of communication need to be broken down and leadership should be able to emphasise the exciting possibilities that a digital transformation can bring.
- Opt for modern management
Traditional approaches are often enforced by traditional-minded management. Innovation and digital thinking needs to happen from the top. If a manager is wired to embrace change and experiment with digital possibilities, the potential benefits of a digital transformation are far more likely to be realised.
- Encourage transformational leadership
A strong leader goes beyond looking at the tools employees can use. Effective leadership will encourage employees to embrace change – with a sense of security and not isolation. Transformational leaders will not only help steer a workforce in times of change, but will help promote experiential and innovative thinking in employees too – harnessing a strong culture of digital change.
- Make the technological decisions collaboratively
Collaboration in decision making is encouraged in all business aspects and when it comes to digital transformation, this is no different. Effective and long-lasting decisions should be made with the opinion of management, employees and those who might be impacted by any digital changes in mind. When it comes to making and implementing digital changes in a company, the IT department is crucial in the roll out. All decisions should be made and then effectively communicated across the company.
- Integrate effectively
Looking and analysing any important data should be the first step in integrating any technology changes in the company. Before making massive shifts, make sure the strategy is based on effective data analysis and then monitor the shifts at each step.
- Gain insight into the internal customer experience
Feedback when making any changes is crucial. When making a step to digital transformation, the company and leadership team needs to make sure that the internal customer (internal teams and employees across departments) are feeling heard. Having room for feedback means that the right systems and software can be implemented well and a successful transformation can take place while enabling employees to feel trusted and secure.
- Improve the logistics and supply chain
The point of a digital transformation is to improve systems and make them quicker, more resilient, and more effective. Adding a digital layer to the logistics and supply chain is a necessity in improving speed and consistency for product delivery and distribution.
- Add data security and privacy
As mentioned above, if users don’t feel as though their data and information is safe, they’ll opt against spending their money at that place. Ensuring that secure systems are in place to avoid data hacks and security breaches is a fundamentally important step in digital transformation. Once secure systems are in place, it’s equally important to consistently update the systems and maintain safety measures.
- Keep an eye on the evolution of customer’s wants
When it comes to digital products, modern generally trumps traditional. When a company thinks about their product or service offering, it is important for them to consider where the audience might be headed. Having a team to watch out for and analyse trends is important to stay up to date and produce something worth a customer’s time and money.
- Integrate traditional into digital where possible
The shift from brick-and-mortar to integrate with click-and-mortar as well as full e-commerce is not a new one, but it still stands as a crucial one. Making sure customers can find a company online or be able to look up or purchase products or services is vital. This includes considering how to offer customers the chance for open feedback (such as online reviews) and harnessing the positive as a marketing method and leveraging any negative feedback and improving from it.
- Make things personal
One of the best customer service strategies to develop or maintain is personalisation. If a customer feels like a person to a company, rather than an order number, they will likely keep coming back. When setting up automatic systems, it’s important to remember the customer and develop processes which puts them at the centre. It can be as simple as automating messages with the customer’s name from the database.