What is a Digital Transformation Strategy?
Table of contents
- What is Digital Transformation?
- What are the Four Main Themes of a Digital Transformation Strategy?
- How Do You Create a Digital Transformation Strategy?
- Why Does Digital Transformation Strategy Matter?
- Examples of Digital Transformation Strategies
- What are the Key Trends in Digital Transformation Strategy?
- What is Digital Transformation Strategy?
- How to Initiate a Digital Transformation Strategy?
- Who Should be Involved in Creating Digital Transformation?
- What Happens When You Don’t Have a Digital Transformation Strategy?
- Advantages of Digital Transformation
- Disadvantages of Digital Transformation Strategy
- Successful Digital Transformation Examples
A plan of action outlining how a firm should reposition itself in the digital economy is known as a digital transformation strategy. Winning companies operate in ways that evolve with changing consumer habits. They use developing technologies, innovate, and alter business and operational methods.
From the viewpoint of the technology sector, a digital transformation strategy often entails using technology to carry out formerly manual processes. The problem with this idea is that from the beginning of trade, firms have improved how they offer their goods through digital transformation services.
A digital transformation strategy that can assist the organization in achieving its goals is necessary for digital transition. Businesses worldwide are initiating enterprise digital transformation strategies as they struggle to enhance corporate operations and create fresh business models and capabilities. A digital transformation roadmap and a robust digital transformation plan are the new currencies in an economic era when sectors constantly 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 look for, evaluate, and choose goods and services that satisfy their requirements. 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.
In the digital business transformation era, information and data have become the primary sources of income, corporate assets, and vital drivers. Companies must create a consistent digital transformation strategy that considers data, processes, information, digital transformation technologies, human factors, and many other factors if they profit from these new digital transformation technologies. Management consultants view digital transformation strategy as a chance to alter a firm from their point of view. A company’s goods and services may incorporate more digital transformation goals if approached correctly. As a result, profit is increased while operational costs are decreased.
Digitally Transform Your Business
Technology is required as the instruments utilized to develop a changed firm to create a digital transformation plan. It calls on the creative sector to articulate the newly created value in a way that appeals to consumers. To successfully execute a digital transformation framework that is more effective, management consulting is necessary.
Digital businesses are not different than anyone else in terms of creativity. But, they expended time to time to understand their customer’s needs by listening to their feedback and developing solutions that would address that feedback.
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 putting their advice into practice. 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 goal of the company is not to improve its digital operations.
A digital transformation strategy also considers the building blocks and the bridges that link them, as well as the barriers and new bridges that get around them, because digital transformation projects are, by definition, comprehensive and necessitate integration and cooperation.
What is Digital Transformation?
Digital transformation is changing a company’s operations to make it more effective or efficient by utilizing digital technology. The goal is to employ technology that shall refine existing services than recreate them entirely from scratch. You may ask why digital transformation is necessary. This question will be addressed in detail as we proceed, but the short answer is that it makes the companies future-proof and lends the adopters a chance to beat their competitors.
Although it seems straightforward, executing a digital transformation strategy may be expensive on time and resources as it is a complex process that doesn’t always go as planned. First, you should understand that digital transformation strategy varies from sector to sector and is unique to the projects you want to implement. The major components or building blocks of your digital transformation strategy should be reinventing the business models, modifying the technological stacks wherever required, and probably the most critical component is that you should improve the customer experience. All these components may require a significant company culture change.
Contrary to popular belief, digitalization involves more than just adding new technological systems and services. Instead of tweaking or improving existing practices, a digital transformation project reimagines the existing processes and models.
Business executives still find it challenging to meet this innovative need. According to a Cass Business School study, most organizations are at ease regarding new ideas. Still, many businesses struggle to implement innovative business models or realize their potential. This gap between creativity and execution has propelled digital transformation strategy to be associated with the agile process. However, there are various instances of digital transformation projects where this wasn’t always the case.
Useful link: 10 Factors That Can Drive Your ‘Digital Transformation’ Initiatives!
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 cut costs, boost quality, and shorten cycle times in their digital transformation strategy. Adopting cloud connection 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. Identifying and including data trends in your digital transformation strategy for insights is possible by bettering your logistical network and supply chain by digitizing these procedures and using machine learning and artificial intelligence.
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 wholly 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
Organizations may implement an agile digital transformation framework, foster a propensity for testing and learning, and encourage decentralized decision-making by adopting a digital-first culture. However, a successful shift to a digital-first culture necessitates the redefinition of mindsets and procedures and the incorporation of 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.
Useful link: Guide to Digital Transformation Technologies and Their Business Impact
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 that work together to accomplish a single corporate objective; here is where three elements are focussed 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
As the foundation of the digital transformation strategy, information and interconnected ecosystems bridge different sectors. 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. To sell applications more rapidly, changes are required.
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 other people; technology is only an additional facilitator and part of the equation of choice and fundamental needs.
Useful link: How Digital Transformation Impacts IT Business in Real-time?
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 as regularly as possible under the most challenging conditions. IT staff had to immediately offer technology solutions to the issues that businesses faced.
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 in the past.
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. According to the analyst, 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 take users into account 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 a problem because they have taken too long to succeed. Developing discrete digital transformation initiatives, such as initiating infrastructure migration to the cloud or creating new digital marketing channels, may be an area where incumbents flourish. However, 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 increased their digital technology during the pandemic by three to seven years over a short period. This accelerating pace has a strong effect. The expert claims that what was formerly seen as the industry norm for corporate digital transformation four to five years ago is now thought to be moving more slowly than typical.
Examples of Digital Transformation Strategies
One frequently mentioned instance of digital transformation strategy is migrating traditional systems to cloud platforms. It is simpler for organizations to update and modify apps in response to new user needs when older systems are moved to the cloud. In this instance, digital transformation solutions assist with agile and adaptable IT operations; in other words, it dramatically improves 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 as an example. By using technology to modernize 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 are 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 40% more firms referenced “metaverse” in their company registration paperwork during the first quarter of 2022.
There has already been some development. For instance, imagine a shop enabling clients to view furnishings via virtual reality apps while relaxing in their own homes. In this instance, digitization changes the conventional physical retail connection into a virtual relationship, allowing consumers to try and purchase things at a distance.
What are the Key Trends in Digital Transformation Strategy?
The goal today 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 analyst Gartner, CEOs are looking for more direct digital connections with their consumers since they know they must speed up the adoption of digital business. In addition, bosses want to be effective and safeguard profits and cash flow while keeping an eye on economic dangers. Current themes in digital transformation include:
Although IT has been at the center of efforts to change the business’ 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.
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 it is by eliminating the need for software coding or by introducing bots to handle service requests.
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.
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 makes it possible for standalone security solutions to collaborate and enhance an organization’s overall security posture.
Useful link: Data Strategy – A Key Checklist for Digital Transformation
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.
As per him, a sound strategy will first diagnose the existing infrastructure and then point out the areas which are ailing/need to be improved. The other element which is crucial for the strategy is that it brings out the critical points for improvement with which management can stitch together a policy that would guide the progress of the company objectives. Finally, a practical action plan must be created and implemented based on the policy.
On the flip side, there is always a bad strategy and let’s examine the elements. Jumping the gun by not taking cognizance of the excellent strategy components would create a counter-productive 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 that will be 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 wishlist 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. 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 is not something that would 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 is increasingly becoming 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 would contend that operational effectiveness is achieved by simply digitizing what already exists. He suggests, but it is not a plan. Rumelt would contend 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 offer understanding via the diagnosis, direction, 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. Both Rumelt and Porter disagree that they are strategic, despite their importance. A plan of action to reposition a firm in the digital economy is known as a digital transformation strategy. Data makes it much simpler for us to identify new possibilities. Building a company that can use new technologies and seizes changes quickly, skillfully, and resolutely frequently necessitates a transformed working method.
How to Initiate a Digital Transformation Strategy?
Sometimes, it is pertinent to double down on the efforts to achieve something which may seem minute. But, one should not skimp on the efforts just because an aspect is small, but 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, it would be best if you asked these questions before you decide which is minute.
This is one of the factors which you need to include in your digital transformation strategy. Considering the minutiae, your digital transformation strategy should address data analytics insights, improve the working culture, and foster 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, and always create a digital transformation solution that works best for these employees and customers. Lastly, make your office mentally ready to mold the digital transformation strategy.
Transforming an organization to be digital 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 plan of action 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 new digital transformation technologies compatible infrastructure.
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 and won’t 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.
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 also develops via 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 while this is a noble goal, it doesn’t produce a sustainable competitive advantage, it’s not strategic, and this sort of marginal benefit has been occurring 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 need, problem, or complaint from a client. The technique is centered on locating suffering or unfulfilled needs. The communications will concentrate on expressing that requirement. Through purposeful innovation processes, creativity will provide the finest solutions to address that need. Technology will meet this requirement, and data will be utilized to assess the outcome. A company with a culture of innovation may methodically do the tasks above.
It is rather unfortunate that among managers, decision-makers, and leaders, there is a poor level of 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.
Useful link: Drive Customer Experience With Digital Transformation
Who Should be Involved in Creating Digital Transformation?
The ability to alter a firm is a complex one. Creative, technical leadership, empathy, and many qualities are ingrained in the strategy. The stool’s three most crucial elements: Communications personnel, technology experts, and management.
1. Communications Personnel
There are often two main groups of stakeholders, internal and external when a firm is transformed. Employees make up the internal. 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 future condition of the firm.
2. Technology Experts
Nobody ever called the IT division to express gratitude for protecting the network. The mail server has had 100% uptime for the past year. Thus 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 a thankless profession where 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. Usually, the technicians’ attitude is one of resistance. 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.
Make a data-driven plan of action to make things clear to everyone. 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 knowing where new emergent business possibilities will come from in the short term and having the resources ready to take advantage of the opportunity 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 always discover that the present business silos are inadequate to satisfy consumer demands with new digital business models adequately. 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. The leader’s job is to create these coalitions and see that the most outstanding citizen experience is realized. But, unfortunately, politics are 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 do 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. But 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 in this blog mentioned, Blockbuster didn’t fail because of poor management. Protectionism by the shareholders caused it to collapse. A firm will not necessarily survive and prosper because it has a digital transformation plan. A firm won’t be disrupted if it doesn’t have a digital transformation strategy. But, weak digital transformation projects do ensure poor results.
Explore Digital Transformation Services
Advantages of Digital Transformation
Your business exists in the world and for the benefit of the world; thus, if you want to remain competitive and provide your customers with high-quality service, you must have cutting-edge technology. Here, we’ll go through the advantages and disadvantages of a 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 too is that of 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. The purpose of these accelerators is 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 every day online. They engage in various activities, including information mining, leisure pursuits, and financial transactions. The simple solution is to be present for your customers, easing their buying route 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. 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 shed more light on existing procedures, allowing you to spot trends and patterns you would not have otherwise noticed. A steadier pulse on all areas of the business that keep the wheels rolling is made possible by the capacity to delve deeper into daily data in real-time.
The openness of teams should also be taken into account. For instance, rather than waiting for Accounting to notify everyone, the Customer Success Team and the Accounting team would be able to identify which clients are delinquent on payments and resolve the issue more immediately.
Many business outlets are unwanted or are compelled to spend a lot of resources and effort to keep their outdated infrastructures running. However, through the integration of more effective procedures and speedier problem detection, executing a digital transformation strategy may not only result in financial savings upfront.
There are several chances for cost savings in general operations with the appropriate ERP software. 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 smart, data-driven way.
5. Revenue Booster
The growing income is made simpler by lowering expenses. Driving a firm ahead requires maximizing possibilities by identifying problems with existing business procedures. Employees and management may enhance best practices and increase income through pattern detection, trend appraisal, and capitalizing on the data-driven opportunity by increasing transparency in many business-related areas.
6. Fostering Employee Engagement
To find and keep talent, one might use human capital management software. Such a system may take care of 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. An employee’s employment will be less stressful if the processes in place make it easier, faster, and more intuitive for them to do their work. 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 able to keep organized and see trends in their work. As a result, they are increasing the value of their production.
You will be able to respond rapidly to changes in the market and customer needs if an IT transformation is completed effectively. As we can recall, 2020 has brought about the most significant disruption to conventional business procedures. Situations like this highlight how crucial flexibility and adaptation are 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
A more transparent supply chain, better vendor management, and a grasp of the microeconomics of your products, from raw materials to customer delivery, are all results of effective supply chain management. 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 is not having 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 an overhaul of aging structures.
Useful link: Importance and Benefits of Digital Transformation
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. But there are other drawbacks to digital technology. The list below includes seventeen of the drawbacks.
The equipment and devices we use daily 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 having your personal information stolen or sold. 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.
In public spaces, digital cameras track and capture our movements. Minor transgressions may potentially haunt a person for the rest of their life if they are put 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 get each week, all of which need to be read and some of which call for responses or other actions. In addition, people may never be able to escape work because of texts they get from coworkers on the nights or the weekends.
It can also be quite challenging to organize the enormous quantity of digital data acquired in various positions, such as meeting minutes, training videos, images, reports, and directions.
4. Data Breaches and Misuse of Infrastructure
The worldwide scope, enormous size, and relative anonymity that users may experience make the internet a favorable environment for evil forces to operate.
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.
Finding the correct technology is one of the most urgent problems facing businesses, according to The Telegraph. 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. A Digital Adoption Platform (DAP) is strongly advised in this case 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.
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.
Useful link: Digital Transformation: Avoid 8 Most Common Pitfalls
Successful Digital Transformation Examples
Let’s examine a few instances of how well-known brands could get through the major obstacles to digital transformation and revolutionizing their industries.
“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 in which we operate. Customers expect more from us as they instantly get accustomed to receiving and using products and services. But, unfortunately, this means that there will probably be a massive gap between what customers want and what you provide. This was something that McDonald’s immediately discovered.
By 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 make the procedure for ordering in-store better? 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 include ordering into the ecology of a smart car? McDonald’s has closed the customer experience gap thanks to digital transformation technologies, including interactive ordering kiosks, AI drive-thrus, and clever mobile app experiences.
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 pizza delivery service’s future didn’t seem so 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. Doyle highlighted the need for improved customer involvement and the delivery process after interacting with the focus group.
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, Dominos became the first delivery service to introduce its “Pizza Tracker” system, which allows consumers to stay informed about the status of their orders.
A standard error made by CEOs is to become so preoccupied with the product that they neglect the needs of their customers. Your product has to grow along with the user experience. If not, you run the danger of the gap in customer experience growing 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 a quickly shifting client demand. Viacom purchased blockbuster for USD8.4 billion at its 1994 peak. Everything appeared to be running smoothly.
In reality, in 2010, Blockbuster CEO John Antioco was approached by Netflix co-founders Marc Randolph and Reed Hastings with a merger proposal in which 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 swiftly Netflix has changed the global scenario on video consumption, and Blockbuster has faded into history.
Organizations occasionally need to be willing to adopt a sound digital transformation strategy to fulfil client requirements. Spotify is one of the best cases of this. There is no formal hierarchy in place in the music streaming business. Instead, they’ve 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 where they work together to produce a fantastic feature or product. People spend most of their time on the matrix’s vertical dimension. The knowledge, tools, and code-sharing aspects are horizontal. At first look, Spotify could appear to be a straightforward music streaming service. You log in, do a song, playlist, or genre search, then press play.
Of course, in practice, implementing these features necessitates a very intricate mix of behavioral prediction algorithms, creativity, and practical cross-departmental cooperation. Nevertheless, the “Spotify Model” is so effective at seeing possibilities and swiftly adapting them to the platform that they have been able to stave off the mighty Apple.
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 just a few instances of how companies have used digital transformation to enhance customer experience and boost sales and income.
The examples show businesses may benefit from the digital revolution by simply changing their innovation processes, plans, and tools. These businesses and business executives have experienced an increase in their stock values due to deliberately and purposefully investing in a workable digital transformation plan. We hope the information in this post will help you better comprehend the idea of digital transformation strategy and how to use it to your advantage 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 winner Veritis and walk away with a sound digital transformation strategy that suits your company.
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