Everything You Need to Know About Digital Transformation
What is Digital Transformation?
Digital transformation is the use of technology to create or improve business processes to better customer experience, maximise productivity and increase profit margins.
This transformation is imperative in large organisations that have been around since before the Internet of Things – in which computers and other electronic devices can communicate and transfer data without human interaction – as huge steps need to be taken in order to implement digital processes like online transactions and sharing documents.
But digital transformation should not happen for its own sake. What companies need to do is know how to leverage new technologies to improve their own processes, and tailor its use to target specific end goals.
Why do companies need to undergo Digital Transformation?
Most senior executives and those holding chief executive roles in the company know that digital transformation is important, but are unable to fully quantify exactly what makes it so necessary. Here are three main reasons why digital transformation is essential for any company:
Future-proofing and ensuring growth
A company with a digital strategy integrated into its overall strategy is more well-equipped to handle change and accommodate growth. Having a strong digital culture affects the productivity at the office, as well as the talent pool that the company attracts: this opens the doors to innovation, rapid experimentation, and collaboration. In fact, Deloitte Insights reports that 71% of digitally maturing companies can attract new talent based on their use of digital.
Adapt or die
About 27% of senior executives believe that using digital transformation is not a choice, but a matter of survival. With the fast-paced development of artificial intelligence and competitors jumping on the bandwagon most organisations cannot afford to stand still – consider what Grab and Uber did to the taxi industry.
Potentially huge financial returns
Done right, digital transformation can have a significant long-term impact on stock prices and revenue of a company. Forbes did an excellent case study of how digital transformation impacted business performance for seven major companies, summarised in this table:
Strategies ranged from Best Buy using data to create customised recommendations, to Microsoft transforming their Office suite into a cloud-based networking system for personal and enterprise use.
How to implement Digital Transformation in an organisation?
We can start off with an example: Under Armour’s data-driven strategy. In 2013, under pressure of competition from other sportswear giants like Nike and Adidas, the company began its acquisition of mobile applications – specifically, those to do with fitness. It started with Under Armour adding the app MapMyFitness to its portfolio, followed by MyFitnessPal and Endomondo. They also developed their own apps: in partnership with IBM Watson, they created UA Record, an app that utilises artificial intelligence to provide customised advice and coaching for an individual’s sleep, fitness, activity and diet. Using the data collected from their app, they also caught on to a walking trend that started in Australia, which allowed them to deploy localised and targeted marketing strategies to cater to that demand.
Obviously, acquiring mobile applications is not something every company can do, nor should it be. The main issue in companies right now is not convincing management that digital transformation needs to happen – they are already aware of it. The challenge is being proficient in doing it right. Some companies, taken with the idea of maximising profit, take to copying other successful strategies in the hopes that if slightly altered, will also bear fruit. When polled, an alarming 42% of strategists stated that they had not done a research on the customer journey before making investments in new digital methods.
As contradictory as it sounds, the main focus is not about the technology at all: digital transformation should be guided by the broader business strategy. The simple analogy that we can refer to is that the goal is a destination. How quickly and effectively one reaches that goal depends on all the steps taken along the way –it would be more worth the effort to top up the petrol of the car than, for example, polish it before the drive. Similarly, a company cannot blindly implement strategies that seem flashy and productive on the surface, if the action does not propel the company towards the end goal.
While there is no easy answer that applies to every company structure, here are four simple tips to help in implementing digital transformation:
Know your target audience
Understanding customers and what they need is essential in coming up with effective strategies. Before implementing a strategy, always consider how it will affect current and future users, and whether it will encourage customers to keep coming back.
Identify pain points in current processes
Often, digital transformation stems from an issue that requires a solution. Many will argue that something is not worth fixing, especially if it has been working for the last 10 years. An easy way of finding these pain points is simply going through the motions. Inevitably, some part of the process will elicit some frustration: that there must be a better, more effective way. Through some creative brainstorming, a digital solution can emerge that both eliminates the issue and paves the way for better processes across the company.
Look past competition
When setting up the digital transformation plan, keeping a close eye on competitors and their actions might draw attention away from the big picture. Remember the analogy of the goal and the false allure of polishing the car instead of driving it – getting locked in a digital transformation ‘arms race’ is a sure way to lose sight of the goal. Focus on ideas outside of the industry and on upcoming tech trends instead of trying to predict the next move of a close rival.
Follow through from the top down
Some companies are stuck in the digital transformation process because of the lack of commitment to these changes. Perhaps the company has developed a mobile app to replace the outdated, inaccessible intranet system. It would take the concerted effort of upper management to start using it, so that the rest of the company will also pick it up and continue using it – with the former also accepting feedback from the latter to optimise the new process and establish an improved workflow.
Suzerin offers a suite of services to assist companies looking to execute digital transformation strategies. As a digital agency, we are equipped to develop custom enterprise systems that automate workflow, optimise operations and even disrupt industries. Our systems are tailored to your context and unique business operations and situations to address real problems that your organisation may be facing.
Drop us a line at email@example.com to start a conversation.