Digital transformation is a continuous journey of challenging the status quo of existing business models to deliver a greater customer experience through the use of technological advancements. As such, it requires not only the commitment of leadership, change agents, and team members it also begs for a fundamental change in the organizational culture. From simply doing digital things to becoming digital, adopting a digital way of thinking when it comes to customers’ needs and experience. The benefits of reshaping businesses towards a digitally empowered organization are increased customer satisfaction, growth, efficiency, and prosperity.
What is Digital Transformation?
Digital transformation is a change in the way a business operates. It includes embracing new technologies and using them to create a more customer-centric environment.
Digital transformation is not just about technology. It also includes changes in organizational culture, leadership, and workforce development. Digital transformation is an ongoing process that requires constant work to stay on top of the latest trends and developments.
The smart utilization of digital technologies, processes, and skills across the organization allows businesses to create real customer value, adapt swiftly to changing market circumstances, and stay competitive through innovation. Nowadays, digital transformation revolves around artificial intelligence, Big Data, automation, personalized user experiences, which are used to complement and improve human work.
What is the Significance of Digital Transformation?
Digital transformation becomes significant for an organization when the goals of the transformation itself support other strategic objectives. As such, digital transformation should help business growth, empower innovation, and deliver a greater customer experience. Furthermore, digital transformation challenges the status quo of current operations and sets the stage for an agile operating model, and creates a collaborative workplace.
What is the Driving Force behind Digital Transformation?
The main instruments of today’s digital transformation are artificial intelligence, machine learning, Big Data, mobile development, robotics, and the Internet of Things.
Companies’ digital transformation is driven by the pursuit to service the evolving customer needs that require a simple and easy customer experience. These customers, for instance, would want to obtain their requirements via mobile, social media, or another medium of their choice. Hence the need to adapt to these demands through the adoption of digital technologies.
What are the Stages of Digital Transformation?
A digital transformation journey consists of six stages.
- Business as usual.
- Present and active.
Understanding the various stages of digital transformation can help businesses to better assess their present state and navigate their next moves. The first phase represents the current business operating model and the present state of an organization. The next phase is where changes are starting to emerge in the form of acquiring new digital skills, education, and encouraging ideas. The formalized stage of a digital transformation is when a few experiments have proven to bring positive results and further transformation efforts are backed up by the leadership. The journey continues with strategic management recognizing the power of digital capabilities and starting to push in that direction by investing in new technologies, trainings, processes, and people. A digital transformation journey’s goal is to replace the status quo with a drive for continuous improvement across the company. This is when an organization unlocks its true agility, innovation, and ability to adapt to changing factors.
What are the Technologies Used in Digital Transformation?
Digital transformation is related to the disruptive power of technologies such as artificial intelligence, machine learning, Big Data, robotics, the Internet of Things. Along with the goal to use those solutions to create more value for the customers, they help organizations to increase their efficiency, productivity, and profitability.
- Artificial Intelligence.
- Big Data.
- Cloud Technologies.
- Internet of Things.
- API Integration.
The biggest considerations in terms of adopting new digital technologies are related to data. What volumes of data would you need?, Where would you store your data?, How fast is data accessible?. You need to answer those questions before you start your transformation. In case you are planning to train an AI model, for instance, you would need sufficient computing power, private or on-premise cloud infrastructure, fast data transfer, etc.
What are the Digital Transformation Trends?
As dynamic as the nature of digital transformation is, there are several globally-observed tendencies.
1. Automation is intrinsic to digital transformation. For businesses to run smoothly in today’s widely remote working environment, automating processes through the use of machine learning, AI, Big Data, and other data analytics technologies is the new norm.
2. The power of Customer Data Software to collect and combine customer data from multiple sources allows companies to create more accurate customer profiles, improve their audience segmentation and enhance their predictive models.
3. The need for Security Resilience will increase exponentially as the maturity of the digital transformation process increases. The more digitalized an organization, the greater the potential cyberattacks.
4. Infrastructure Agility or the ability of organizations to adapt and effectively manage their increasingly complex infrastructure. Cloud architecture and automation software are two critical components of successful digital transformations.
What are the Roles and Skills to Enable Digital Transformation?
The key skills and roles that enable digital transformation include both advanced technological skills as well as strong leadership.
- Cloud computing skills. Cloud technologies allow companies to scale their digital transformation efforts but also to optimize their infrastructure cost. Hence, the need for cloud architects, cloud administrators, and cloud migration specialists.
- DevOps skills. Software engineers that connect development, quality assurance, and IT operations help to bridge any gap between those teams to accelerate the delivery speed and improve products’ quality. DevOps engineers are usually entitled to this role.
- Data-analytics and machine learning capabilities. The increasing amount of accumulated data that businesses must navigate today requires strong analytical capabilities and the ability to draw insights from it. These responsibilities are usually distributed among data scientists, data engineers, data architects, statisticians, etc.
- Deep market research skills. Understanding the market to identify new opportunities will always remain a key driver of digital transformation. It’s widely established in the role of digital product managers to strategize, coordinate and track the performance of digital projects.
- Ownership and accountability. It’s important that leadership owns the transformation project. Whether the role is dedicated to the CIO, Chief Digital Officer (CDO), or another digital transformation specialist, they need to analyze the potential cost and value of the implemented technology, design and oversee the implementation strategy.
How to Create a Digital Transformation Strategy?
To set up your digital transformation strategy, you should understand the needs of your organization, think of the data sources available, how flexible you can be regarding technology and the ownership requirement.
Answering these 3 cornerstone questions will guide you to set the foundation of your digital transformation journey:
- Why do you need the transformation?
- What needs to be transformed?
- How can you transform?
The steps to follow when creating a digital transformation strategy should support your vision. Below you can find 10 tactics to consider in the process.
1. Identify opportunities.
2. Assess your current position.
3. Analyze your readiness in terms of company culture.
4. Determine your strategy goals.
5. Create a roadmap plan.
6. Employ data and technologies.
7. Get leadership approval.
8. Set measurable goals.
9. Focus on long-term objectives.
10. Strive to continuously learn, measure your progress, and innovate.
What is the best Framework to Create a Digital Transformation?
A digital transformation framework is an elaborate roadmap to guide organizations towards cultural and operational transformation. Furthermore, this formalized strategic plan helps companies to move forward in their journey without experiencing any stalls caused by the fast digitization pace, changing customer needs, innovative technology solutions, etc.
The best digital transformation framework to employ is one that allows organizations to take control of their digitization without sacrificing their short- and long-term goals. A great strategic plan is a plan you can adjust to reflect and support your business needs. It also invokes a company-wide understanding of the chosen business approach and goals to pursue during the transformation initiative.
Do you need Digital Transformation Consulting to Create a Digital Transformation Strategy?
Digital transformation consulting services can help you develop a transformation strategy to tackle your specific goals, considering your business ambiance and industry factors.
Multiple companies develop their own digital transformation strategies and offer them to clients. Digital transformation consulting companies can help by tweaking the proposed frameworks around their clients’ pain points and goals such as digitization, creating new business models, inducing innovative culture, getting leadership to collaborate, creating customer-focused products and services, etc.
What are the Digital Transformation Challenges?
The most commonly experienced challenges threatening a digital transformation initiative are listed below.
- Missing leadership buy-in.
- Resistance to cultural change.
- Lack of cross-functional collaboration.
- Lack of technological skillset.
- Poor communication.
- Lack of success measurement.
What are the Sectors and Examples of Digital Transformation?
Digital transformation happens throughout industries, domains and applies equally to startups and global enterprises alike. Below, you can find a few examples of digital transformation in various industries.
- Digital transformation in the financial domain, for instance, may seek to merge artificial intelligence with technology to transform data into high-end financial solutions.
- Digitalization of the procurement sector through fetching, analyzing data, and automating processes, can boost visibility into stocks, losses, and overall operations in the supply-chain industry.
- In healthcare, digital transformation is used to create greater patient satisfaction and engagement, and to improve the care quality. On that mission, organizations are utilizing electronic health record systems, developing AI health applications, improving the patient’s user experience, receiving real-time feedback, etc.
What are the business and job opportunities for Digital Transformation?
The job opportunities in the digital transformation domain expand to multiple business areas: strategy consulting, software design and development, IT operations and architecture, business development. Digital transformation specialists, change agents, digital product managers, DevOps engineers, cloud architects, UX designers are among the most sought-after roles on the market.
Acquiring knowledge in real-time data analytics, machine learning, and artificial intelligence is critical for a successful carrier as a digital transformation engineer. A Digital Transformation Interaction Design specialist, for instance, will help deliver full and robust digital experiences across a variety of devices.
Digital transformation specialists need to hone their analytical skills to identify gaps between existing services and new opportunities, as well as be able to guide an organization to shape their digital experience based on the specific needs and challenges their customers have.
What are the Resources to Become Successful in Digital Transformation?
To be successful in the digital transformation field, professionals need data analytics skills, exposure to cloud technologies, as well as personalization, customer-centric user experience, strong motivation, passion for technology, and a genuine hunger for innovation.
There is a variety of resources on digital transformation, such as blogs, podcasts, videos, case studies, research papers, etc. Here is a list of the most prominent books on the topic.
- The Digital Transformation Playbook: Rethink Your Business for the Digital Age by David L. Rogers
- The Digital Matrix: New Rules for Business Transformation…by Venkat Venkatraman
- EDGE: Value-Driven Digital Transformation by David Robinson, Jim Highsmith, and Linda Luu
What is the Return on Investment for Digital Transformation?
Digital transformation requires a significant investment of money and time. Choosing the right technology to implement is important for the success of the transformation itself; however, establishing clear success metrics is far more critical when it comes to ROI. To measure the return on investment of a digitalization project, you need to set clear goals, establish measurement indicators (KPIs), and monitor the progress on a predetermined regular basis.
What are the Differences between Digitization, Digitalization, and Digital Transformation?
Digitization is the process of converting data from analog into digital form. The process is designed to help streamline information management and sharing between team members. Digitalization, on the other hand, refers to the process of using digital data to simplify work processes through the smart integration of innovative digital technologies, and scaling new processes and competencies across the organization. While thanks to digitization, data became much more powerful and efficient, it was the digitalization of work processes that made it possible to scale this efficiency to make work simpler and faster. Digitalization unlocked people’s creativity and ingenuity on how technologies can be used in different ways to their advantage, which was the spark of the digital transformation movement. Digital transformation represents continuous efforts of leadership, change agents, and team members to challenge the existing business models to deliver better, more personalized, and flexible customer value.