The vigorous digital evolution and modernization of aging systems have never been more relevant. Digital transformation initiatives expand to virtually every industry and parts of the globe, with growing investments expected to reach 3.4 trillion dollars. At the same time, digital transformation remains one of the top priorities for 62% of executives in the aftermath of the pandemic. Why is that? What are the most sought advantages of digital transformation?
Cost reduction, growth, faster delivery, sustainability, and organizational resilience summarize some of the top reasons businesses initiate digital modernizations. Let’s dive deeper.
1. Enhanced Customer Experience.
Digital transformation enables businesses to connect with customers in new and innovative ways. By leveraging digital technologies, businesses can create personalized customer experiences, improve engagement and satisfaction, and increase customer loyalty.
Indeed, digital-first experiences are becoming the new normal. Enhanced customer experience was the most impactful factor for customers in 2022. 88% of people leverage their interactions as a ruling factor to bond with a brand. Furthermore, the expectations of personalized experiences are continuously growing. (SalesForce)
Investing in technological advancements to improve customers’ journeys has been the focus of digital transformation efforts at Domino’s. Creating a digital platform for its clients, driverless pizza delivery, implementing a pizza tracker, etc. As a result, the restaurant leader is now at the front of the innovators in the industry.
2. Higher Operational Efficiency.
New work operations that stem from digital transformations can help businesses automate processes, streamline workflows, and reduce manual errors. This can improve efficiency and productivity, allowing organizations to accomplish more in less time.
An example comes from the financial industry. One way digital transformation benefits the financial sector is by helping organizations streamline their compliance processes. With fintech-related and data privacy regulations on the rise, financial firms are heavily investing in automated workflows. Research on the global wealth industry shows that process automation is wealth firms' second priority in their digital development journeys, preceded only by interactive customer experience. (ThoughtLab)
A similar trend can be seen in the public sector too. According to research from Deloitte, the need for digital access for all, a data-fueled government, and re-imagined social care are the most prominent trends in the sector. Data-sharing, breaking down silos, and facilitating the connection between different agencies are key techniques leading to higher operational efficiency. (Deloitte)
3. Improved Data Analysis.
Digital transformation allows businesses to collect and analyze data in real-time, providing valuable insights into customer behavior, market trends, and operational performance. By leveraging these insights, businesses can make more informed decisions and optimize their operations.
About 34% of organizations say they are investing in data and analytics technologies to become digital businesses. The healthcare industry investments are focused on artificial intelligence and machine learning (51%), while the financial companies spend most on public (46%) and private cloud solutions (44%). (IDG)
Furthermore, The growing number of online interactions made enterprises especially focused on improving cybersecurity. Handling large amounts of sensitive customer data brings forth the need to scale cybersecurity (46%), making it one of the top three areas of investment in digital transformation. In addition to securing data, cloud computing (44%) and AI (40%) are key major pillars of digital transformation strategies in healthcare, financе, energy, manufacturing, retail, and IT domains in 2021/2022. (BakerMcKenzie)
4. Greater Operational Agility.
Digital transformation offers a way for businesses to become more agile and responsive to dynamic market changes. By embracing digital technologies, businesses can quickly adapt to new trends, launch new products or services, and respond to customer needs on time.
Legacy and cumbersome work systems are often why companies struggle with efficiency problems. Lack of operational agility is what led to misunderstandings about the company priorities and poor communication at the aerospace engineering company Aerosud. To improve their work flow, the company implemented full visualization of all three organizational levels (Flight-Levels concept) to support their digital transformation efforts. This enabled Aerosud to understand their demand, better manage capacity and accelerate decision-making processes to meet customer expectations. (Aerosud Project & Portfolio Case Study)
5. Improved Workforce Performance.
While technologies are the backbone of digital development, a winning transformation strategy seeks to boost workforce performance significantly. Ensuring connectivity and access to real-time data through digital advancements empowers people to make strategic and timely decisions aligned with business goals.
Furthermore, empowered employees show higher engagement and signal strong organizational culture, which can lead to improved talent retention and lower turnover rates. Unsurprisingly, one of the main drivers of digital transformation strategies is improving employee performance and productivity (44%). (IDG)
6. Increased Revenue.
Digital transformation can help businesses expand their customer base, increase sales, and improve their bottom line. By using digital technologies, you can reach new markets, offer new products or services, and optimize sales and marketing efforts.
AI technologies, for instance, are the second technological advancement expected to significantly impact business agility and new revenue streams (42%). A key area of future digital transformation investments focuses on improving the customer experience through investments in 5G, customer online platforms, and technologies supporting remote work. By developing new and improving existing products and services, organizations manage to align with evolving customer expectations and future-proof their growth. (BakerMcKenzie)
7. Driving Innovation in Undisruptive Ways (Bonus).
“Innovation is not a disruptor in and by itself”
Nigel Thurlow, co-creator of The Flow System™, and internationally recognized expert in the Toyota Production System and The Toyota Way
With the rising need to catch up with the digital transformation pace of competitors, disrupted innovators started to emerge. A wide variety of products and services started to appear as a result of “demand creation” rather than the birth of new ideas. Gradually, the term “digital-first” becomes synonymous with a transformative organization. While that may be true for some, it’s an opportunity many cease to exploit.
It’s important to understand that digital transformation is a strategic imperative not only because it’s inevitable or because everybody else is doing it. Digital enhancements and an Agile organizational culture can help businesses evolve, contributing to a better society. With a mindset ready to improve continuously, digital transformations can yield great results.
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In Summary
While digital initiatives can seek results and employ different techniques, every transformative process always changes. Some of the most common advantages a digital transformation aims to achieve are:
- Enhanced customer experience
- Accelerated innovation
- Greater efficiency
- Improved data insights
- Organizational flexibility
- Better workforce performance
- Increased revenue growth
