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What is digital transformation?


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Put simply, digital transformation is the strategic integration of digital technologies across an organization. The principle idea is that these emerging technologies and digital innovations have the capacity to transform organizational culture and operations for the better. 

Though primarily used in digital business environments, digital transformation has also proven useful within governmental and public sector agencies. Leveraging technology has the power to create value, boost services, and increase innovation. 

The digital transformation process seeks all-around optimization across an entire organization. By tapping into big data and starting with a clear roadmap, digital transformation has the potential to heighten the way businesses deliver value to customers.

According to Adobe and Econsultancy, in 2019, digital-first companies were 64% more likely than their peers to exceed their top 2018 business goal. With stats like that, it’s worth thinking about starting a digital transformation of your own. 

The 4 main areas of digital transformation

Digital transformation is a multifaceted process. It doesn’t stop with the integration of digital technologies. Information technology is just one part of the digitalization process. By approaching digital transformation with a four-pronged business strategy, your chances of achieving a streamlined, successful transition are much, much higher. 

So, let’s dive in with some top digital transformation strategies for 2020 and beyond. 

Digital transformation strategies 

There are four main areas that make up a high-quality digital transformation process. Everything from operations to company culture must be incorporated into your digital strategy. Don’t be fooled into thinking your roadmap is all about tech. Digital infrastructure must be supported by a robust and secure company culture if you’re to become a digital leader.  

1. Business process 

Digital transformation is all about improving operational agility. That means existing or new business models need to be spot on. Business processes need to be streamlined. Business functions must be well-defined. 

Everything from your go-to-market approach to your revenue streams informs your core business. A digital transformation will impact business functions all-round. That means marketing, operations, administration, customer service, and human resources. 

The business process is key to the digital transformation process. Businesses need solid customer-facing and internal goals to get the most out of digitalization. Business leaders and CIOs must get across this at the outset of any transformation initiatives

2. Business models and culture

Technology is an enabler, but your business should remain people-centric. When embarking on a digital transformation, maintain a clear customer-oriented goal. Your company culture informs all business processes and activities, including IT.  

In fact, digital transformation should actually prioritize people and culture before technology. Your stakeholder behaviors and expectations are critical to a successful transformation. 

According to Accenture, 76% of executives agree that organizations need to reengineer technology and customer experiences to be more human-centric. 

Relying solely on digital technologies as the solution to every organizational pitfall is a recipe for disaster. Technology should support, not define, company culture. No matter how proficient, the tech should not completely replace human-to-human interactions. 

3. Workforce enablement

Enabling your workforce during a digital transformation is crucial. According to Gartner, digital transformations move twice as fast when company leaders have a shared understanding of the projected digitalization plan. 

A digital transformation is great for facilitating agile working, unified communications, and increased collaboration. But your \ needs to be well managed, fully trained, and ready to embrace these new ways of working. They’re the core components of digital change management

4. Integrated technologies and artificial intelligence

Last but not least, of course, technology is central to any digital transformation process. By mobilizing data, data analytics, and integrated technologies, businesses can expect to notice a profound and holistic transformation across their operations. 

A good digital transformation strategy will leverage technologies to improve business processes, communications, and outcomes. With so many technologies available, having a well-thought-out roadmap is integral to a successful integration. 

Popular options for businesses going through a digital transformation include:

Cloud computing

Cloud computing functions through three pillars (SaaS, PaaS, and IaaS). The cloud supports a vast range of IT services to support a fully fledged digital transformation

Big data

Using big data mobilizes a significantly larger volume of structured, semistructured, and unstructured business data. This can then be applied to machine learning projects, advanced analytics, and predictive modeling. 

Machine learning 

Machine learning provides computer systems with the functions to learn and improve from experience organically. In other words, computer systems do not have to be programmed specifically but access data and use it independently. 

Advanced analytics

Advanced analytics gets more out of your data by predicting and forecasting trends.

Artificial intelligence

AI allows businesses to drive their processes at a much larger scale. It is also an effective way to make precise and informed business decisions. Artificial intelligence is therefore an integral part of any digital transformation process. 

Mobile apps

Mobile apps can help advance the digital transformation process. They help to make informed decisions with real-time analytics. They are also an effective way to collect user data and deploy effective, personalized marketing communications accordingly. 

The Internet of Things (IoT)

Using an IoT platform helps companies of all sizes transform themselves into digital companies. These platforms facilitate the digitalization of physical products. Take the household name Michelin, for example. Michelin has used IoT to investigate its supply chain in real-time and improve customer satisfaction. 

Edge computing 

Edge computing technology makes business more efficient and therefore more profitable. As systems have started generating more data, decentralized decision making has become the norm. 

Robotic process automation (RPA)

Optimized robotic process automation can be super useful for transformation processes. RPA offers an efficient and simple way to streamline critical business processes and has the potential to extend the life of any existing legacy systems. 

Why is digital transformation needed?

Digital technologies are the new normal 

We live in a digital age. For any business to remain competitive today, digital transformation is not just useful. It’s essential. 

Businesses that do not keep up with other tech-savvy competitors are under threat from major disruption. Despite this, 7% of executives say they’re not concerned about the threat. Developing trends would suggest that this 7% is being a bit too optimistic.  

By failing to take digital transformation seriously, executives are putting their businesses at risk. Big companies like Amazon, Microsoft, and Facebook are massively mobilizing technology. As a result, all businesses today need to consider digital transformation efforts of their own. 

The strategic deployment of integrated technologies boasts impressive results. Integrated technologies can open up a lot of opportunities for growth. Some benefits include:

  • Operational flexibility
  • End-to-end customer experience and user experience optimization
  • Innovation 
  • New revenue sources 

We live and work in a tech-driven society. It’s important to stay up to date with technology trends. Especially if you’re running a business. These rapid innovations call for the fast deployment of digital transformations as a necessity, not a luxury. 

For customer experiences 

Customer expectations and behaviors are constantly changing alongside their adoption of new technologies. Digital transformation success is essential for any business that wants to remain relevant and competitive. 

In the past year, customer needs have changed dramatically. Take healthcare services as an example. According to McKinsey, during 2020, health service users increased their use of digital tools for health support by 15%

This just goes to show that, in today’s climate, digital infrastructure is integral to keeping customer services running smoothly. 

When did digital transformation start?

The number of companies opting for a digital transformation has been steadily increasing over the past few years. Businesses are realizing that they must evolve to match the rapidly changing digital world. To compete, they must boost efficiency with technology. 

As such, more and more companies have been adopting automated technologies to streamline their business processes across the board. This has proven to be an effective way to counter disruption from competitors and new startups.

The deployment of sophisticated technologies by retail giants like Amazon, to recommend new products and do plenty more besides, has also catalyzed more digital transformations. Legacy technologies are no longer cutting it. Instead, businesses are seeing legacy solutions as a liability. 

In recent months, digital transformation has become even more relevant. More and more, IT leaders and retailers are adopting cloud computing software and IT technologies to enable remote team collaboration and manage supply chains with greater accuracy.

Businesses must put in place tools to help them navigate a new normal. Workforces and workflows alike have recently been disrupted to a great degree. Digital strategies must now be adapted for a new era. And digitalization is set to be key to this transition. 

The 3 approaches of digital transformation

A digital transformation process can be approached in many different ways. The most important thing is to implement a cohesive business strategy and roadmap. If in doubt, these three tried and tested approaches to digital transformation will stand you in good stead. 

1. Hiring

Hiring IT talent is one way to fuel a digital transformation. Companies can use a talent management system to forecast their staffing requirements. Qualified IT professionals are brought in via outside hiring or internal cross-training. 

Some companies opt for a more collaborative approach by partnering with local colleges and universities. This is sometimes referred to as the “farm system” approach.

Companies serve on educational advisory boards and assist in designing the IT curriculum. In return, they can get senior staff to deliver lectures and intern promising students. 

Hiring is an effective way to staff a successful digital transformation. But it’s not always that easy. A 2016 survey by Harvey Nash and KPMG reported that 65% of IT leaders had difficulty hiring IT personnel. 

2. Contracting/renting

Contracting is a way to solve talent shortages. Businesses can either seek out IT contractors on designated websites or hire through word of mouth. A disadvantage of this method is that contractors will do things their way. In other words, no learning curve. 

If going down the contracting route, make sure you give yourself an easy out. It’s also possible to use contractors to fill empty positions with the intention of hiring them permanently in the future if they do a good job.

Renting is sometimes confused with contracting. But it is slightly different. Renting is a permanent outsourcing process. A company can rent an entire help desk, app development, or call center, for example.  

3. Sharing 

Finally, resource sharing is another way to acquire IT talent. Sharing talent is a great option for small businesses and NFPs. 

If you don’t have the funds available to hire your own designated IT department, consider buddying up with another small business to share the costs. Talent sharing can come to the rescue as an effective antidote to short-term skill gaps. 

Digital transformation in a nutshell

Digital transformation is the new normal. And it’s here to stay. More and more companies are embarking on digital transformation processes of their own to boost efficiency, streamline operations, and remain competitive in an oversaturated and competitive market. 

Remember that digital transformation is about more than just information technology. IT is just the building block. In reality, a successful digital transformation process encompasses everything from operations to company culture. 

Don’t succumb to digital disruption. To keep your business relevant, competitive, and efficient, consider embarking upon a digital transformation sooner rather than later. Don’t let tech giants and up-and-coming startups rob you of your well-deserved customers. 

Depending on the scale and financial standing of your business you can either hire, contract, rent, or share IT personnel for a business transformation from the bottom up. Whatever method suits your means, a digital transformation is the best way to prep your company for the future.  

Originally published Dec 08, 2020, updated Jun 24, 2024

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