What is digital transformation?
Not just another buzzword, digital transformation is a key tool for ensuring business longevity.
Like so many of the terms in today’s techno franca, ‘digital transformation’ has been rendered virtually meaningless due to overuse. From being employed to describe the upgrading of technological infrastructure to serving as a tool for punting tech-driven products, the flogging of the phrase has created uncertainty around both what it implies and how it applies.
While its application to a broad range of disparate matters has diluted its meaning, this lack of understanding has not dulled organisations’ enthusiasm for throwing their money at the matter. According to the International Data Corporation (IDC), worldwide spending is projected to account for 53% of total worldwide technology investment by 2023. A date that has without doubt moved forward due to the global pandemic.
What is digital transformation?
Back in 2012, research consultancy Capgemini published a report that studied various companies that were pursuing digital transformation. It found that those companies that were highly vested in both digital and transformation management intensity derived more revenue from their physical assets, were more profitable and had higher market values.
This, according to the French consultancy, was all down to one thing: digital transformation. These companies succeeded by observing the ongoing changes in the world and the market, adopting technologies that helped to adapt their internal approaches and systems, and staying ahead of their competitors. Tactics that remain relevant today.
Simply put, digital transformation revolves around the effort to understand how technological changes are affecting human – customer and employee – behaviour to improve operations and future proof business models. Rather than being a single product or solution, it encompasses a multitude of tools, solutions and processes that are used to fundamentally change how an organisation operates.
In a broad sense, digital transformation is the adoption of digital technologies to change the way an organisation does business. As such, it’s not specifically about technology, but is empowered by technology.
Why is digital transformation important?
Whether developing products whose manufacturing processes are less taxing on the environment or setting up mobile-friendly online shops, every organisation must evolve to respond to the constantly changing business landscape. Digital transformation, with its focus on the interconnectedness and interdependence of business activities, customer and employee experience, and operational optimisation, plays a key role in ensuring that organisations remain relevant.
Effectively implementing this intelligent system has the ability to increase customer engagement, transform products, empower employees and lead to operational optimisation.
With the possibility of instant feedback from customers, digital technologies can lead to incremental changes of products or services, enhancing the customer experience almost instantaneously. These technologies also enable the tracking and analysis of data, which improve an organisation’s understanding of customers’ needs and wants, assisting with better decision-making around business activities and strategies.
This improved understanding in relation to business drivers can help to fuel innovation while aligning all departments and employees with a common goal. The advantage here being that increased agility and collaboration have the potential to streamline workflows and introduce automations that improve efficiencies.
How can an organisation successfully incorporate digital transformation into its business plan?
The multifaceted nature of digital transformation means that there is no simple, single solution to incorporating this strategy into an organisation’s business plan.
What rings true for all organisations is that those spearheading the transformative agenda – usually the C-suite executives – must first assess where the company sits in terms of its digital capabilities. Sweeping organisational changes that require reskilling employees and introducing entirely new technologies are unlikely to be successful unless they are built on a solid technological foundation.
One of the first questions companies should ask themselves in this respect is: “What business outcomes do we want to achieve for customers?” Knowing the desired end result will guide the transformation of products, adaptation of processes and evolution of business processes.
According to a survey by McKinsey, organisations that implement successful digital transformation strategies have three things in common: reimagining the workplace, upgrading the organisation’s hard wiring and changing the ways they communicate.
In reimagining their workplace, these businesses think critically about the ways in which digitisation could affect their operations in the short and long term. Developing a clear workforce strategy helps these organisations to invest in and hire for the skills that will be needed to reach their goals.
Tied in with this is the upgrade of the organisation’s hard wiring. Digital transformation will likely change both the culture and pace of work, which requires employees to be empowered to work differently. Implementing digital tools, refining processes and streamlining the operational model will all support these changes and bolster employee autonomy, which must be supported by a shift towards an innovative leadership approach within the organisation.
As with traditional change efforts, good communication is a key factor that drives success in digital transformation. Adopting new methods of correspondence that enable speedier, more efficient communication will encourage and enhance collaboration, increasing the chances of innovation.
Digital transformation is a long-term strategy, not a short-term tactic. Ensuring success requires an organisation to adapt to the demands of this dynamic model using targeted cultural and technological approaches. While revolutionary or ‘disruptive’ change might sound appealing in this space, neither of these are necessary. What organisations should aim for is anticipating what the market will demand and pivoting to match this before it becomes an imperative.
