Digital transformation is a common buzzword these days, but what does it really mean? When technology has had an impact on every area of a business, that business has experienced a digital transformation. This process includes all of the following:
- Leadership and employees
- Business processes and operations
- Customers and their experience
- How effectively and efficiently the business runs
- Interactions with partners and vendors
At its essence, digital transformation occurs when a company is willing to review itself (or work with an outside partner to perform a review) and determine where it can most effectively use technology to improve the way it functions. When the business deploys that technology in a way that has a positive effect, it experiences a digital transformation.
Digital transformation involves four primary areas: people, processes, customers, and offerings.
First, a company’s people are at the heart of the business and also at the heart of that business’s digital transformation. Getting buy-in from all stakeholders is vital, from company leadership to front-line employees, so that everyone feels invested in the plan and its success. Technology should be thought about in a way that empowers all a company’s employees to have the information and tools they need to serve customers most effectively.
Second, optimizing processes is a huge part of digital transformation because optimization supports a business’s people, allowing them to work smarter and focus their time and talents on high-value tasks. Technology that can automate and alleviate repetitive tasks reduces the chance of error and allows employees to shine.
Third, engaging, delighting, and surprising customers should be a business’s primary focus, and a successful digital transformation will allow that to happen more easily. With the right technology in place, a company can deploy targeted campaigns, test personalized messaging and offers, track results, and optimize future campaigns, constantly improving the customer experience.
Fourth, a business should continually look at its product or service offerings through the lens of digital transformation. Technology improves rapidly, and innovation happens quickly. So what improvements can a company make to its offerings? To determine this, businesses can be proactive in assessing their offerings, anticipating their customers’ needs and wants, and harnessing the available technology to improve their products or services
In many situations, artificial intelligence (AI) should be a part of digital transformation. Why? Two words: big data.
Every day, businesses collect a staggering amount of data—personal data, transaction data, demographic data, behavioral data, and so on. Multiply those bits of data for each person who browses and each person who buys, 24 hours a day, seven days a week, and one can easily see how the amount of data produced can quickly become overwhelming. Looking at this customer data as a whole and discerning any kind of meaningful pattern or trend is nearly impossible.
This is where AI comes in. AI is perfectly suited for analyzing massive amounts of data and identifying patterns and trends within it. Although it might not be able to reveal the why behind a specific pattern—for that, the trusty human brain is needed to draw conclusions—it can pinpoint, for example, the segment of a business’s customer base that is most opportune for growth
Numerous trends have emerged in the realm of digital transformation, from AI and machine learning to multi-cloud architecture. However, we see the following as three of the top trends for the year ahead:
- The continued democratization of technology: The more people within an organization who can use technology to accomplish their goals—without IT intervention—the more effective and efficient that organization can be. As vendors continue to focus on delivering innovative solutions that enable non-technical users to take advantage of highly complex technology through intuitive, user-friendly, self-service interfaces, employees will be empowered to autonomously make smarter decisions.
- An upswing in customer data platforms (CDPs): Businesses today collect an incredible amount of data about their customers at a variety of touchpoints—in stores, via call centers, through email, online, and so on—but aggregating all this data into a 360-degree view of the customer has been difficult. This is where CDPs can help. CDPs provide a single source of customer information, allowing business units across an enterprise—from customer service to marketing and sales—to have a holistic, comprehensive view of a specific customer’s every interaction with the company at their fingertips. We expect investments in these platforms to continue to grow.
- Automation: Savvy businesses are always looking for opportunities to use technology to optimize processes—not only can it help streamline operations, but after the initial investment, it can also reduce costs and enhance productivity. We anticipate that companies will continue implementing technology to automate parts of their operations that will allow employees to focus on higher-value, more important tasks.
Digital transformation benefits project management in two primary ways. First, the tools being used on a project are continuously updated to be their most efficient and effective. Cloud Computing and online communication mean that location and distance are no longer obstacles for effective remote collaboration, and Big Data allows companies to adjust to their projected needs. Additionally, the application of digital tools and products provides wide-ranging flexibility for dealing with any unexpected roadblocks encountered in development.
Second, digital transformation reduces, and in some cases, can completely eliminates the risk of project outcomes becoming obsolete in the future. Because the framework is continuously updating, the project can remain consistently at the cutting edge of technology long after it has been launched.
What digital transformation contributes to business models is the capacity for continuous change. Many executives know that they must adapt to new business environments, and adaptation is a core feature of digital transformation. Because a business model that incorporates digital transformation will subsequently be digital “down to the bone,” the company will be able to function much more quickly and efficiently, and improve continuously over time.
Prior digital changes to a business could involve, for example, updating the company’s software, purchasing new design tools, and improving logistics strategies. Once digital transformation has been implemented, such tasks are performed continuously and automated where possible. The concept is similar to the difference between an encyclopedia and Wikipedia. With an encyclopedia, you have to buy a new edition whenever the previous one becomes outdated, whereas the pages of Wikipedia are continuously, and often instantly, updated as new information becomes available.
A business’s digital transformation often involves every level of management and requires the commitment of those in leadership positions from the top down. Typically, a head technology officer such as a CTO or similar will oversee the project and integrate the efforts of all departments as the new way of doing things is implemented. This oversight is necessary because when digital transformation fails, the primary reason is most often uneven implementation or an unwillingness on the part of certain departments to participate.
Digital transformation is often achieved through the creation of a long-term, multistage plan, with each stage involving tracked goals and benchmarks. Changes to such elements as digital tools, payroll and invoicing systems, network structures, and the like are implemented and tested, and all the departments involved are kept in continuous contact with the internal and/or external people who are enacting the changes. That way, any factor that slows progress can be quickly addressed and problems solved immediately.
Like the internet was before it, digital transformation is the future. Many businesses, especially those in the technology sector, either have already adopted this business model or were created with it from day one. As a result, companies that ignore or fail to implement digital transformations are putting themselves at risk.
For the business industry as a whole, digital transformation presents an incredible opportunity to improve efficiency, automate tedious and wasteful processes, and be stronger competitors in their sector. Additionally, digital transformation allows companies to be more agile, capable of adapting to changing business conditions with relative ease.
Digital transformation can greatly improve a business’s efficiency, from its hiring practices to logistics and customer service. Integrating Artificial Intelligence and Big Data provides businesses with insights into their customers’ needs and interests. Most importantly, the flexibility that comes with being “digital first” allows any company to quickly and skillfully transition into new functions that cater to what their customers want. This in turn creates spectacular growth opportunities for agile companies.
Additionally, a digitally transformed business can integrate automation into such departments as billing, payroll, and customer service, meaning that employees can be reassigned to more useful, complex duties that make better use of their talents. Employee satisfaction and productivity rise, while the tedium of certain repetitive tasks is eliminated.
A business can develop a digital transformation strategy in-house or using outside expertise. Doing so in-house can give a company greater control over the process. After all, the business knows best what it wants. But recruiting the necessary expertise and training current employees in the digital transformation process can be difficult, which tends to slow down the transformation process.
For most businesses, hiring an outside consultant is often the best choice and offers the greatest value. An outside consultant is able to more objectively analyze a company’s digital transformation needs, develop an overall strategy for the transformation, and implement the necessary changes, step by step. Additionally, a consultancy that specializes in digital transformation will have the deep expertise needed to ensure that the process is executed correctly the first time.