Like it or not, every company is now a digital company. Technology is so ingrained in society that employees, clients and customers have become accustomed to its presence and the advantages it brings. At the same time, businesses of every size and industry are harnessing new technologies to drive competitiveness and growth, while those reluctant to change are getting left behind.
As business leaders wake up to this reality, the concept of “digital transformation” is becoming central to their strategy. This article will explore why this process is important and how business owners can take advantage of it. Let’s start with a digital transformation definition.
What is digital transformation?
Digital transformation (also known as DX or DT) is the integration of digital technology into all aspects of an organization — including its people, processes, and tools — resulting in fundamental improvements to the way it operates. This includes adopting digital tools and processes to replace non-digital ones, as well as updating existing technology with new advancements.
The broad goals of digital transformation are to improve efficiency, enhance operations, and drive innovation. In practice, a digital transformation strategy must be built around an organization’s specific goals, challenges, opportunities, and culture. It should produce sustainable improvements, such as higher ROI, greater productivity, automated processes, or better customer experiences.
Some examples of digital transformation include increasing the efficiency or effectiveness of operating systems and applications by moving to cloud servers and Software as a Service (SaaS); increasing logistical efficiency by adopting an internet-of-things (IoT) inventory system; using big data analytics to identify opportunities and inefficiencies; and decreasing training costs by educating employees using digital tools.
Why digital transformation is important
Digital transformation requires a documented and consistent framework to improve an organization’s performance through selection and implementation technologies. When properly executed, digital transformation can help businesses achieve their goals, sustain improvements, and remain competitive. Here’s how.
Digital transformation identifies and prioritizes areas for improvement
Digital transformation is not about investing in every new technology; rather, it’s about strategically identifying and prioritizing areas for improvement based on the needs and goals of the organization, then leveraging the most appropriate technology to meet those goals.
This enables business owners to make smarter decisions with their resources. For example, instead of investing in software that won’t be used or wasting time and money maintaining outdated legacy systems, digital transformation encourages businesses to identify the investments that will produce the most meaningful results.
A business might focus on employing technologies to automate repetitive tasks or online collaboration tools to facilitate productive remote work. For those in ecommerce, tools that enhance payment security and customer experience are likely to take precedence. And for industries dealing with highly sensitive data, security and data backup will be a priority.
Digital transformation provides consistency
Digital transformation provides a consistent methodology for assessing and maintaining the efficacy of processes, people, and tools. It involves constant iteration and improvement to ensure all elements continue to operate effectively and in harmony over time. This process of continual assessment and improvement helps businesses track their successes and failures, adapt quickly, and cut their losses.
For example, this process will highlight if a new software program is not being utilized. The cause can then be investigated, be it a lack of training in how to use the program, an absence of oversight, or simply that the program is not fit for purpose. The business can then adapt accordingly by providing user training, assigning someone to manage the program and its adoption, or replacing it with a more appropriate tool.
Digital transformation provides a holistic view
Digital transformation gives a high-level overview of business needs. Rather than looking at costs and benefits in isolation, it considers them in relations to past, present, and future outcomes. Here we are talking about things like the compatibility of different technologies and processes; cross-functionality between different departments; and security benefits, including risk management, business continuity, and data protection.
For example, the cost of migrating data to the cloud and maintaining backups is high compared to leaving data on a physical server. However, the benefits of moving to the cloud far outweigh the upfront costs. These include the security of offsite storage, improved operational agility, productivity, and remote collaboration thanks to cloud-based systems; scalability; and the elimination of hardware maintenance and obsolescence overheads.
Optimizing your business technology also requires new mindsets and behaviors. As we have already touched on, digital transformation takes this into account by establishing IT processes, identifying people to manage these processes, and ensuring adequate training is provided to facilitate adoption of new technologies across all departments. This ensures that technology investments are implemented and utilized to their full potential. A comprehensive digital transformation strategy also sets organization-wide hiring goals based on the need for specific skill sets to implement and manage new technologies.
In addition, digital transformation encourages cultural and behavioral changes, such as increased collaboration and calculated risk taking. These can be reinforced through formal mechanisms or by adopting new ways of working, such as an open office environment.
How to get started
Most business leaders want to know which technologies will increase their revenue and lower their expenses. To begin forming an effective digital transformation strategy at your business:
- Identify your business goals so that technology investments can be appropriately aligned.
- Assess your digital maturity to develop an understanding of where you are in the transformation process and to uncover gaps in your current strategy.
- Schedule a business improvement working session. Skilled as they may be, in-house IT teams usually lack perspective on business operations as a whole. You should therefore consider enlisting a digital transformation specialist to help bridge any gaps in your digital strategy.