Everyone is talking about digital transformation, but there’s a lot of confusion and misinformation about what that term means. Much more than just a buzzword or doing things “digitally,” digital transformation means reimagining your business and driving it forward in a better way.
When done correctly, digital transformation can fundamentally change how you deliver value to your customers. That’s what you need to focus on if you want to thrive in this market. Customers today have high expectations and a lot of options, so carefully considering your customer journey is critical to success.
Before you get started, here’s an overview of what you need to know about digital transformation and how to continue to drive it forward:
- What exactly is digital transformation?
- The evolution of digital transformation
- Cloud computing fuels digital transformation
- More than just technology
- Keys to successful digital transformation
- The challenges of digital transformation
- Where are you in your journey?
What exactly is digital transformation?
Digital transformation is the integration of technology into all areas of a business, fundamentally changing how you operate and deliver value to customers.
It can often be confused with digitization or digitalization, but they are all different things altogether.
Digitization is the process of taking information and converting it from a physical format to a digital one, like typing up paper notes and putting them into Microsoft Word or scanning into a PDF.
Digitalization, on the other hand, uses these digital files to take the processes already in place and make them more efficient using the new digital format. Digitalization allows you to make your processes faster but doesn’t evolve the process itself.
Digital transformation does more by enabling you to interact with your customers in a new way that is constantly evolving to meet both their needs and your business needs. By ideating and implementing better business processes and technologies, you’ll not only create an elevated customer experience that will result in increased profitability, but you’ll also save significant time and money in operating costs.
The evolution of digital transformation
Digital transformation might be a popular term today, but this was also true in the late 1990s through the mid-2000s.
It started with companies computerizing processes 30 years ago, and as the internet was established, websites started to connect companies with their customers. That’s when Fusion Alliance got started, and we’ve been focused on the end goal of developing solutions for clients ever since.
Digital processes emerged to support customer interactions, from sending emails to managing online ordering. As digital ambitions grew, companies realized a need for dedicated digital teams to manage social and mobile channels. Connected to customers, suppliers, and other stakeholders, companies realized the need to connect all of these data silos.
Seeing the potential in connectivity, organizations focused on digital platforms connecting all systems. Then they started to experiment with new digital ways of doing business, leveraging data more effectively, and creating greater agility.
Today, we live in a world where customer expectations have never been greater. They demand personalized experiences in every interaction with a company’s products and services. Because of this, companies must innovate quickly and deliver.
In addition, the pandemic has forced IT leaders to adapt yet again, with many adopting cloud software for video collaboration and building apps that enable workers to enter offices governed by social distance practices and contact tracing.
Technologies such as cloud computing, the Internet of Things, and Artificial Intelligence all power the innovation that is able to deliver value. An important element of digital transformation is technology. But often, it’s more about doing away with outdated processes and legacy technology than it is about adopting new tech. It should also about enabling innovation.
Cloud computing fuels digital transformation
Companies are increasingly moving toward a hybrid cloud infrastructure. From SaaS applications and on-premise solutions to a mix of public and private clouds, hybrid cloud strategies help companies find the right balance for their unique infrastructure needs. Over the past year, cloud providers like AWS, Azure, Google, IBM, and Oracle have made investments to support hybrid strategies. OEMs like HPE, Dell (VMware), and Cisco have also increased investments in tools that enable simpler connectivity between on-premises data centers and the cloud. These investments are all centered on meeting the customer where they are in the moment.
Hybrid cloud adoption was already underway before 2020’s pandemic, but the sudden disruption sped things up. Being agile and nimble was, and still is, a significant business advantage.
More than just technology
Although the focus of digital transformation is often on emerging technologies moving the business forward, true transformation has to encompass much more. Business leaders at the top level must be involved in this change and must be willing to invest in and empower your employees, as well as focus on building your culture.
As employees begin to see changes occurring around them, they might begin to wonder how it will affect them and their coworkers. They may question their own position within the organization and try to figure out their own best next steps. During any transition, leadership must communicate with employees to help them feel secure in their own positions as well as the direction of the organization.
Head off potential issues by making sure your employees understand what digital transformation is, what it’s not, and how they can be a part of it. Additionally, it may be best to communicate how rapidly things can change throughout this process.
Being as transparent as possible and preparing your employees for future changes can make all the difference in ensuring your digital transformation is successful.
Keys to successful digital transformation
Data from McKinsey shows that when companies achieve transformation success, they are more likely to have digital-savvy leaders in place. Less than one-third of all respondents say their organizations have engaged a chief digital officer (CDO) to support their transformations. Those that do are 1.6 times more likely than others to report a successful digital transformation. Companies that have already invested in data and infrastructure to support technology efforts are more adept at again succeeding.
The keys to finding success with digital transformation projects vary because no two companies are the same. However, we do have a few recommendations:
Define what digital transformation means to your business
Create a map of where your business is now, including people, process, data, and technology. Then define where your business needs to be. The gap identified becomes a roadmap. Defining the gaps are in the business is the first key step in your digital transformation process.
Identify and involve the right internal stakeholders
Leaders and decision-makers might not have the insider knowledge to execute technical challenges. Your stakeholders should be throughout the organization, across departments, and exist at different leadership levels.
Align with a partner to shepherd the process
You might find your business well-suited to tackle projects outside your normal scope of work, but many companies lack the internal resources to be able to undertake larger projects. Finding an outside partner might be helpful to keep things moving and provide direction with next steps.
The challenges of digital transformation
While digital transformation is worth it and necessary to the survival of your organization, there are challenges that come along with reimagining any new business process.
To make your transformation truly successful, ensure that you have a good understanding of your brand and your customers. Without that, the entire digital transformation strategy you build will be misguided, and you’ll end up back on square one.
Budget can also be a big hindrance for a lot of companies looking to begin their digital transformation. Often, there are additional resources and training needed upfront. Although the cost savings and increased profitability are worth it in the end, the initial expense can be intimidating.
Additionally, poor data quality can become a huge challenge for organizations as they go down the digital transformation road. Poor data analytics often leads companies to make important decisions based on misguided data. Poor data also prevents companies from being able to use emerging technologies like artificial intelligence and machine learning, since they prove useless when fed with bad data.
Sound strategy and good data will ensure you start your digital transformation journey on the right foot.
Where are you in your journey?
Whether you’re an established business or a startup, the perfect time for digital transformation is now.
No matter how old your business is, your digital transformation will be unique to your organization. It is helpful to think ahead to the future — where do you see your company in the next 5 years? Create a roadmap of where you want to be in terms of customer experience, technology, and data insights, and involve those team members in your planning discussions.
By involving decision makers across the organization, you can ensure that you are aligning all parts of your business with the end goal. And, if you can, bring in an experienced third-party to help streamline planning, bring in additional insights, and ensure that your projects run smoothly.
Digital transformation allows your organization to deliver the right customer experience to the right people and not only remain relevant in your market, but actually build your brand.
One thing is consistent: customers today expect a flawless and customized customer experience, and you’ll need digital transformation to deliver it.
Your digital transformation partner
Customers today expect a customized customer experience, and you’ll need digital transformation to deliver. When you’re ready, we’re here to help you execute.
Need help addressing or assessing where are on your organization’s digital transformation journey? Let us know.