The path to digital transformation: a five-point guide

Not all organisations know what to do on the path to Digital Transformation. Many digital projects have not delivered the desired results. Business organizations are unsure of what it means and why it is needed. Here's what to do and avoid for a digital transformation journey to truly bring value to business outcomes.


What is Digital Transformation about?

Many companies are aware of its importance. Yet, it is difficult to understand what it exactly means and how it can be applied fruitfully.


Digital transformation is

"The integration of digital technology and a redesign of work processes into all business areas to increase productivity and meet customer expectations."

This process of using technology to create new or improved business processes, products, or services, includes:

  • redesigning business processes.

  • introducing automation and cloud computing.

  • developing new digital products and services, including subscription services.

When done correctly, it can help organizations become more innovative.


Digital transformation strategy: what to avoid.

According to a LinkedIn study, "nearly 70% of Digital Transformation initiatives fail". This means only 30% of the global organisations that undergo a transformation and implement new business models succeed.


Technology can help businesses to grow, but it also:

  • increases the complexity of IT solutions.

  • making it harder to implement efficient strategies without losing focus.

  • few employees are prepared to handle the latest changes to improve their performance.

Furthermore, often transformation is done without a clear digital transformation business strategy. It often lacks:

  • a clear definition of the business objectives.

  • insight into how competitors are innovating.

  • an assessment of the IT initiatives to be adopted.

  • a calculation of the business impact.

  • digital skills for management and employee.

  • a clear integration into the entire business organisation.

Consequently, failures can be costly.


Consequences of digital transformation failure

When a digital transformation project fails, it can lead to several unwilled consequences:

  1. Increased costs: caused by the cost of hiring new employees, staff or consultants and the cost of implementing new software technology.

  2. Lost revenue: caused by a loss of customers or a decline in sales.

  3. Decreased productivity levels: can negatively affect other business areas, such as sales and customer service.

  4. Legal implications: caused by breaches of data protection or privacy laws or contractual issues.

  5. Reputation damage: caused by negative publicity about the digital transformation and a decrease in customer satisfaction.


Digital transformation strategy: what to do.

How can digital transformation be done correctly?

Digital transformation starts with creating a clear digital transformation strategy:

  • Defining business objectives to make sure the business goals are clear and can be measured.

What business goals your organization wants to achieve? And What does success look like for your company?

  • Engaging with all stakeholders to make sure everyone is on board.

This includes the staff, employees, customers, and suppliers.

  • Plan and test the digital transformation strategy.

This will show any potential issues and make necessary changes before launch. Focus on one area at a time. Transform everything at once is a recipe for disaster. And make sure to have a solid plan before moving on to the next phase.

  • Monitor the progress on an ongoing basis.

This will help to identify any areas of improvement and necessary changes needed. Adapt as the project progresses. Make changes along the way. Communicate any changes and decisions to all stakeholders.


The three Ps of Digital Transformation:

Having a clear digital transformation strategy is a great start, but there is far more to consider to make it successful. This is where the three Ps of Digital Transformation come in:


People:

Before an organisation can transform, its employees must transform. To overcome people's resistance to change, a digital transformation strategy must be accompanied by change management. The Chief Information Officer (CIO) leads this by:

  • Create clear new roles within the company.

  • Provide digital training to upskill managers and employees.

  • Communicate transparently across all departments to share and support the new digital transformation strategy.

Products:

Digital transformation impacts the product creation process and the final customer experience. A distinctive feature of all successful digital transformation projects is the use of hi-tech solutions:

  • cloud-based services

  • mobile internet technologies

  • traditional web technologies

  • Big data

  • Internet of Things (IoT)

  • Design thinking

  • artificial intelligence (AI)

  • Robotics Process Automation (RPA)

  • Deep learning and other neural machine learning techniques

  • Augmented Reality technologies (AR)

  • Additive manufacturing (3D printing).

  • Data security

Processes:

Digital transformation does not happen all at once. Consider the following seven key aspects for IT process optimization:

  • Adaptable: modernised cloud technology helps businesses quickly change and innovate.

  • Speed: help businesses improve with digital skills, modern technology platforms and automation tools.

  • Data analytics: data helps businesses to create more efficient business processes.

  • In-depth analysis: helps businesses seize new opportunities, reduce costs, innovate, and offer new products and services.

  • Scalable: Developers need a platform to rapidly integrate and scale business services to create significant business value from information.

  • Secure: Data needs to be always protected. All data need to be encrypted for security and privacy

  • Economic: Businesses need a quick and clear Return on Investment (ROI) and continuous profit improvement.

Cloud computing has become one of the foundations of digital transformation. Yet, each business needs to consider its own mix of cloud and on-premises data centres.


The path to digital transformation: a five-point guide

The path to a successful digital transformation process consists of five points:

  • 1: Value chain:

Understand how the value chain for businesses in your industry is changing. Investigate who a business's target audience and customers are and what they need. and what a specific business is offering them in products and services.

  • 2: Business goals:

Define specific business goals (KPIs) that need to be achieved in the digital transformation process. In this way, a business will not get lost in digital transformation initiatives.

  • 3: Data:

Analyse all business data. Identify each customer and customise the business products and services for each customer.

  • 4: Impact:

Study and manage the 3Ps of Digital transformation. What is the impact of digital transformation on people, products, and processes?

  • 5: Small steps:

Digital transformation does not happen at once. Focus on small steps in line with business objectives in areas where you can achieve rapid success. Once done, extend your transformation project to the rest of the organisation.


Four tips to succeed in digital transformation

A few tips to guarantee success for digital transformation projects:


#Tip1: Focus on people before technology.

Understand how technology can provide new tools to improve people's work, productivity, and creativity. In this way, technology can help improve the customer experience.


#Tip2: Set clear business objectives.

Focus on creating clear business objectives instead of the specific functionality of technology.


#Tip3: Identify one change at a time.

Start with one minor change at a time. and gradually involve the entire business organisation. More complex projects can be triggered with a total vision that is limited to specific business areas and objectives.


#Tip4: Constant change is the new culture

Digital Transformation is never finished. Digital Transformation requires a new business culture, including flexibility, dynamism, and adaptation. There is only constant change.

Xplore Digital helps companies with their digital transformation strategy.

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