With the continuous emergence of new IT technologies, the world is changing quicker than ever before. Organizations experiment with groundbreaking digital innovations and try different approaches to progress in their business and offer opportunities for digital economy. In this article, we will consider the meaning of digital transformation (DX) for your business, and reveal tips on how to build an effective digital transformation strategy to support your workflows.
What Is Digital Transformation?
Digital transformation is the implementation of digital technologies used to remodel the company workflow for the sake of increased efficiency with the help of digital economy. Most often, this entails the introduction of IoT, AI, big data, and migration to the cloud. However, the shift in the corporate culture is as important as the tech revolution. Companies are more open to inviting changes into the way they conduct their business. Internal processes, business models and strategy, customer experience — all these spheres undergo adjustments as well. As a result, businesses increase their productivity and become more competitive.
The rapidly changing market caused by the pandemic has made it necessary for companies to quickly adapt to any interruption of the production process or alterations in client requirements. Under unpredictable conditions, the use of technologies has become a necessity. Top performers in different industries understand the true value of digital transformation and do not underestimate the importance of constant change. They became trendsetters in their sphere, and other companies try not to fall behind.
Why Does Digital Transformation Matter?
There are plenty of reasons why businesses may want to try digital transformation in order to remain competitive in their industry. Let’s consider the most significant reasons to try digital transformation.
- Better data aggregation. Chaotic data is useless, and it becomes valuable only when properly organized. In such form, it is prepared for analysis and processing, on the basis of which insights can be generated for better decision-making. In addition, digital transformation enhances the confidentiality of sensitive data and helps protect clients against cyberstalkers.
- Wiser resource allocation. DX helps consolidate all the assets you have at your disposal. When your resources are not scattered at random but are gathered in one place, it simplifies the management process significantly and increases the safety of personal data as well. The innovative approach integrates apps, programs and databases so that their operation can be aligned and they can be in sync with each other.
- Better understanding of clients. With comprehensive data analysis, you can get a better grasp of client needs and desires. Based on the dynamics of customer activity and their preferences, you can shape your future marketing tactic and adjust it according to any changes that may appear over the course of time. Personalization and agility are the keys to creating more client-oriented strategies and driving more profit.
- Customer-focused approach. Digital transformation assists companies with upgrading the customer experience (CX). CX is one of the focal points that companies devote attention to in order to outcompete their rivals. Thanks to cutting-edge digital services, improved communication tools and trouble-free website performance, it becomes easier to win over the hearts of clients.
- Cultural shift. Because it empowers teams with effective instruments for improved collaborative efforts, DX promotes innovations in the company’s culture. All staff are given reliable means of communication. With the popularization of constant training and education, companies invite technological change and innovation for increased productivity and revenue growth.
- More gains. When you introduce digital transformation into your organization, improved efficiency and increased sales will not be long in coming. This happens due to the optimization of workflows, better allocation of resources, and improved marketing strategy based on thorough data analytics.
- Flexibility. When companies are more agile and flexible, they release products more quickly and strive to always find new ways of enhancing their potential. Thanks to DX, more innovations appear in company workflows, which is reflected in productivity, customer satisfaction and revenue.
- Increased industrial capacities. With digital instruments working coherently together, it is possible to greatly rationalize and modernize workflows. Consequently, you will have more effective processes empowered with technical innovations that drive digital transformation.
How to Build a Digital Transformation Strategy?
DX is not just the adaptation of top-notch technologies and allocation of resources into expensive equipment. Most importantly, it is the extensive shift of consciousness towards innovation and new ways of conducting business. It involves several significant steps.
Let’s first take a look at the major areas in which you should develop profound expertise before you start building your digital strategy.
To ensure smooth transformation processes, you have to be aware of the potential benefits and risks of each innovation, make thought-out decisions and try to execute all needed changes fast. When organizations do not have a clear view of the processes that take place during transformation, they won’t be able to set priorities when needed and solve emerging problems.
Another critical factor is comprehensive data analysis that will provide you with valuable insights on important steps. Agile attitude is pre-eminent, while digital transformation is a continuous and lengthy process, which will affect your business tremendously and lead to great metamorphoses requiring quick adjustments.
Knowing all of the above, you can start creating your own strategy. The major steps are as follows:
- Ensure collaboration. Before you start creating a digital transformation strategy, it is important to make sure that all the stakeholders are on the same page and ready for the transition. You should not overlook this step, as the change will impact all parts of the business and all its areas of activity; therefore, ensuring all actors are aware of the processes and what they need to do is a necessity.
- Allocate resources. The next step is to decide how much money you can devote to the implementation of innovation. Remember that it is a long-lasting endeavor that will influence all your staff and clients similarly. So, budget formation is crucial in order to create a wise management policy that will ensure equal resource distribution to all the spheres of activity.
- Evaluate the present state. The foundation for your strategy is the correct estimation of how your business operates at the moment. You should take into account several indicators, such as cultural peculiarities, employees’ skills, the structure of the organization, existing possibilities for development, as well as limitations and disadvantages that can throw a spanner in the works.
- Provide clear goal-setting. The next stage is to define your objectives of digital transformations: what are you going to attain for your business, personnel, and clients in the long run. It is also useful to divide your goals into short-term and long-term goals and determine a period within which they should be achieved.
- Convey the needs assessment. It’s time to specify what has to be done in order to reach the transformation goals for the business. It may be acquiring new machinery, hiring new staff, providing training and instruction, establishing new processes, and trying new technologies.
- Set a detailed plan. Once all the above steps have been made, it becomes easier to outline the primary goals and create a plan to achieve these. Decide the areas of the main focus, the instruments and resources, the responsible parties, and the time constraints. Remember, the plan should be flexible and open to any changes.
- Beware the possible hurdles. Although you may have created an elaborate plan, not everything is going to happen accordingly. You may encounter the following obstacles:
- Unreadiness for transformation. Either staff or clients can be unwilling to take part.
- Insufficient skills. Profound experience is needed to carry out the smooth transition to new technologies.
- Lack of data-driven approach. A thorough analysis will help you save money and make effective decisions based on gathered information.
- Inattention to the current situation. To introduce relevant improvements, any changes should be a consequence of careful consideration of the present state of company processes.
What Does a Digital Transformation Framework Look Like?
As a plan of transition during the time of changes, the digital transformation framework is the basis of how the company strategy can evolve according to the changing business conditions. The processes of transformation can differ from company to company, varying according to business needs. Nonetheless, there are key pillars that all companies can use to build a strategy for a progressive makeover. Here are the most useful components of the transformation framework, used by most companies in some form:
- Agile working processes
- Enhanced management
- Organizational culture
- Flexible approach to change
- Executive education
- Well-trained human resources
- Software usability
- Improved client service
- Aligned digitization activities
What Drives Digital Transformation?
There are two aspects at the heart of digital transformation in any organization:technologies and educated staff. Effective transition to a more efficient business strategy is impossible when either of those is missing. That is why it is of utmost importance to pay close attention to both.
The technology is the pivotal instrument that helps create transparent and motivating digital culture in the workspace for your employees, nurturing effective communication strategy and cooperation at all levels. There are plenty of different IT technologies that are popular today that can benefit your business greatly. You can choose the right software based on your particular needs and desires. If implemented correctly, cutting-edge technologies will help reduce costs, optimize the allocation of resources, improve the quality of the product and drive more sales.
Educated people are an important factor on the way to digital transformation success as well. Highly qualified personnel is the prerequisite to successful strategy when it comes to the implementation of new technologies. When you don’t have enough tech-savvy experienced human resources, it will be difficult for you to establish reliable working processes that are based on the latest technology trends. Another option is to recruit new resources or hire qualified specialists on a temporary contract basis.
The essential component of any digital transformation strategy is the correct implementation of new technologies, alongside data-based resolutions and aligned workflows. At the end of the day, digitization should reflect the company’s progress and result in the emergence of digital culture that meets the needs of both clients and employees.
A great many organizations of good repute, unfortunately, still rely on old legacy software. They stick to the old ways and are reluctant to introduce changes into the usual routine. This encumbers progress in all spheres of business growth and causes hindrances in upscaling and finding new channels for effective marketing strategy. Nonetheless, change is inevitable. When you don’t invite progress in the way you conduct your business, you are very likely to fall behind your competitors within a year or so.
What Are the Key Trends in Digital Transformation in 2022?
Importance of Substantial Investment in Digital Transformation
The organizations that actively work on the digitization of their infrastructure have transformed their approach to business and received positive outcomes as a result. With innovations in management strategy, data processing, cybersecurity, etc., any company will undoubtedly have a competitive advantage over its rivals and is likely to outperform them. Managers lay particular emphasis on the optimization of recruitment processes to attract new highly educated personnel who can utilize these innovations effectively. The major areas of new technology implementation are:
- improving collaborative efforts;
- mitigating dangers;
- better allocation of resources;
- movement to enhanced architecture;
- improvement of processes;
- introduction of cloud solutions;
- more educated staff.
Benefits of Precisely Focused DX
When organizations make the final decision to invite changes into their digital environment and enhance their existing infrastructure, they can encounter difficulties at the very start. First and foremost, they have to efficiently deal with the question of where to start. Lots of industrial enterprises choose to make changes in several spheres at the same time.
When doing so, they will face such issues as the inability to scale their capacities, which undermines the potential for long project lifespan and stable financing. Most companies do it intuitively, without a proper strategic approach, which is counterproductive at the end of the day. To forestall such unwanted outcomes, it’s best to define the major areas of digital transformation strategy from the very start. When you have a sharp focus, you will concentrate only on the most noteworthy areas, and free your mind of the unnecessary hustle and disorientation.
Employee Digital Experiences
Over the last few years, employees have shown great interest in the possibility to combine two types of work: at the physical location of the office and remote mode, usually from home. The pandemic has forced companies to allow their staff to work in such flexible dual-mode. This has underlined the necessity of the acquisition of necessary hardware and software, better allocation of resources, and thoughtful management strategy. Recently emerged technologies such as AR, AI, ML, and cloud facilitate the smooth introduction of these changes tremendously.
Expansion of Generative Artificial Intelligence
According to Gartner’s forecasts for 2022, Generative Artificial Intelligence will be very popular. This is an ML approach that involves studying data about the target concept, and then, based on the received and analyzed information, bringing about an entirely new unique artifact. This option is already incorporated into the available program and is soon going to be better adapted to customers’ needs. According to the predictions by Gartner, in the upcoming few years, generative AI will produce 10 times more data than is currently produced.
ML is making good headway at the moment and the industries that use it are flourishing. With this technology, software developers are able to regularly reiterate the solutions at a quick pace. The computer “brain” helps to come up with innovative decisions in a wide number of areas varying from smart cities to space navigation. In the future, the influence of ML in both engineering and industrial manufacturing will grow exponentially.
Increasing Pace of Change and Customization in IT Infrastructure
Undoubtedly, Covid-19 has changed the way things work. Companies have been forced to implement new approaches and try new things in the areas of management, resource allocation, communication, and optimization of workflows under the conditions of the constantly changing epidemiological situation in the world. That is why today it is of utmost importance for IT services providers to ensure they are able to quickly adapt to changes on the go, in order to meet the challenges of today. In addition, the custom approach needs to be implemented so that the software infrastructure of the company is aligned with the particular needs of the business and its clients.
How Can I Measure ROI from Digital Transformation?
In order to ensure your digital transformation has paid off, you have to find relevant instruments that are able to show your exact results for the given time period. In addition, it will help you analyze your accomplishments and adjust your strategy if required, both in terms of client service and internal processes within the company.
It is important to quantify your achievements with the help of a specially set KPI, which is transparent and clear for all the interested parties. Foremost, you should take a comprehensive approach and make an overview of all your investments into digital transformation, and be ready to take risks that are necessary during the time of change. Then, refer to the most effective techniques to efficiently analyze your digital transformation strategy. Next, consider best practices regarding digital transformation metrics.
- Incorporate business outcomes: Look at strategic impact (e.g., revenue growth, lifetime customer value, time to market), operational impact (e.g., productivity improvements, scale, operational efficiencies), and cost impact.
- Set a standardized system of measurement beforehand.
- Create a hierarchy of metrics and more detailed sub-metrics to see the picture more clearly and make the changes if necessary.
- Introduce the results for your business: investigate the effect strategically, regarding such parameters as the increase in profits, how quickly the product is being released to consumers, how the operational efficiency of workflows was improved, and how cost-efficient the production is in the long run.
How Сan I Get Started with Digital Transformation?
Digital transformation is an unceasing process and not just a single event that happens instantly. For a seamless transition, companies should not rush the process, but rather focus on good strategy and a consistent approach to the gradual implementation of changes. Here are the essentials of success in DX:
- Experienced decisionmakers;
- Constant education of personnel;
- Laying the groundwork for change;
- Transparent communication;
- Streamlined administration processes;
- Improving the company culture;
- Flexible mindset.
For effective digital transformation, you should not leave any of these essentials unattended. As you have noticed, such psychological characteristics as readiness for transition are not less important than improvement of technical skills and establishing better cooperation between employees. All these factors facilitate the effective introduction of digital innovations in the enterprise.
Digital transformation is a multifarious process that can take different forms of expression. You may choose to upgrade the back end with cloud solutions and enhance the infrastructure of your company, or you can choose to work with the front end and improve, for example, the user interface and user experience on your website.
Other options may be changing the design so that it can embrace digital elements such as sensors and actuators of the Internet of Things network, adding an enhanced data ecosystem with Big Data, moving storage to the cloud, trying to include artificial intelligence, ML, additive manufacturing, and building a robust infrastructure with a powerful capacity. A huge step towards technical improvement is adding an interactive option for your clients as a chatbot or the possibility to book and pay for a service online.
A successful strategy is a mixture of changes that happen both inside the organization and in communication with clients. One way or another, it’s important not to forget that the ultimate objective is not just to enrich your working routine with complex equipment, but to optimize workflows, increase productivity and drive more value to your company.
A well-thought-out and well-executed strategy is the prerequisite for maximizing benefits from digital transformation. As this is a game changer for numerous enterprises, it’s crucial to properly think the strategy through and work out how best to benefit from it.
At SaM Solutions, we suggest that businesses turn to digital transformation services companies before they start their transformation initiative to make the most out of a challenging opportunity to revolutionize and improve their business.