In an increasingly connected world, it is vital that everything from information and data to the customer’s experience provides value and works faster. That’s what digital transformation is all about. As such, digital transformation should be a top priority for every company that strives to stay competitive and meet customers’ growing needs and expectations. This is no easy task. Identifying the right path to digital transformation can be daunting since digital transformation programs, processes and tools vary, and success runs the gamut.
Digital transformation is a multi-faceted journey, dependent on a company’s needs, industry, and level of digital maturity. The process affects different parts of an organization in varying ways. With the right strategy and blueprint, companies can begin their digital transformation journey in a way that minimizes or eliminates conflicting demands and doesn’t jeopardize business operations.
The benefits of digital transformation
Digital transformation improves many aspects of an organization, including customer service, business transparency, employee interactions, and product or service demand. In essence, change delivers value. This factor drives business executives to harness technology innovation and become tech-forward. With digital transformation, new software and processes are not enough. Successful companies will empower every level of their organizations, and not just IT, with information about the digital vision to gain higher transparency. For example, making real-time data on technology spending available to tech stakeholders leads to more accountability among divisions. Transparency also increases decision-making capabilities.
Digital transformation drives fundamental market shifts and creates opportunities to engage customers and maximize value for everyone. Customers are central to digital transformations, and analyzing customer feedback assists companies in evaluating how this type of initiative changes a customer’s behavior and improves customer service functions. This allows companies to deliver faster communication, decrease costs, and improve customer outcomes.
Digital operations: More than just a support function
Preparing for the future is critical for business executives. Digital transformation is a bridge to the future. There are several key drivers to digitally transform an organization. The most significant one is enhancing the customer experience and meeting customer expectations with a robust digital presence. Another key driver is to modernize the IT infrastructure to achieve greater operational efficiency and transparency. Still other drivers include upgrading employees’ skill sets, managing costs, attaining predictive analytics, and meeting the need for artificial intelligence (AI) and cloud computing. Digital processes improve organizational agility and encompass technologies for how an organization delivers value digitally and becomes more customer-centric.
Understanding digital transformation investments
Determining suitable investments for digital transformation projects depends on the organization’s needs, objectives, and goals. There are many factors to consider, including software, cloud, AI, websites, and digital vendors.
Digital transformation investments differ from traditional investments. These projects require orchestration across diverse employees, processes, and capabilities, making measuring the return on investment more difficult. The adoption of digital transformation raises costs for digital skills-building, organizational change, communication, and training. Companies will need to weigh the expenses of digital transformation with its short- and long-term advantages.
Challenges companies face with digital transformations
Digital transformation presents unique opportunities for companies to flourish and innovate. With any digital transformation program, however, challenges arise, including the following:
- Siloed decision-making – When all departments make their decisions independently, it limits team collaboration, innovation, and open communication. This disconnect can be detrimental to every aspect of a successful digital transformation, from strategy to implementation.
- Insufficient budget – Companies often prioritize technology expenses as operational expenses rather than as strategic investments. Funding digital transformation systems requires enterprise-wide financial resources and alignment.
- Digital skills and experience gap – If the employees tasked with implementing digital transformation lack the appropriate expertise, the program will not succeed. While it is important for businesses to conduct regular training workshops to keep current with the new technologies, this will require dedicated costs to bridge the digital skills gap.
- A risk-averse organizational culture – Digital transformation is a learning journey and resistance from all positions in the enterprise is common. Employees who are reluctant to accept or support digital transformation will hinder the program’s implementation, so it is important to address this upfront.
- Legacy systems and software – Older systems that lack agility and are not integrated with newer technologies like AI and cloud will impede digital transformation.
- Ignoring customer feedback – Not prioritizing customers and their needs or failing to implement a customer-centric mindset will affect the ongoing success of digital transformation.
- Increased security risks – Adapting to sudden changes in customer demands makes a company more vulnerable to more cybersecurity risks and data breaches.
To ensure success and organization-wide adoption of new tools and software, a company’s digital transformation strategy needs to be well-executed and effective. It’s crucial for employees to be aware of the change and the project timeline as this will help them to buy into the new initiatives more quickly. On average, it takes a minimum of five years to go through the digital transformation process. Astute change management leaders set realistic deadlines as digital transformation projects take time, planning, and resources.
How to develop and manage a digital transformation program
It’s critical to have the right resources to develop and manage a digital transformation program. Many departments are responsible for the success of a digital transformation project. The C-Suite shapes the program’s vision, and the chief information officer (CIO) takes the executive lead. The human resources department manages the change, while the IT department ensures the integration of systems and processes, security, and compliance. It’s vital to place an emphasis on a program management team to ensure the goals and objectives are met and that the business is meeting its timeline and within budget. Digital transformation managers and specialists handle the day-to-day activities and IT and employee interactions. Digital product managers share existing process insights and support cultural change.
IT operations and the digital transformation program
IT operations are significantly impacted during the digital transformation program as new technology is implemented across the enterprise. The technical infrastructure is also affected as upgrades are made to the server, hardware, and foundation to support the new technology. Implementing new technologies forces internal IT departments to develop new skills because the organization must now integrate with other systems.
For most companies, the digital transformation journey begins with uplifting the company’s IT infrastructure, mobile infrastructure, data lakes, and the cloud. An IT overhaul provides modernized tools that improve employee efficiency and satisfaction, decrease IT maintenance costs, and increase customer satisfaction.
Although the IT department is impacted before, during, and after a digital transformation program, it is crucial that an organization’s tech leaders communicate appropriately using a common language to ensure that the digital program is aligned with the enterprise strategy, so there is no risk of miscommunication and misalignment.
Best practices for implementing a digital transformation strategy
The following best practices will help execute a successful digital transformation strategy, so the company can adopt, scale, grow, and repeat this process as the organization and its technologies evolve.
- Show how the new technology will support and improve business goals by articulating the business case. Understand the business problem and build a thoughtful vision and business technology capability roadmap to make sure the digital transformation meets organizational goals and achieves the company’s vision and key performance indicators.
- Assess customer feedback and put the customers’ needs first. These are important tools to better understand customers’ behaviors, which can result in more tailored offerings and organizational improvements.
- Select the right technology and partners that are ideal for the company. Ensure third-party vendors are aligned with the company’s strategy and business goals, so that switching to a modern technology fits the company’s technology platform and vision. Additionally, it’s essential that vendor technologies seamlessly integrate with the existing internal technology stack.
- Create a collaborative and agile community. Employee education and involvement are critical to increase employees’ knowledge and skills and build a collaborative, engaged, and agile community.
- Develop and upskill employee talent. Digital transformations require the right talent as the power lies within people. Employees need to be empowered with skills to adapt to the change. Creating effective teams to drive change, adoption, and transformation is also a useful best practice.
There are many benefits of a well-planned and implemented digital transformation program, including improved data-driven customer insights and productivity, increased agility, upgraded security and privacy, and most importantly, a better customer experience and digital culture.
The future of digital transformations
The digital transformation market size is expected to grow from $521.5 billion in 2021 to $1,247.5 billion by 2026, at a compound annual growth rate (CAGR) of 19.1 percent during the forecast period. More than 50 percent of CEOs say digital improvements have already boosted profits and 70 percent of organizations have a digital transformation strategy or at least have one in the works.
Domino’s Pizza successfully implemented a digital transformation strategy that uses a next-gen delivery technology, enabling customers to order pizza online and track their orders, creating multi-experience customer service. The company also leverages AI and machine learning to enhance product quality and boost store and online operations.
Digital transformation projects are huge undertakings, involving implementing digital technologies like mobile, AI, cloud, advanced robotics, and biometrics, among others. The future of digital transformation depends on the success of implementing and igniting organizational change in culture and mindset and strong executive support.
The fundamental requirements for digital transformation accomplishments involve both people and technology. When building a game plan for digital transformation, incorporate a strong workforce to execute the appropriate digital transformation strategy for the company. Most digital transformation initiatives require specific skills, culture, and change management.
Additionally, without the correct technology and solutions, digital transformation never becomes a vital part of the business strategy. The best plan allows the business and digital strategies to complement each other, so any company can fully capitalize on the benefits of digital.
About the Author: Samar Satpalkar embodies a unique talent for applying an engineering mindset to build valuable relationships with a global perspective shaped by career experiences in the United States, Europe, and India. He is an experienced program manager and chief architect for crucial enterprise software. He also has deep expertise in utilities, energy, oil and gas, pharma, and media and entertainment industries. For more information, contact him at [email protected] or on LinkedIn.
Edited by Erik Linask