As IDG noted in their 2018 State of Digital Tranformation Report
More than a third of organizations (44%) have already started implementing a digital-first approach to business processes, operations and customer engagement. Some 19% are in the integration process of making operational and technology changes throughout the enterprise, and 18% are executing their digital plans and making process, operational and technology changes on a department and business unit level. Just 7% of companies have already fully implemented their digital first approach and are in the maintenance phase.
A recent Progress report notes that 85% of enterprise decision makers believe that if they don’t make serious progress on digitally transforming their businesses in the next 24 months, they’ll fall behind the competition and take a hit on their bottom line.
Clearly, people believe that DT is a pretty big deal.
But despite the significant enthusiasm and high-hopes surrounding digital transformation, many people are still fuzzy on exactly what it means and how to implement it. The whole idea can feel somewhat like Michael Scott’s proposed slogan for Dunder Mifflin in the show The Office: “Limitless Paper In A Paperless World.”
On the surface, it sounds appealing, futuristic, and forward-thinking. But once people dive into the nitty-gritty of what’s actually involved, things start to get a little unclear. Phrases like, Internet of Things, asset digitization, and, cloud infrastructure, get thrown around without clarity on exactly how they relate to digital transformation.
The conversation can quickly devolve into a buzzword soup.
In this article, we’re going to break down the what, why, and how of digital transformation. We’re going to walk step-by-step through the exact nature of DT, why it matters to your business, and practical ways to actually implement it in your business.
Consider this a detailed primer on DT — a roadmap if you will.
What Is Digital Transformation?
Essentially, DT is the process of using digital tools and technology to improve or renovate existing processes. It’s the process of strengthening or even replacing archaic, slow, tedious, often manual processes, with easier, efficient, and often automated processes.
But there’s a broader, more fundamental way to understand digital transformation. It means integrating digital technology into all departments of a business, which then dramatically changes how each one operates.
It also typically means a change in the business culture that starts in the C-Suite and filters down through every level of the business. This change involves a commitment to using digital tools to increase the efficiency and, ultimately, the bottom line of the business.
A commitment to DT is required because it’s not typically a simple process and often requires significant changes to long-used legacy systems. This, in turn, requires time and resources, as well as buy-in from the employees who will have to learn new ways to do tasks.
David Terrar at Agile Elephant puts it this way
Digital transformation is the process of shifting your organisation from a legacy approach to new ways of working and thinking using digital, social, mobile and emerging technologies. It involves a change in leadership, different thinking, the encouragement of innovation and new business models, incorporating digitisation of assets and an increased use of technology to improve the experience of your organisation’s employees, customers, suppliers, partners and stakeholders.
And while all this may sound great, it does raise the question: why does digital transformation even matter?
Why Digital Transformation Matters For Your Business
Frankly, all the high-level talk about DT can fail to answer the fundamental question of why you should even care. After all, if it’s not broke, why bother fixing it? If long-standing processes and workflows seem to be getting the job done, why rock the boat?
These are certainly valid questions. There are a number of costs associated with DT and a significant commitment is required in order to make it all work. Is it really worth it for your company to invest time, money, and human capital in this process?
Short answer: yes.
At the risk of overstating things, it’s a matter of survival. Maybe not in the immediate future, but certainly a few years down the road.
Here are just some of the reasons DT is so critical. You can think of these as a series of falling dominoes, with each one leading to the next.
By its very nature, digital transformation involves making processes and workflows faster, easier, and more efficient. For example instead of spending hours processing paperwork, digital workflows can be created that will seamlessly and automatically move documents to their proper locations. This increased efficiency frees up employees to focus on other, more revenue-centered activities.
In a recent surveyof 100 IT leaders by Vanson Bourne, 44% of respondents indicated that legacy systems hold back or hamper nearly every project. Digital transformation enables you to create much more efficient systems and processes, which in turn allows key tasks and projects to move forward much faster.
Improved Customer Experience
Implementing digital transformation allows you to remove points of friction experienced by your customers. For example, if new clients or customers are required to fill out a series of onboarding documents, digitizing and automating that process can lift a significant burden from the them. This leads to higher customer loyalty and a greater Customer Lifetime Value.
The statistics are clear that implementing DT leads to improvements on the bottom line. In a recent Gartner survey, 56% of CEOs said that digital improvements have already led to increases in revenue. With this being the fundamental goal of all businesses, this in and of itself is reason to move toward DT.
Keeping Up With The Competition
It follows that if digital transformation leads to increased profits, it’s also necessary for keeping up with your competition, who are most certainly implementing a DT strategy. A recent Forrester survey shows that executives believe that within five years, as much as 50% of their revenue will be driven by digital changes to their businesses.
Bottom line: Your competition know that digital transformation is crucial for future business success, and if you want to keep up with them, you also need to consider a DT strategy.
Implementing Digital Transformation In Your Business
It’s one thing to recognize the importance of DT, but making it a reality in your business is a different animal altogether.
It’s the difference between talking about running a marathon and actually doing it. It’s easy to talk about the health benefits and the sense of pride that comes with completing a goal, but actually running the race requires an intense commitment to training, eating properly, and purchasing the appropriate running gear.
So how do you move from talking about digital transformation to the actual transformation?