What is digital transformation?


The term ‘Digital Transformation’ has become a buzzword in recent years. It is a term that is being used in most enterprises across the world. However, what exactly is digital transformation?


Digital Transformation can mean different things to different organizations. It can range from getting on social media to implementing advanced tools and technologies-such as cloud technology, mobile, and Internet of Things (IoT). In general terms, we can define Digital Transformation as the following:


Digital Transformation is the “Integration of digital technology into all areas and aspects of a business that results in fundamental changes to how enterprises operate and how they deliver value to their customers”. Besides the said definition, it also involves cultural changes that requires enterprises to experiment often, continually challenge the status quo, and stay comfortable with failure. This can also mean sometimes walking away from long-standing business processes that businesses were built upon in favor of newer practices that are still being defined.


Why does digital transformation matter?


There may be different reasons why organizations undergo digital transformation. However, looking at the manner in which digital transformation has changed the way enterprises do business, there is little doubt about its impending large-scale impact in the days to come.


Most organizations today have realized that their business's success is linked to the adoption of new technology and platform-based business models that helps them cater to their customer needs in a better manner. And, increasing digitalization in all aspects of business has made it imperative for organizations to constantly innovate and hence renovate the way they provide products and services to their customers. Moreover, the question of survival in a competitive world is a key driver for the digital transformation of several businesses.


As per a report by IDC “FutureScape: Worldwide CIO Agenda 2016 Predictions”, 

One-third of the top 20 firms in industry segments will be disrupted by new competitors within five years," and that it's a matter of transform or perish.


While the chief drivers of digital transformation are changing customer demand, changing competition and technology, there are also a few other reasons and benefits why organizations should consider digitally transforming their business. Here are a few of them:

 

Improved Efficiency: Digitalization makes organizations more efficient. Research has shown that nine out of IT ten decision makers claim that legacy systems have been preventing them from harnessing the digital technologies they require to grow and become more efficient. With the right tools and technologies at the organization’s disposal, their teams can collaborate between the various departments and locations thus making business decisions and operations more streamlined. It also enables organizations to quickly solve problems, meet deadlines, increase productivity, and improve customer care.

Better Profitability: It goes without saying that improved efficiency leads to improved profitability. Companies that embrace digitalization within their business models and systems lead to significant increase in revenues and company valuation. Projects that drive digital initiatives with commitment change management can witness even greater improvements in profitability. As per MIT Center for Digital Business, “Companies that have embraced digital transformation are 26% more profitable than their average industry competitors and enjoy a 12% higher market valuation.”

Enhanced Customer Value: It helps improve customer lifecycle management starting from acquisition, to maturation, retention, and to advocacy. It also provides superior customer insights such as shifting customer demands to organizations through more detailed and diverse customer engagement data that can lead to prediction of product and operational impacts, optimization of planning, thereby creating more effective and relevant products or services that will help you win new customers and retain your current ones.

Extended Organizational Reach: Part of digital transformation is to utilize the tools and technologies that enhance the organization’s reach to the target customers. When the business applications and website are adopt to different digital platforms and utilize appropriate technologies, the organization becomes visible to the prospects and customers and has the potential to gain more sales.

Empowered Employees: Empowering an organization’s employees will enable them to be more proficient at their jobs, resulting in greater productivity. For example, an organization’s staff will not only be able to instantaneously collaborate with colleagues and management, but will also be able to consult with experts and get questions answered in real time. Additionally, employees can now work from virtually anywhere, anytime, allowing the team to fully optimize their time.



Digital Transformation Framework


Digital transformation varies based on an enterprise’s specific challenges and demands. There are however, a few common themes that all businesses should consider as they embark on the journey to digital transformation. Enterprises that are leading the way in digital transformation have the following chief elements in their reinvention framework:


Customer Decision Journey Study Understanding the customer’s requirement and the stage of the buyer’s journey – whether they are becoming aware of the brand or they are considering to make a purchase –  is becoming the cornerstone of successful businesses. A recent research by McKinsey shows that enterprises that are able to understand and act upon their customer's’ journey are able to cut down the costs by 15-20 percent. In addition, these organizations are able to improve customer satisfaction by up to 20 percent, and revenues by about 15-20 percent.

Strategy and Innovation A digital strategy is an inseparable part of a business strategy for most organizations today. However, the best strategies don’t come from past analysis and execution, but are in fact based on where the firm believes the value is likely to shift in the next few years. Digital leaders identify where they are, the changing trends and a few possible disruptions in their industry and market, prioritize them and then craft a digitized business model to exploit opportunities.

Technology Adoption Today’s changing business environment requires that organizations deploy technology and tools like cloud technology and data analytics tools that support high-performance. Legacy systems alone do not work anymore if the company has to become agile and flexible. Hence, digital leaders are taking a two-tiered approach to implement technology and drive personalization for the customers while focusing on robust performance. While on the one hand, they focus on designing and developing customer-facing software which is fast and responsive, on the other, they design core systems for greater stability and high-quality data management.

Data Analytics High-speed data analytics form one of the core elements of a strong digital transformation framework. Companies that lead in digital transformation know what data to use, draw critical insights from the data, and focus on delivering on their goals based on this data. According to a recent research by McKinsey, organizations that made extensive use of data analytics saw approximately 126 percent improvement in profits over their competitors.

Process Automation Process automation forms an important part of the digitization framework. A well-automated process helps in reducing redundant processes and inefficiencies while enabling rapid scaling of business at no substantial additional costs. Over time, a significant cost performance can be achieved while helping the firm to become agile and responsive to changing demands, thus gaining a competitive edge.

Organization Culture While technology and tools are an important part of digital transformation, it seldom drives transformation alone. In reality, it is the people, both employees and customers that help drive the digital transformation. Everything about the organization, from structures and business processes to the mindsets and behaviors play an important role in implementing digital initiatives for transforming their businesses digitally.


While different experts give their own recommendations, varying steps or considerations, CIOs should look for those important shared themes when they embark on a journey of developing their own digital transformation strategy.


Digital Transformation Strategy and Consulting


What is a digital transformation strategy?

A common mistake most organizations make is to believe that digital transformation is all about technology. However, The 2015 Digital Business Global Executive Study and Research Project by MIT Sloan Management Review and Deloitte states that it is strategy and not technology that drives digital transformation. Digital transformation consultants help understand the change in customer behaviours and embraces digital strategies that make it simpler for customers to interact with the organization, irrespective of the time and place.

Why do enterprises need it?

In a world of growing digitalization, having a strategic consultant is no more an option, but a necessity for businesses. Most start-ups and businesses have digitalization ingrained in their DNA as they identify the customers’ increasing shift towards the digital. However, the process can be difficult and painful for large enterprises. Hence, with the help of a consultant, developing an effective digital strategy that identifies this shift becomes absolutely necessary.


Steps to build a successful digital transformation strategy


So, what is needed to develop a digital strategy that transforms? Here are five steps that are necessary to create a successful strategy:


Change the Point of View The first step necessary for creating a successful digital transformation strategy is to change the enterprise’s point of view. Successful digital transformation should be able to get the right people on board which includes all stakeholders.

The organization must be able to map out every area of business which it wants to improve and plan how the management intends to take these steps. It should then make it clear what the outcomes will be for everyone involved. A digital transformation strategy does not work if all the stakeholders are not on board. So it is necessary to ensure that the organization is letting them know why it’s so critical to digitalize and the benefits that will be achieved.

Translate Business Goals into Digital Processes Every business has goals. However, figuring out how those goals will be translated to digital and identifying the digital processes that'll get the organization there is important. For example, one of the key goals for an organization is to increase its sales. By using the appropriate user personas and digital tools, they will be able to make sure that only the relevant products or services that will resonate with the potential customers will be showcased. Personalized content not only helps improving user experience but also leads to improved conversions.

Conduct Research In order to achieve business goals, knowing their customers becomes extremely important for enterprises. This goes beyond knowing what they do or like to purchase. It is also about understanding their purchasing patterns such as what time of the day do they usually like to purchase, what platforms do they utilize, how many times do they browse before making a purchase decision and what drives them to make a purchase.

Customer data and analytics help organizations understand their customers’ behavioral patterns. A deep understanding of how their customers utilize digital to make purchase decisions helps organizations target their customers better and drive more conversions as well as sales.

Adopt a Collaborative Approach A successful digital transformation strategy ensures that all the technology being utilized allows collaboration within the organization, lead to lower costs and saves time. Another important requirement for digital transformation is connected data. Big brands actively use customer data to offer better user experience and utilize tools and technologies that provide a unified platform that provide customer data across devices and channels. Ultimately, the more connected the people, digital technologies and processes are, the more effective they will become.

Evolve Digital transformation is all about evolution. Organizations that are being digitalized must be willing to change and evolve. As times and people’s demands and digital behavior change, organizations must be willing to change in order to cater to their customers or cease to exist. The best way to evolve is to continually track changes using analytics and evolve the business goals. It is also a good idea to keep experimenting with patterns, so that when a new pattern emerges, it will be easier to adapt to the changes.

Digital Transformation - Key Areas to Focus


Technology implementation and transformed customer experience are probably the most visible and exciting aspects of digital transformation. However, to obtain a completely transformed business, various other elements of the organization too must succeed. Here are the few business elements that we address as key areas of our digital transformation consulting services.


Key Business Elements of Digital Transformation

Digital Strategy

As customer expectations change and as they increasingly move towards the digital world, businesses are forced to develop strategies to cater to the changing customer demands. Developing a digital strategy cannot be however, be treated as an IT strategy and needs a different approach.


Customers are increasingly going from paper to laptops and mobile devices, and even internet and cloud. They are all on major digital media platforms from Facebook to LinkedIn and emails. Hence, developing a digital strategy, especially in the marketing area, that connects and caters to the changing customer expectations as well as achieves the key business goals such as sales and ROI becomes important.


A company’s business strategy must involve a digital action plan, a practical set of initiatives that align with the organization’s goals as well as a bold vision for how the pace of innovation will likely reshape the industry over time. It should also focus on creating policies and priorities that are agile and flexible to the constant changes in technologies and customer behavior.

Content Strategy


When it comes to the digital world, content is the king. It can drive massive traffic to a company’s website that can be converted to leads and sales. However, just great content or content marketing do not ensure website traffic and digital success. It requires a strategic approach to ensure better success rate.


Content strategy delves deep into the creation, publication, and control of content. An excellent content strategy employs audience research, developing a user persona and the stage in their buyer’s journey. It then determines the best form of content for the target customers, tailoring the style of content, the delivery frequency and the keywords they use to search online.


By engaging in this process, repeating it and refining it, organizations will be able to develop a powerful strategy that leads to a steady amount of website traffic and conversions.

Digital Marketing


Another important area of a business that requires attention is digital marketing. The purpose of a digital marketing plan is to take the organization through the process of thoroughly researching and articulating the goals of its digital initiatives, clearly targeting digital personas, methodically selecting the relevant channels to go after these personas and planning how to do it.


An organization must consider the following aspects while creating a digital marketing plan and campaign.


Determine Objectives and Goals: Setting the goals is fundamental to a digital marketing campaign as it determines the direction of the whole campaign. Creating goals at the beginning of the campaign ensure that focus is maintained. Goals also help optimize the returns of the campaign.

Identify a Strategy: Creating an effective digital marketing strategy requires a good understanding of the various digital channels, how they work, and the best practices to get maximum outcomes. A digital marketing strategy must consider every single aspect of the campaign, from identifying the target audience to the message to be conveyed, and from the execution channels to the budget.

Understand the Audience Better: To launch a successful marketing campaign, it is important to know the audience better. Doing this helps organizations contacting the right audience and delivering targeted and relevant communication to them. Organizations must spend time defining their target customers, their digital presence pattern, general time of digital activity and so on.

Optimize: A critical requirement for successful digital marketing is to optimize the content so that it can be found by people when they search using specific keywords and topics. A search engine optimized content makes the website and content rank higher on search engines. Care should be taken that the best practices are followed, else websites can get penalized with lower page rankings.

Identify Digital Channels: Understanding what digital channels their target customers spend most of their time on, how much time they spend, the right channels to target their customers, etc helps organizations make best use of the channels to reach their customers and achieve results.

Revise CTAs: A call to action (CTA) can act as a good on-page marketing tool for an organization’s website. An effective CTA has the power to convert a website visitor to a lead.

Monitor Success: Everything said and done, what doesn’t gets measured doesn’t get improved. It is absolutely necessary for organizations to analyze the success of their digital marketing campaigns to identify what can be optimized and improved to make it more effective so that better results can be achieved.

Customer Experience


It is common knowledge that revenue is directly related to customer experience. This means that providing a better customer experience can help organizations improve customer loyalty and drive better revenues. So, how can organizations enhance customer experience? Following methods given below can help organizations achieve this:


Step into the customer’s shoes: It is a good practice to step into the shoes of the customer and ask oneself, what kind of experience do I want? Doing this helps organizations identify the kind of experience they can provide their customers that will keep them coming back for more.

Don’t dodge the feedback: A negative feedback is something that everyone fears. However, customer feedback is valuable as it provides organizations wonderful opportunities to improve and grow. It is a good practice to keep a lookout for customer feedbacks and also respond to them.

Offer educational content: The age where organizations need to actively advertise their products and services is coming to an end. Customers are using the Internet First approach to look at an organization and its offerings. What they need instead is a solution to their problem and not an advertisement. Organizations that excel in educative and high-quality content that address their challenges create better customer experience.

Experiment: Sometimes, all an organization may have to do is see what works and what doesn’t work with its customers is to perform simple experiments with alternatives, generally referred to as A/B testing.

Digital Technology Enablement


Digital technology platforms are an inherent part of Digital Transformation. Digital technology enablement is all about influencing an organization’s digital transformation journey through the utilization of technologies such as Cloud and DevOps, Big Data Analytics, and the Internet of Things (IoT). These technologies help in achieving smarter and efficient business processes; consequently driving customer experience. So what exactly are they? And how can they help enterprises?


Big Data Analytics

As data evolved over the years, Big data Analytics emerged as a process that involves advanced techniques such as machine learning, text analytics, predictive analytics, data mining, statistics, and language processing. These techniques effectively help enterprises declutter and arrange their diverse, massive data sets.


DevOps and Cloud

Adopting DevOps alongside Cloud services can help inject automation at all levels—by using the extra layer of flexibility to empower new DevOps processes; thus maximizing the benefits. This approach helps enterprises stage a well-built cloud architecture that leverages automation for configuration management, infrastructure provisioning, container management and continuous code delivery. At the end of the day, they can achieve greater levels of operations and developer productivity and security.


IoT

Talking about the IoT, it is an innovative technology that injects the power of Internet connectivity and data analytics into consumer appliances, automobiles, sensors, industrial and utility components, and other everyday products to transform the way we live and work.


Parting words


Digital transformation is a significant undertaking and a continuous process that never ends. It is not only a transformation in terms of technology, but also in terms of organizational culture. And, it is something that requires a strong leadership to drive change. When done right, the result will be - a business that is more aligned with customer demands, and resilient in the fast-moving digital future.


Moreover, as organizations formulate their own digital transformation strategy, there is much to be learned from other organizations and CIOs who have already successfully transformed their businesses.


Reach out to us to learn more about our capabilities and how 7EDGE as a strategic consulting firm, can help your organization take a digital transformation journey.


Originally published , updated March 15 2018