Why Digital Transformation is essential for Business growth
Digital Transformation refers to the adoption of digital operations and tools to reach strategic business goals. It encompasses everything that is involved in the business of an IT company right from internal processes to customer interactions. Whether it is a small business or a large enterprise, digital transformation is an absolute necessity in the modern technological era.
At the core of a successful digital transformation strategy is an in-depth understanding of the true potential of the technological prowess in hand.
According to Dell’s Digital Transformation Index 2020, which surveyed around 4000 business leaders from different parts of the world, 80% opined digital transformation to be one of their top priorities in 2020. A recent report from the World Economic Forum suggests that by 2025, the value of digital transformation for both society and industry combined would reach $100 trillion. During the outbreak of COVID-19, the traditional business faced its biggest challenge yet. The bitter truth is that those who do not go digital will soon become obsolete.
As the impact of the COVID-19 epidemic surged in 2021, political, administrative, and business leaders came to a common solution: Digital transformation. Due to travel restrictions and nationwide lockdowns, people have turned to online shopping, e-learning, and social media to maintain a semblance of normality. Tech companies, educational institutions, and other organizations use digital technology to collaborate and operate remotely, seamlessly, and without a drop in effectiveness.
Digital Transformation can better collaboration between organizations, improve customer engagement, bring about employee innovation, increase productivity, and help you extract accurate insights from data that aids in business growth. It provides a great chance for your business to thrive even in testing conditions.
Top reasons why Digital Transformation is important for Business Development
Uplift customer experience by adopting digital transformation
At the heart of all digital transformation strategies are customer experience because, for DT to deliver its promised benefits, customers should view their experience, with your software products and your organization, positively. 92% of companies developing and implementing digital transformation strategies consider enhancing customer experience as the top priority. According to a recent Gartner report, the top three DX goals for technology companies around the world are:
- Automation of business processes
- Migration of applications to cloud
- Transforming legacy systems to new-age technologies
There has been a consistent upswing in the use of automation for several years but the pandemic has caused businesses to rethink the purpose of automation. Earlier the reasons were primarily reduction in cost and improvements in performance. But now, from 2020 onwards, companies are turning towards automation to provide better business resilience, faster development and deployment cycles, reduced risk, faster and better decision making.
By automating the bulk of the day-to-day technical and business processes, IT teams can make better decisions faster, and hence will have more time to focus on delivering better DX.
As digital ecosystems become increasingly complex, automation with narrow scope will cease to solve many of the complexities. There is a dire need for end-to-end automation solutions that take care of data silos, integration challenges, and deployment challenges. That is why organizations have been leaning towards maintaining different automation solutions for different purposes, such as RPA, job schedulers, and other custom applications to cater to different needs.
In an attempt to drive integration and reduce complexity, tech teams have started adopting extensible automation platforms with API adapters that support low-code automation, which allow AI and ML technologies to be infused with the existing processes enabling better and faster data analysis. A recent report from Mulesoft states that IT teams with API connectivity is significantly less vulnerable to integration challenges than those that stick to traditional methods.
If the above points were not convincing enough, then read through the data provided by the International Data Corporation regarding Digital Transformation in the near future.
IDC predicts $6.8 trillion worth of direct investments towards DX from 2020–2023. By 2025, more than 75% of tech companies would be leveraging Digital platforms and other interconnected systems to drive their products to new markets, industries, and ecosystems. By 2022, a majority of companies would have realized that developing digitally-driven and sustainable software products and lifecycle processes should be the default standard. By 2023, 75% of the organizations would have a comprehensive digital transformation roadmap that puts them on the path to true transformation in all aspects of business processes.
Help employees focus on things that matter
With the current pandemic situation and a dispersed workforce, employee engagement has become that much more important. Companies are looking at alternative strategies to make at-home work environments more productive with the help of digital technologies. Departments like HR and Finance need to transform manual processing of payroll, attendance management, appraisals, and tax deductions to digital platforms which makes them simpler for both the employee filling it and those in charge of the reviews and approvals.
This helps people to spend less time on doing things that are mandatory but tedious and enables them to focus more on innovation, new opportunities, and the adoption of new trends and tactics that are essential for continuous development.
Security: A primary factor, a tough nut to crack
One of the biggest problems for many tech companies is to figure out how to place a huge amount of data at the edge of their networks while keeping that data secure and easily accessible to authorized individuals. With hackers becoming increasingly proficient with maintaining anonymity and finding newer ways to break systems, securing the data is not only a crucial task but also a complicated one that necessitates accurate implementation to ensure meticulous enforcement around accessing of data, compliance to data regulatory statutes, and shielding from attacks.
Security architecture should be designed in such a way that it works for both in-office staff with measures that safeguard the data of at-home staff on personal networks and devices. Essentially, the security strategies should possess ‘agnostic’ characteristics, meaning the same potency prevail irrespective of the network, the service provider, applications, or the kind of data being protected.
Increase efficiency and embolden business partnerships
Customer demands are always on the rise and competition within each domain is stronger than ever before. The time frame for ‘time to market’ has been shortened hugely because of these two factors. Firms are becoming increasingly reliant on each other, working with suppliers, distributors, specialized consultants with the aim of producing a variety of products and services that interest customers. Managing these partners often requires document-based communication, a cumbersome process that’s rightly viewed as a deterrent to efficiency.
Technology approaches this process in a much simpler, more accurate, and time-efficient way through e-signatures. It takes away the traditional paperwork that resides only on the office desk and facilitates reviewing and signing of documents on the go, even from mobile devices, thus improving efficiency. Though document processing is just one part of the puzzle in the entire lifecycle of bringing a product to market, it does silently munch away a major chunk of your time.
By introducing digital strategies at the early stages, companies can stay ahead in the race and position themselves to be viable partners. As internal processes become more efficient, the collaborative processes with partners automatically become more efficient. Over a period of time, digital transformation aids organizations to observe time and resource gains, be more productive, scalable, and flexible, strengthen existing business partnerships, and be open to joining hands with new players to expand product diversity and in turn, the customer base.
Make intelligent decisions, faster
Technology, in recent years, has been delivering some superpowers such as Big Data, AI, ML, and IoT. With these technologies at the core of your digital transformation strategy, it becomes exponentially easier to make key decisions essential for your organization’s growth based on what the data teaches you and not merely based on gut feeling. With the proper analytical tools in place, the massive amount of data gathered through interconnected IoT devices can be leveraged to gain maximum knowledge about key factors that influence business growth.
With AI and ML-based algorithms, the complex task of sifting through large volumes of data, and gathering insightful, reliable details have become incredibly easier. The deeper these technologies and analytics tools are embedded into your business strategies, the greater the impact they can have.
Increase productivity and reduce resource costs
Organizations that aren’t digital or do not have an entirely digital process will spend more time and money. Costs will quickly go out of hand when compared to others who do the same as an automated process, for a lesser cost. With a proper digital transformation strategy in place and with appropriate tools, businesses can go a long way in cutting costs and hiking productivity.
A consequence of not going digital
In order to elaborate on the impact of not going digital, we need to first look at the statistics of businesses that have gone digital or have immediate plans to do so. 55% of the world’s startups already have a digital transformation plan in place. Just going digital is not going to cut it anymore. Having a digital transformation roadmap is equally as important.
Let’s take the example of Amazon, the most valuable company in the world by a clear margin. In 2005, Amazon was just an online bookstore with modest sales figures. The US had several heavyweights in the retail sector such as Walmart, Target, Kohl’s, Macy’s, etc. But now after having gone digital, Amazon has experienced such unprecedented growth that its net worth is around $50 billion more than the combined net worth of the top ten US retailers.
Major US retailers that haven’t gone fully digital or have an online presence just for the sake of it, have experienced downfalls in their market value to as much 85–95%. So not going digital is going to be at the cost of your own peril. Going digital, with a proper vision and strategy, is the only way to ensure the long-term prosperity, expansion, and viability of your brand.
Key Drivers of Digital Transformation
To develop a successful digital transformation strategy it’s important to keep the ultimate goal of your organization as the pivotal reason and build the strategy around it, to aid in achieving it.
The key components involved in any digital transformation are listed below:
A digital twin is a digital representation of a real-world entity. If you own a retail store, an online store would be the digital twin. Digital twins are essential for DT success because they allow for experimentation and let you decide what works and what doesn’t with the customers. It helps stakeholders make better decisions based on insights from reliable data.
If your DT strategy is going to sacrifice privacy, then it is destined to fail. It’s easy to hop onto new technology trends with the vision of providing the best convenience to customers but due diligence about security measures is a must. Research suggests that a majority of the customers are not willing to give up the safety and privacy of their data just for the sake of convenience.
Augmented intelligence goes beyond the capabilities of Artificial Intelligence in that it allows humans and machines to work in tandem, which is why it plays a crucial role in DX strategies. Augmented Intelligence is not about replacing people but collecting huge volumes of data, analyzing it, deriving insights, and presenting them in a manner that allows people to augment their knowledge.
Digital Product Management
In order to achieve pure digital transformation, there should be a coordinated mindset shift from projects to products. This thought process should occur throughout the organization, from top to bottom. It acts as a catalyst for employees to come up with innovative solutions to solve people’s problems via digital products, improve customer experience through DX, and deliver them through digital channels. Do not wait for something else to change.
If you see something as a drawback or a gap in a certain industry vertical, look at it as an opportunity, seize it and make the best use of it. Delivering a quintessential product that embodies the great values of digital transformation principles will certainly result in customer loyalty.
Changing the culture that’s prevalent within your organization to suit the needs of digital transformation is a major hurdle. It’s not easy to solve it because resistance to change is natural. If not solved, your DT process is bound to hit a brick wall soon. According to surveys, several CIOs from companies around the world believe cultural transformation is the biggest barrier in implementing digital transformation.
The voice of thought leaders should be used to drive initiatives forward through positive reinforcement along with educational webinars about the desirable benefits of digital transformation.
Phases of Digital Transformation
The different stages in the process of digital transformation act as a guide for purposeful, result-oriented initiatives that are eventually successful.
The current state of business, status quo — Evaluate the current state of your organization as it is.
Present and Active — This is the phase where you experiment, encourage your employees to bring out creative ideas and attempt to improve their digital literacy.
Formal Initiative — What was previously experimentation now becomes clear with intent. You need to buy in leadership approval in this phase.
Strategic — This phase involves groups of employees working together, pooling their research and ideas in order to achieve the goal of rolling out a strategic plan for transformation.
Converged — This is where you deploy a dedicated digital transformation team that will help implement the strategic plan, further guide and modify the strategy as need be, establish goals and set up systems that support the organization’s DT journey.
Innovation and Adaptability — This is the phase when your organization is well on the way on its digital transformation process and leadership has established a monitoring team to curate the upcoming trends on the technological landscape that will better the current process and ensures that your company continues to progress and evolve.
The targets you set and the technology you leverage to achieve those targets will define what your digital transformation will look like. Regardless of how you choose to transform your organization, proper planning and following up on those plans every step of the way is crucial.
Author: Vijayakumar A & Mohan Bharathi S