Digital transformation is the adoption of new technologies by a company or an organization to enhance the business processes, productivity and efficiency, and customer experience, which ultimately helps the business grow its value and revenue. Having said that, digital transformation is not only limited to all the said earlier. But it also spreads further to the areas like business and culture transformation.
Article Content:
- What is digital transformation?
- Why digital transformation is important for SMEs?
- 4 Types of Digital Transformation?
- Digital Transformation Examples from Different Business Industries
- What is a Digital Transformation Strategy?
- Why Digital Transformation Fails?
- What is Digital Maturity?
- How to Assess your Digital Maturity?
- How to get started in Digital Transformation? (A Start Plan)
What is Digital Disruption or Transformation?
Today, Digital transformation has become a 'must have adopted' stage in the competitive business world. With digital transformation, companies are now able to improve their business processes, make them smooth, enhance customer experience, and bring value to themselves through innovation. Although there's no one defined term for digital transformation and a 'one fits all' strategy for businesses to go on this stage, we would define this as a business transformation' or 'business culture transformation' that impacts all the areas of the business to expect qualitative and quantitative results. For example, adding value to customer experience, and enhancing the productivity and efficiency of service delivery.
Why Digital Transformation is Important for Businesses?
Well, the very flat answer to this is that digital transformation reduces the cost of operations while increasing the efficiency of the business. But if we are to give you a proper and a broad idea about this, the importance of this digital disruption, lies far beyond than the said. Let us explain to you more about the importance of digital transformation.
1. Increases Customer Experience
Digital transformation enables customers to get what they want exactly when they need it; at the right moment. Also, the new technologies used in the business simply allow customers to get personalized services or experience from the business. So that there's a greater chance that the customers become happy about the service delivery due to the personalized business solutions.
2. Makes business processes easier and smoother
The adoption of new digital technologies in a business also helps make business processors easy and smoother by organizing. That means when your business is equipped with digital technologies, you can connect so many processors or different stages of the processes together, making it easy for both stakeholders and employees. For example, by looking at the trend of previous year's orders, the purchase manager can predict what quantities and how much he will need to purchase the materials for the new year season. And on the other hand, the business owner can predict how much he will need to spend for purchasing for the same season. With these, business processors become easy and smooth with its operation without making any lag in each stage or process.
3. Reduces cost of business
Transforming your business into digital reduces the humans involved in some operations. For instance, data entry operator or clerks for document maintenance. By integrating digital technologies in business you can reduce the costs involved in the same. This also reduces the costs that may incur due to the business's having to repeat or rework due to human errors.
4. Increases revenue
With the technology disruption, you can get data insights of customers and send personalized messages to your target audiences. This helps you increase your reach to the customers. Also, with digital transformation you have the opportunity to explore more advanced marketing systems and increase customer loyalty and thereby ultimately increase revenue at a minimal cost.
5. Brings you data insights
Digital transformation gives you access to gain data insights. For instance, if you have implemented a CRM system, its analytics provide you sales and customer service performance.
6. Increases efficiency of the business
By different technology and system implementations, you can save time or improve management times and increase performance. For example, with some cloud software solutions, employees or other stakeholders can have access to different data and collaborate with others efficiently.
7. Increases the business agility
With digital transformation, you can increase your business's ability to change in changing environments by leveraging new technologies. This particularly helps your business make better informed decisions, increase awareness and take fast action or execute to changing business environment.
4 Types of Digital Transformation?
Businesses may need to undergo a digital transformation at some point in their business journey. Same way, you may feel the necessity to adopt digital technologies in your business. However, there is no "one size fits all" method or approach. A business may perform better with one type of digital transformation but that type will not do better for another business. Therefore, business owners or entrepreneurs need to clearly understand the four main types of digital transformation.
1. Business Process Transformation
This focuses on the existing business processes and finding ways to improve the same to expect high efficiency and results. For instance McDonalds has improved their processes by implementing online ordering systems through mobile apps, digital ordering Kiosk and etc. challenging the traditional competitors in the same industry.
2. Business Model Transformation
Businesses with a clear vision adopt digital transformation to transform their traditional way of doing business. This is what exactly Amazon did with Amazon music and Netflix did, transforming from selling DVDs to providing online streaming services. Therefore, it is important to note that business model transformation at the right moment also plays a pivotal role if you are to expect a business growth.
3. Domain Transformation
With this you can consider moving to a new market like moving to the cloud environments to redefine your products or services. This may not particularly mean that you will need to abandon your existing business. But, to go for the existing new opportunities with the service or product delivery. Knowing this too, helps business owners expect growth in the industry. This is exactly what Amazon did. For example. Amazon moved to Amazon Web Services without being limited to the online retail industry.
4. Cultural or Organizational Transformation
Digital transformation is not just about implementation of technologies in your business. It is far beyond than that. It is about your company's behavior and culture. It is about your image and perception in the mindsets of the customers. If you fail in digital transformation, there is a clear chance of your customers ending up with a disturbed experience with your company. And that will lead to a reduction in customer engagement and revenue. So when we say cultural transformation, it also includes employees' using the technologies implemented, if they are comfortable with it, if the customers are getting an experienced service with the upgrade, getting feedback and many more.
Digital Transformation Examples
Digital Transformation Example in Telecommunication Industry
Vodafone
Regardless of how powerful the coverage is, customers hate waiting on a phone call for hours to reach a call representative. For the customer, "it's a disappointing experience" and for the company "A warning; risk of losing the customer base" despite their throwing thousands of dollars per month for customer service. In order to address this, Vodafone opted digital transformation. The company implemented Microsoft's Azure Cognitive services to build TOBi. A virtual assistant that could deliver fast, accurate and human-like customer support through app and chat. It is now said that around 60% of the customer interactions are handled by TOBi. This is a great achievement for Vodafone because, now their customers are handled in no time with the accurate, fast and friendly service; TOBi. This actually has increased customer engagement and experience while reducing the cost.
Example of Digital Transformation in Retail Business
Domino's Pizza
Domino's is the first pizza company to implement a pizza tracker for customers. With this adoption of technologies or system implementation, Domino s users are now having an enhanced customer experience. They now know exactly how long it will take for the pizza to arrive from the time the order was placed.
Digital Transformation Example in Manufacturing Industry
BMW
The car manufacturer uses robots and automation to produce its vehicles, which has increased productivity and quality control. They also use predictive maintenance to identify when repairs are needed before they become a problem. This has allowed the company reduce its costs, increase productivity, and improve product quality
Amazon
Amazon is also a great example of a company that has implemented digital transformation in the manufacturing industry. They have heavily invested in automation and robotics for their fulfillment centers, which has allowed them to process and ship orders much more efficiently. They have also developed sophisticated algorithms to optimize their supply chain management and delivery processes. So that they are sure that the costs are reduced while ensuring an efficient and productive service delivery.
What is a Digital Transformation Strategy?
A digital transformation strategy is a deliberate and detailed plan that outlines an organization's goals and expected outcomes from integrating technology and optimizing business processes. It represents a significant shift in how organizations create value, emphasizing the importance of leveraging integrated digital solutions to drive product/service innovation, improve process efficiency, enhance customer experiences, and empower employees with the knowledge and tools they need.
Leading and Implementing Digital transformation Strategy for SMEs
Leading and Implementing Digital transformation Strategy for SMEs
For an SME to lead a digital transformation strategy successfully, it is crucial to identify the individual or team accountability for the overall effort. Often the CEO, as well as those who are responsible for implementing the strategy. This is when the UDEL 360 methodology comes into play. This is a model practiced by us (Digital Transformation Center, Canada) and proved to be very successful in for SMEs in terms of process revenue, process and experience improvement. This model serves you as a valuable framework that offers a structured approach to implementing digital transformation, ensuring a smooth and efficient transition.
Why Digital Transformation Fails?
According to Forbes and Mckinsey, Businesses failure in digital transformation falls somewhere between 70% - 95%. That means, the concept of Digital Transformation should not be taken lightly. It requires proper planning, identifying that 'one fits all size' doesn't exist, right implementation at the right time and many more. Don't worry though. We will navigate you through this to success of your SME. First, Let's have a quick look at the commonly identified digital transformation pitfalls leading to failure.
Why digital transformation projects fail?
We divide the 10 reasons into 3 categories.
1. Leadership Pitfall
- Pitfall 1: Different perspectives among the leadership about the meaning of the term “digital”.
- Pitfall 2: Lack of alignment among the leadership team about business goals.
- Pitfall 3: Focus on past performance.
- Pitfall 4: Leadership nonchalance.
- Pitfall 5: Politics and culture.
- Pitfall 6: Top-down change management approach.
2. Operational Capacity and Organizational Capability
Pitfall 7: Stuck in Digital Pilot Projects.
Pitfall 8: Employee disengagement, decreased productivity, and turnover.
3. Technology Pitfall in Digital Transformation
Pitfall 10: Poorly selected technology solution and partner (Wrong fit)
Businesses heavily invest in digital initiatives. But not seeing the expected results is not uncommon.
What is Digital Maturity?
Digital maturity is the ability of an organization to anticipate and respond to market changes by adopting and integrating digital technologies at a deep and broad level. A digitally mature organization has the infrastructure and capabilities to use digital tools to improve operations, engage customers, empower employees, and transform products/services.
Assess your Business' Digital Maturity
Digital maturity assessments can vary depending on the specific framework or methodology used, but generally it assesses an organization's ability to effectively leverage digital technologies and practices to achieve business objectives.
How to get started on Digital Transformation (A Start Plan)
Getting started on digital transformation requires a comprehensive approach that addresses the key questions related to the organization's current state, strategic objectives, readiness, and ability to lead and implement change. Here is a digital transformation start plan that can help you get started:
Assess current state: Before embarking on any digital transformation initiative, it is essential to evaluate the organization's current state. This includes reviewing business processes, technology integration, and supply chain management to identify areas that need improvement. This assessment can help identify potential roadblocks to digital transformation.
Define strategic objectives: It's essential to define clear and measurable strategic objectives that align with the organization's overall goals. These objectives should be communicated clearly to all stakeholders to ensure that everyone is aligned with the digital transformation initiative's purpose.
Identify drivers for change:Organizations need to understand what is driving the need for change. Drivers could be related to changes in customer needs, market trends, or competition. Identifying these drivers can help the organization prioritize its digital transformation efforts and allocate resources accordingly.
Assess readiness: It's essential to assess the organization's readiness to undertake a digital transformation initiative. This includes evaluating operational capabilities, leadership, digital talent, and financial resources. Organizations need to determine if they have the necessary resources to support a successful digital transformation initiative.
Define timeline and start date: Once the organization has assessed its readiness, it's time to define the timeline for the digital transformation initiative. This should include a start date and a timeline for the completion of each phase of the initiative.
Define key results: Organizations need to define key results that will indicate the success of the digital transformation initiative. These could be related to revenue growth, cost savings, customer satisfaction, or employee engagement.
Identify areas for change:Based on the assessment of the current state and strategic objectives, organizations need to identify specific areas that need to change. These could include business processes, technology infrastructure, and employee skills.
Identify partners: It's essential to identify partners who can help the organization achieve its digital transformation goals. Partners could be technology vendors, consulting firms, or other organizations that can provide expertise and support throughout the initiative.
