The digital transformation journey is the entire process of incorporating technology into the business operations for a more nuanced version of the company. It guarantees efficiency, higher revenue, and better customer satisfaction. In this blog, we will discuss the importance of the digital transformation journey and how it can be carried out in six easy steps.
I. What is Digital Transformation?
Digital transformation may be defined as the process of incorporating technology into the everyday operations of a company. This marks a shift from the traditional way of carrying out tasks. Many companies are adopting digital solutions and beginning their digital transformation journey because of the benefits that this process carries.
Digital transformation can help your business grow exponentially, create higher capital, and enhance customer satisfaction. It brings newer ways of functioning and instills a more agile and innovative work environment in the company.
In the next section, we will elaborate on the benefits of digital transformation and why it is crucial for a company in this digital era.
II. Benefits of Digital Transformation
Digital transformation has numerous benefits, so companies are keen on implementing it at their premises. The key benefits of digital transformation are listed as follows:
a. Enhanced customer satisfaction: With the use of digital tools, companies can cater to the problems and demands of customers through AI-powered chatbots that are available round the clock. It can also help suggest similar items to purchase by analyzing their previous experience.
b. Higher revenue: Digital transformation can fasten the business processes and create a more innovative and agile environment. It also puts an end to repetitive tasks and enables employees to focus on tasks that require human attention. This further results in higher productivity and an increased ROI.
c. Accurate data collection: Data is something that all companies prioritize and when you deploy digital solutions at your service, all business operations are automated. This makes collection of data easier, along with other tools like smart sensors, and weighing scales.
d. More rational decision-making: When you adopt digital solutions, they automate all tasks, provide better insights, and reduce the possibility of human error. With better data and insights, companies can make more rational decisions, keeping in mind the overall benefit of the company.
III. COVID-19: The Key Driver
As per Mercer’s Swift, the pandemic has largely shaped the digital transformation agendas of companies. With a larger number of people working remotely, the experience of employees with technology has become crucial, and an important factor in getting work done. COVID-19 has also had a positive impact on these areas:
- Use of chatbots to enhance customer support.
- Automation tools
- Removal of redundant systems
As per McKinsey, COVID-19 has sped up the adoption of digital transformation technologies for several years. It has also helped companies realize the need to stay competitive in today’s world. Also, the pandemic shifted the mindset towards a more flexible and agile business model. In short, the pandemic has significantly impacted the digital transformation journey.
IV. Digital Transformation Journey: Where to Start From?
It is okay to be confused about where to start your digital transformation journey. Being the long and demanding process that it is, you will need a lot of time and understanding for this. Look at these five steps to understand where you can start your digital transformation journey:
a. Assess the requirement: Begin by understanding if your company needs to embark on a digital transformation journey. Try to assess its need, and ask yourself if your business can do without it or not.
b. Develop a multi-year strategy: You can develop a plan that is deployed in phases. Define a budget, and create a foolproof strategy for all the processes you will be undertaking.
c. Create a business strategy: Digital transformation journey is expensive, and so you need a business plan to work things out which will multiply your revenue. You should invest in digital systems and enhance revenue to ensure better results.
d. Reduce risks: Risks like crashes, downtime, and cybersecurity issues among others must be reduced and taken care of. For this purpose, you may create a list of all the probable risks that your company might face and devise plans to mitigate them.
e. Stay focused: It is wise to focus on areas that are more important from the point of view of the business. These can be related to enhancing efficiency, resilience, and agility as well as developing an innovative work culture.
V. Digital Transformation Journey Consists of Six Steps
Now that we have elaborated on where you can start your digital transformation journey, let us focus on the how of it. In this section, we will discuss the six major steps involved in any digital transformation journey:
a. Understand How You Define “Digital”
“Digital” can mean different things to different companies. Each company is unique in its way, in terms of industry, competition, work environment, etc. So, you must set yourself apart from others and understand what the word means to you. You can define the term by understanding your company better. Try to analyze the challenges that your firm faces and determine the long-term goals.
b. Determine How You Want to Digitalize
Next, you should determine how you want to digitalize, as in which option you may want to choose. A digital transformation journey can be both, front-end as well as back-end. You may refer to the strategies listed below for a better understanding:
- Revamping products: As per trusted sources, more than 66% of respondents to a survey are inclined towards the Internet of Things (IoT) as the best way to revamp their products and customer experiences.
- Developing digital ecosystems: Many companies are slowly moving towards the cloud, big data, and connectivity for building digital ecosystems for themselves.
- Data monetization: You can use IoT to monetize your data and make it more profitable by developing modern features.
- Transformation of processes: As per a survey, about 81% of the companies aim at transforming themselves to better use modern technology like machine learning, AI, 3D printing et cetera.
- Creating a robust IT apparatus: It is important to ensure that there is an alignment of all your toolsets. Your IT apparatus is crucial for the entire digital transformation journey, and so it must be built strong.
c. Get Top Leadership On-Board
It is important to get the top leadership on board. You may begin by presenting the entire plan solely for the company’s benefit. Many people also try to speak in terms of numbers, like an increased return on investment (ROI), and a lower total cost of ownership (TCO) to attract leads. It is also advised that you personalize the presentation, by catering to the desires of each board member.
d. Find Potent Partners
It is essential to find a transformation partner who can work things out for you during your digital transformation journey. You must always choose a partner who has a lot of expertise in the industry. Companies can go for references from other firms that have already used the services of the shortlisted partners. An analysis of the record and compatibility of the partner’s existing technical know-how.
e. Prepare Your Employees for the Change
Make sure that your employees are prepared for the digital transformation journey. You may do so by letting them know the importance of this change and how it will benefit your company as well as them. Try to establish a proper channel for communication, so that they can get rid of all their doubts easily. Once you have your employees on your side, you are ready for the next step.
f. Initiate the Digital Transformation Journey
This is the final step in any digital transformation journey. After the first five steps have been taken care of, it is time for you to begin your digital transformation journey, with support from all departments and stakeholders.
VI. Four Pillars for Success Digital Transformation Journey
Any successful digital transformation journey stands on four key pillars, which are as follows:
a. IT Modernization
This is the first pillar of the digital transformation journey and aims to modernize the present IT infrastructure. It is a flexible method, comprising a set of top-notch tools for your assistance. If you plan to modernize your IT, you must hire a team of experts, change managers, and DevOps. Once implemented, its performance can be assessed through KPIs such as reduced costs, enhanced capabilities, and employee satisfaction.
b. Digitizing processes
The second pillar aims to optimize the existing business operations by reducing costs, making the processes more efficient and optimized. For digitizing your business processes, you will require a thorough knowledge of your business and a good change management team. Its results can be assessed in the form of higher customer satisfaction, and higher profits.
c. Digital Marketing
The process of digital marketing comprises the use of digital tools for ecommerce, and customer acquisition. Its primary benefits include cross-selling, higher brand value, and market/wallet share. A thorough knowledge of data analytics and digital marketing can help any company ace it, and its results can be realized in the form of higher returns on marketing, enhanced leads, and more customers.
d. New ventures
New ventures include newer products, experiences, and business models. This pillar of the digital transformation journey brings with it numerous growth opportunities and results in enhanced access to markets as well as products. You must be thorough with facts like innovation processes, leaders, and business creation for this purpose.
VII. Key Elements of the Digital Transformation Journey
A successful digital transformation journey is made of six key elements, which must be present in every company’s process. Let us look at these driving forces:
- People: As a company, you will need a good number of people who can handle your business operations, and take care of the pain points of the process efficiently.
- Technology: You must invest in the right technology to solve your digital issues, help you stay ahead of the competition, and outshine the same.
- Culture: It is advised that you implement a robust change management plan, and an innovative work culture to prevent any inconsistencies in the future.
- Customers: This element must be your priority as it will expand your business. Try to offer personalized experiences to each one of them, along with better customer satisfaction.
- Market conditions: The market is quite dynamic so you need to work as per the changes that it brings. If you fail to do so, you will be left behind.
- Innovation: You should encourage innovation through experiments and try establishing ways in which you can integrate the new technology into the existing systems.
What Does a Successful Digital Transformation Journey Look Like?
While many companies deploy digital solutions to their advantage and complete the process entirely, they are still not aware of the meaning of the outcome. This section will tell you what a successful digital transformation journey looks like. As per McKinsey, a successful journey can be assessed on four parameters, namely:
- Market share
Let us develop a better understanding of these four parameters.
a. ROI of Digital Investment
Companies can assess the ROI of their digital investment to understand how successful their digital transformation journey has been. Investing in the best option available to you and reducing the unnecessary costs involved is essential. It is also true that the low code can help you maximize the return on investment significantly in the following ways:
- Increasing productivity
- Reducing complexity
- Speeding up development
- Create new platforms
- Encourage agility
b. The Proportion of the Annual Budget Spent on Digital Solutions
Budgeting is a huge problem in the digital transformation journey, and allocating that budget judiciously is even more difficult. It is important to allocate a good proportion of your annual budget to digital solutions for a more technical approach. As per Gartner, more than 70% of large companies will shift to a more inclusive strategy by 2025. Better investment in digital tools will also enhance their compatibility with your business.
c. Time Needed to Create a Digital Application
It is important to ensure that you are quick with your digital transformation journey. As per Google’s DevOps Research and Assessment, companies that initiate several daily deployments are called “elite performers.” One such example is Netflix. If you wish to enter this category, you may use a low code that can:
- Initiate automation
- Provide reliable means
- Integrate new technology with existing systems
- Providing state-of-the-art technology
d. The Best Technical Skills
It is considered important to have employees who are experts in digital transformation, like data analysts, design and user experts, change managers et cetera. You may want to use low codes for retaining the best technical skills in your company. As per the “Developer Engagement Report: Are Your Developers Happy or Halfway Out the Door?“, developers are 58% more likely to be content with the tools that they have when they are using low code. They are also 75% more likely to be promoted in this case.
Challenges of the Digital Transformation Journey?
No process is free of challenges and the same is true of the digital transformation journey. In this last section, we will be elaborating on the challenges that you might face in this process.
a. Scarcity of resources
As per IDC, the technical talent was short by 10% across the world. This number is expected to reach at least 20% by 2025. Considering these statistics it is clear that scarcity of resources is a major blow to any digital transformation journey. If you are not a tech giant, you are more likely to suffer because the larger companies take up most of the talented minds.
b. Huge backlogs
With more expectations, comes more work which can hamper the style of working in a company. Companies are expected to make timely deliveries which can be very stressful. In the case of procrastination, you are likely to have huge backlogs to cater to later. As per Gartner, employee experience has surpassed customer experience in the CEOs’ strategic priorities list for 2023-24.
c. Technical debt
Most companies undergo what is called technical debt during the digital transformation journey. As per IDC, generally, 50% of the applications within a company are legacy systems, while the remaining are integrated into modern systems like DevOps. Any transformation requires them to integrate the two, which can be quite tiring and costly.
The thing about any digital transformation journey is that companies can never be sure about their best version. It is essential to realize the need for experiments, which can drive innovation. This can essentially be harder if the company is facing some economic crunch.
e. Complexity of software development
It is very difficult to create an application or software that is top-notch, especially when you have limited resources. You will require a thorough knowledge of coding, development frameworks, and even expertise in digital transformation.
In this blog, we have elaborated on what a successful digital transformation journey looks like. We have also discussed the key steps involved in this journey and how you can make the most out of it, by conquering the obstacles in your path. We hope this helps you out in your very own digital transformation journey.