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Digital Transformation – More About People Than Technology

Serengeti
15.11.2022.

In the business world, the phrase "digital transformation" has been around for some years now.

We can hear about the importance of digital transformation at every lecture, panel and presentation. It is often emphasized that companies, from small to international corporations, should embrace transformation if they want to remain competitive on the market.

To comprehend what benefits you will obtain from a digital transformation, first it is necessary to define what a digital transformation is.

What is Digital Transformation?

Digital transformation might appear different for each company, so it can be difficult to find a universal concept or a definition that applies to all. We can describe digital transformation as integrating digital technologies into all business sectors, resulting in profound changes in how businesses function and give value to consumers.

If you think about digital transformation as two words, we pay too much attention to the digital and not enough to transformation. It’s not a technology challenge, it’s a leadership one.” - George Westerman, PhD, senior lecturer, MIT Sloan School of Management.

A prevalent misunderstanding among corporate executives is that digital transformation is synonymous with "digitization" or “digitalization”. In this sense, digitization refers to the use of technology to move from analog to digital. Transferring business from physical documents, papers and binders to digital files is the backbone of digitization. Digitalization represents progress, but it does not affect the way of doing business. It represents the use of digital information in order to simplify and execute already established processes more efficiently.

Unlike digitization and digitalization, digital transformation changes the way of doing business and the way things are done. It adds value to every customer interaction. During the process of digital transformation, businesses are reevaluating everything they do, from internal procedures to online and in-person customer encounters.

Netflix is a perfect example of digital transformation. It began by sending DVDs to customers via mail. It now consumes more than 15% of global internet bandwidth and has customers in over 190 countries. Renting videos was expensive, with customers frequently hit with late fees. Netflix transitioned from a pay-per-rental strategy to a monthly membership, and finally they introduced flat rate unlimited rentals and online media streaming service.

Netflix transitioned from a pay-per-rental strategy to a monthly membership in September 1999. Netflix's well-known business model, flat rate unlimited rentals with no due dates, late penalties, or handling fees was debuted in early 2000.

Later, Netflix's establishment of its own online media streaming service came as no surprise because widespread internet use has severely undermined traditional TV networks.

It’s Not Just About Technology

There are four main areas of digital transformation, meaning that when you digitally transform your business, you are shifting the processes (internal), the model (external), the domain (external, i.e., where you compete) and the culture (internal).

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The first one is where a lot of organizations have problems, often because you have four or five different generations of employees in the workplace, and they will respond to technology and change differently. It can be hard to shift to very technology and development-heavy culture, but it’s not impossible.

Companies that lack a clear direction during their digital transformation often place too much emphasis on advanced technologies and not enough on employees. Business leaders must accept the human aspect of change. According to Gartner, 46% of employees see automation as a threat to their job. It is important to build a workplace culture that encourages adaptability to change. Educating your employees in advance will be beneficial for the planned transformation.

People, leadership, and company culture

Adoption of new technologies allows for the automation of time-consuming and manual operations, as well as the automation of reporting and the streamlining of workflow. Digital transformation frees people from manual chores, allowing them to focus on strategic projects and reach their full potential. Employees who have access to data analytics may enhance their performance, boost their efficiency and attend their consumers better.

The carriers of any transformation are people, and digital transformation is no exception. When you start the digital transformation of your business, prepare for a tremendous cultural change.

Clients and workers of a company typically resist to changes, making any transformation tough to implement. Culture is a critical component of every successful digital transformation initiative.

Up-skilling and re-skilling 

What do your employees need to know to be relevant and competitive in your company's future? Where are the knowledge and skill gaps? Is it necessary to get outside experience to augment what you already have with your employees? 

User experience

This entails end-to-end, multichannel customer service. What are the main ways a consumer may interact with you? What platforms and channels are they using? How long does it take from the initial contact for them to become buyers?

Data and analytics

Whereas the industrial revolution was concerned with production efficiency and volume, digital transformation is concerned with data. A digitally equipped firm gathers data from many sources and then distributes it across business divisions.

One of the primary motivations for implementing digital transformation is to minimize pain points in your organization for both your staff and your consumers. But how can you recognize what these pains are?

Data analysis and integration can assist you in locating them. People usually pick their technology before reviewing their data while building transformation projects. This is not the right path. If you don't evaluate data, you might know what gaps to fill in inside your internal team, but you may miss out on the gaps your consumers face daily.

Upgraded processes 

There is no one-size-fits-all strategy to business process transformation. Instead, understanding your goals and tailoring the transformation to your individual needs is the best method to identify how to alter your business process.

To digitally transform your business, your internal operations must reflect a new approach to doing business and acceptance of the tech stack. Externally, you must ensure that your systems are simple for the end user. Nobody wants to visit a site or application and discover that it was created in 1994.

Insights

Businesses receive a unique insight into their operations and customer behavior through an intelligent, data-driven approach. This allows them to create better business strategy and improve operations. Digital transformation enables company executives to integrate technology across their organization and create fundamental improvements, propelling their operations to the next level.

Why Digital Transformation?

Improved Customer Experience

Digital transformation helps in boosting the speed and agility of generated insights. It delivers an impactful user experience by designing and digitizing customer journeys and fostering agility in journey transformation delivery. This assists businesses in gaining authority and trust from their customers.

Data-Driven Insights

Businesses receive a unique insight into their operations and customer behavior through an intelligent, data-driven approach. This allows them to create better business strategy and improve operations. Digital transformation enables company executives to integrate technology across their organization and create fundamental improvements, propelling their operations to the next level.

Agility and Productivity

Agility refers to a company's ability to continuously expand and improve. When it comes to digital transformation, 68% of businesses rank agility as one of the top three relevant factors.

Adoption of new technologies allows for the automation of time-consuming and manual operations, as well as the automation of reporting and the streamlining of workflow. Digital transformation frees people from manual chores, allowing them to focus on strategic projects and reach their full potential. Employees who have access to data analytics may enhance their performance, boost their efficiency, and attend their consumers better.

Increased profits

According to report from SAP Center for Business Insights and Oxford Economics, 80% of companies that have completed digital transformation report increased profit, and 85% report an increase in market share. Executives expect around 23% higher growth in revenue than competitors.

How to Develop a Digital Transformation Strategy

Digital transformation starts with a vision. Implementing cutting-edge technology without first determining how it would benefit the company and its consumers will not result in successful transformation. 

There are a few important steps for developing a digital transformation strategic plan:

1.       Know the market and your company's role in it, along with your current and future clients.

2.      Analyze the market's path. Is there any potential for disruption, and how can you benefit from it.

3.     Create a vision of how the company should look like in the future.

4.     Find a technology partner with expertise.

5.     Develop a digital transformation plan that outlines a path from the present to the future state. Consider the requirements imposed on your employees and systems, as well as possible opportunities for development.

6.     Digital transformation is a process. Start small, but strategic.

Conclusion

Digital transformation of a company cannot be done overnight, nor does it represent another new technology addition to the business. It represents a change in the way the company works, a shift in the culture and mindset of both employees and leadership.

If done properly, the benefits it will bring to your business, among many others, are higher productivity, agility and efficiency, better customer engagement and last but not least, higher revenue and profit.

When it comes to the technology part of digital transformation, many companies will use an outsourced software development provider to help them throughout the digital transformation process. Their job is to make sure the systems are upgraded, customer experience is properly coded and intuitive, and to help the existing team to change the culture and drive innovation.

If you are looking for a technology partner with extensive expertise in digital transformation, let us know.

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