Digital transformation is a huge driver in today's corporate climate, changing operations, generating experiences, and, ultimately, driving innovation. Companies must adapt and accelerate their pace, or risk being overwhelmed by the speed of technological progress and competition. In this journey, selecting a good software solution is critical.
While off-the-shelf software provides a quicker and cheaper answer, this often comes at the expense of flexibility and, more crucially, long-term adaptation. This is due to inefficiencies introduced into these ready-made solutions. Over time, companies’ needs change, and with them, the software requirements also evolve to address new business challenges. If you are using an off-the-shelf solution, these challenges can become extremely costly to address. That is precisely where custom software development excels.
Companies today face a critical dilemma in a rapidly changing digital landscape: meet the demands of digital transformation, or risk falling behind. Digital transformation has become a must, not a choice. It is the comprehensive integration of digital technology with business processes, fundamentally altering the way businesses operate and delivering value to their customers.
But here's the question: what exactly drives this transformation? The solution lies in custom software development. Custom software solutions help companies modernize procedures, simplify their operations, and capitalize on growth prospects. Custom software development surpasses the capabilities of off-the-shelf solutions by providing a distinct and scalable strategy tailored to specific business requirements, especially when combined with technologies such as cloud computing, artificial intelligence and machine learning.
In this blog post, we'll look at how custom software development drives digital transformation and helps organizations succeed in an increasingly digital environment.
Statista projects that global spending on digital transformation will hit $3.4 trillion by 2026.
Markets and Markets forecasts the digital transformation market to grow at a compound annual growth rate of 19.1%, from $521.5 billion in 2021 to $127.5 billion in 2026.
Prophet highlights that market pressures are the primary drivers of digital transformation, with 51% of efforts driven by growth opportunities and 41% by increasing competitive pressure. Additionally, 38% of organizations are motivated by high-profile data breaches and new regulatory requirements such as GDPR.
Gartner reports that 91% of companies are involved in some form of digital initiative, with 87% of senior business leaders prioritizing digitalization.
A study reveals that 89% of companies have either adopted or plan to adopt a digital-first business strategy.
Prophet notes that 28% of digital transformation efforts are led or sponsored by CIOs, while 23% of CEOs are taking on more leadership roles in these initiatives.
By 2027, more than half of enterprises are expected to adopt and implement industry cloud platforms to speed up business operations.
A survey found that 86% of customers will stop engaging with a brand they like after just two negative experiences.
According to Gartner, 56% of CEOs believe that digital improvements have led to increased business revenue.
89% of companies have either adopted or plan to implement a digital-first business strategy.
Off-the-shelf software solutions may appear to be a quick and handy alternative, but they frequently fail to meet your company's specific requirements. Custom software, on the other hand, is tailored to your unique issues and possibilities, allowing you to streamline your processes and provide a consistent customer experience.
Digital transformation has been associated with flexibility in your IT systems. Flexibility is the most important feature that each product should have, and custom software development makes this task much easier. Off-the-shelf solutions have restrictions that often require workarounds. There have been situations where software companies, frequently smaller ones, have bid for a project using their existing products. After winning the bid, they wind up providing many workarounds to meet the client's tight deadlines. Custom software rises to the occasion, offering to meet all criteria for tackling digital transition.
Flexibility: Custom software can be adjusted to your precise requirements, ensuring it fully aligns with your business goals.
Scalability: Custom software can be quickly scaled up or down to meet your company's expanding and changing demands.
Integration: Custom software can be effortlessly linked with your existing systems and processes, reducing interruption while increasing productivity.
Netflix is our best option for staying up to date with the popular movies and TV series that everyone is talking about. The corporation is today valued at $149 billion, and its capacity to predict and shape the future of entertainment is contributing significantly to its success.
To enhance customer experience, Netflix CEO Reed Hastings approached Blockbuster with a proposal. At first, Blockbuster was a video rental service, but by 2007, technology had evolved, and customers were becoming more accustomed to it.
Through their online streaming platform, Netflix resolved issues like late fees that customers had with Blockbuster and successfully provided new value through digital transformation, changing the way people purchase and watch movies.
Starbucks – Coffee & AI
Starbucks, a well-known coffee chain with over 32,000 locations in 80 countries, is familiar to all coffee enthusiasts. Unsurprisingly, Starbucks realized the value of digital transformation and launched the 'Digital Flywheel' in 2017.
The effort aimed to alter incentives, customization, payments and ordering based on client input. Cloud-based technologies have enhanced Starbucks' ability to provide tips and place orders while controlling inventory and production.
In addition to technology, Starbucks has incorporated Artificial Intelligence into its app, allowing it to tailor product offers and provide incentives depending on user preferences. Starbucks' CEO intends to continue harvesting new technology, which is why the company is the world's most recognizable coffee brand.
Deliveroo – Streamlining Orders with Advanced Logistics Technology
Deliveroo needed to create a specialized system to improve order processing efficiency. They enhanced their logistics technology by developing a front-end application that allowed customers to directly place orders from the restaurant’s kitchen. This innovation enabled Deliveroo to streamline delivery, making it faster and more efficient in meeting customer demands.
Audi – Digital Innovation for Car Buying
Audi transformed car shopping with Audi City, a digital showroom concept launched in 2012. Instead of traditional car showrooms, Audi City features small stores in city centers where customers can explore the entire car lineup on interactive screens.
Visitors can customize cars, view full-size images, hear engine sounds, and even look inside the vehicles using tablets. These showrooms also host events and forums, boosting the brand's image.
With only four cars on display, Audi City saves space and costs while increasing sales by 60% compared to regular showrooms.
Limitations of Legacy Systems
First, we have to answer one question: what exactly is a legacy system?
A legacy system is any outdated system still in use, such as old hardware, software, or programming languages. These systems are often no longer updated, supported, or available for purchase, leading to many business challenges.
Despite this, legacy systems are still common in many businesses. They can include things like old Excel spreadsheets with overly complex formulas, or older systems that don’t work well together, causing inefficiencies, poor user experience, and potential security risks.
These systems can be a problem for companies because they can slow down operations, limit growth, and reduce competitiveness. Since they are built on outdated technologies, they often don't work well with modern software or hardware. As a result, legacy technology can cause problems with integration, difficulties in connecting with newer systems, and create challenges when trying to adopt new technologies.
Legacy systems frequently lack the scalability required to meet evolving business needs. As the company grows, outdated systems may struggle to accommodate higher data quantities, user traffic, or transaction processing, resulting in performance bottlenecks and system unavailability. Adding new features, customizations and tweaks to old codebases can be difficult and time-consuming, restricting agility and creativity. As a result, more and more companies are realizing the importance of application modernization and custom software development.
Our client, a large banking group from Austria with more than 16 million customers and 2200 business outlets, had a vision of transforming the bank into a digital enterprise by improving the effectiveness and performance of products, services and processes. The goal was to customize their system and services according to the needs of new generations of users and new business ecosystems.
With the help of our team of experts, the client benefited from faster delivery and scalability through a microservice architecture, allowing for independent scaling and seamless integration of EU banking directives. They gained improved system flexibility for easier upgrades and long-term efficiency, along with access to Serengeti’s expert team, which ensured quick productivity with minimal involvement. The architecture also enhanced collaboration, enabling teams to independently develop and deploy services, further improving operational efficiency.
 You can read more about this project on the link.
Despite the growing recognition of its importance, many digital transformation initiatives face significant challenges and fail to deliver the expected results. Studies from leading research companies highlight the common reasons behind these failures, shedding light on the obstacles companies must overcome to successfully navigate their digital transformation journey. Below are some key findings illustrating the difficulties organizations encounter during their digital transformation efforts.
- Forbes showcased a study by Boston Consulting Group that found that a 70% of digital transformation projects fail to achieve their goals, even with united leadership.
- According to a McKinsey study, 70% of all digital transformations fail due to a 5 reasons: disagreement among management, failure to understand digital transformation, failure to deliver omnichannel customer experiences, poor data analytics, and lack of experts.
- According to McKinsey & Company, due to a lack of focus on change management, only 30% of transformations succeed.
- Everest Group discovered that 73% of companies struggle to achieve economic value from digital transformation due to a lack of defined strategy or goals.
- Over a third of CIOs anticipate difficulty in finding appropriate skills in the tech areas of cybersecurity and data science.
- According to a study, 92% of the SMEs believe digital transformation is crucial for their business.
To overcome these challenges and navigate the transformation journey with success, expertise is crucial. By partnering with an experienced custom software development outsourcing company, businesses can access specialized skills and knowledge that ensure a smoother transformation process and help them achieve their goals more effectively.
Conclusion
In conclusion, digital transformation is crucial for businesses to stay competitive in today’s fast-changing world. Custom software development plays a key role in helping companies modernize, improve efficiency and grow.
Unlike off-the-shelf software, custom software solutions are designed to meet specific needs, offering scalability, flexibility and better integration with existing systems. Companies like Netflix, Starbucks, Deliveroo, Audi, and many more show how digital innovation can improve customer experiences and drive success.
However, legacy systems can hold business development back, so upgrading to modern solutions is important. By choosing the right technology and partners, companies can ensure they stay ahead in the digital world.
Additional resources:
- Digital Transformation – More About People Than Technology
- Valamar - Seamless digital transformation of one of the leaders in holiday tourism
- What is the role of software development in digital transformation?
- 6 Benefits of Custom Software Development & 6 Signs Your Company Needs Custom Software
- Serengeti among top Custom Software Development Companies in Croatia
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