By now every business leader has heard about the need to “digitally transform” to stay competitive. But not everyone is so clear as to what a digital transformation means in reality—and they’re even less clear on how to get the job done. Despite the confusion, many executives still name digital transformation a top priority.
So, in order to reap the benefits of this new approach to business, what has to be done? Is there a singular interpretation that guarantees success? This article explores the concept of digital transformation and the ways in which some companies are creating new digital ecosystems that fundamentally change the way they do business.
What does digital transformation mean?
A digital transformation refers to fundamentally changing the way your technology, people, and processes work together for purposes of improving business performance.
While implementing new technology alone has the potential to provide a competitive advantage (a concept called digitalization), a true digital transformation encompasses people, processes and technology to orchestrate a major change in the organization. In order to tap into the full value of technology—to create a transformational impact—it has to be used strategically as part of a larger business initiative.
For example, are you searching for new business opportunities? Looking for a way to improve your interactions with customers? Want to increase your operational efficiency? All of these goals represent a different type of digital transformation, and are valid reasons for implementing a change strategy.
Why Digital Transformation Is So Impactful
Today, data is a business differentiator—organizations that have the capacity to gather data and cull insights from it are in the best position to grow. Companies that continue to use analog business processes lack the high-level data and analytics competencies of their digital competitors, making it harder for them to continually improve performance. Reimagining your business with the help of digital tools allows you to make the most of a digital transformation, including:
- Optimization of your systems and processes so you can operate at maximum efficiency
- A better understanding of your customers so you can serve them better
- Insight into your industry and business model, resulting in more innovative products and services
Transforming your company's former analog task model to a digital task model is about positioning your team to do its best and achieve more.
85% of executives surveyed believe that achieving digital maturity is crucial to organizational success.
Benefits Of Digital Transformation
Some examples of organizations that have reaped the benefits of digital transformations include:
- Coca-Cola—Its digital transformation program, called “Digitizing for Growth,” had three main objectives: 1) to harness data to create more personalized (and predictive) customer experiences; 2) to build new partnerships that would benefit customers; and 3) to create a more engaging and agile workplace. One area that is being transformed: Coca-Cola Bottling Sales & Service is currently using automation tools to replace manual paper order fulfillment documents and account reconciliation processes. By doing so, the company will be able to consolidate multiple vendors and save an estimated $1 million annually.
- Starbucks—Its digital transformation efforts centered around maintaining operations efficiency, engaging customers, and increasing sales. To achieve these goals it has implemented a variety of new technologies ranging from cloud computing to blockchain. Customers now receive personalized recommendations for orders, and have the opportunity to learn more about how their cups of coffee were created. These and other innovations are the reason why mobile rewards participation has increased by 14% year over year in the U.S.
- Experian—Its digital transformation was rooted in its desire to innovate. To do so, it needed to modernize the entire company’s digital infrastructure, switching from legacy architecture to the cloud. Today, Experian’s new API hub processes more than 100 million transactions a month—all of which is new business made possible by the transformation.
Another major benefit of digital transformation is that it reduces your dependence on physical resources, making your company increasingly capable of thriving in any scenario—the current crisis being a perfect example. Organizations that have embraced digital tools, processes, and mindsets are more suited to adaptive thinking and will be better positioned to ride out challenges of any kind. (Tweet this!)
Are you launching a digital transformation effort at your organization?
Many companies have clear goals for a transformation but struggle to enact the changes successfully. The key lies in putting the right elements in place to support the process.
To help you sidestep some of the pitfalls other organizations have encountered along the way, download our free Guide To Digital Transformation. Gleaned from the failures (and successes) of the companies that have gone before. The guide covers six best practices your organization should follow to set your digital transformation program up for success, starting with your purpose for doing it, and continuing to after a new technology tool has been implemented.