Digital Transformation – Companies must start it or will die

This week revisiting my library, I started rereading the book The Third Wave by Alvin Toffler. In this book, this futurist writer talks about a scientific-technological revolution that would succeed the post-industrial society. Although the book is over 40 years old, it is a very up-to-date book, which requires constant reflection from the reader. Not only the book, but Toffler's ideas and phrases also require deep reflection, such as: " If you don't have a strategy, you're part of someone else's strategy ", " The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn” or “Change is the process by which the future invades our lives, and it is important to look at it closely, not merely from the grand perspectives of history, but also from the vantage point of the living, breathing individuals who experience it”. For this reason, I decided to write a follow-up to my first article on Digital Transformation . In this first article, I discussed, in a general way, how digital technology can generate a competitive advantage and create value for the company. I mentioned that it is fundamental to create a “tripod” that involves people, processes, and technology, as a sine qua non condition for success in the transformation process. And I emphasized that it is important, especially for small and medium-sized companies to start this process, because if they don't, they will die.

I believe that it is no longer necessary to justify the need that companies have to start this process. What often happens that there are employees’ reactions to change (resistance to change), expectations of results are unrealistic, planning is poorly done or the initial investment may be too high and resources are lacking. In any of these cases, directors, shareholders and/or the board of directors must focus actions on how to overcome these obstacles and realign the transformation process.

Gartner shows some optimization initiatives that can provide significant gains in the short term and that can leverage the digital transformation process with less risk. Below is a summary of what is presented on the page “Where and How to Target Your Digital Business Transformation ”

1. Improving existing revenue: using data analysis and AI, companies can help “decision makers” in optimizing prices and defining promotions, targeting greater purchases by customers or improving customer service, creating a loyalty project , providing a memorable customer experience (see my last article on Customer Experience – CX ).
2. Improved operating margins: Automation projects together with the redefinition of processes can improve the efficiency of companies and people, providing lower expenses and consequently improving margins. This type of initiative allows companies to perform more services and tasks without increasing payroll.
3. Improvement in the use of assets: use of predictive analysis to build multiple scenarios, to find new earning opportunities with the same existing asset. In this case, we can generate a better suggestion for purchases for the retail industry (as seen in my last article on Inventory Management ) or even the creation of classes to be offered to students from universities that use the credit hours system (face-to-face learning) in order to meet the demands of students and the optimal number of classes to be offered (in relation to the number of students enrolled in each class).

There are still not many results that directly link the digital transformation to the improvement of operational indicators and performance (The Value of Digital Transformation ), but what is guaranteed is that not starting this process will limit the companies performance, since they will continue to do more of the same. The best way to start the digital transformation process is to carry out detailed strategic and operational planning of how this process will take place, taking into account financial resources, human resources, infrastructure, schedule and earnings perspective. Without taking all these points into account, it is very likely that this process will enter the Mckinsey statistic that points out that 70% of digital transformation processes fail .