Digital Transformation: What it is & why it matters

What is digital transformation?

Digital transformation refers to the reinvention of business operations by drawing maximum benefit from technology. By integrating new technology, companies aim to solve traditional business problems or create new and optimised processes.

Digital transformation has become a top initiative for many executives, particularly those working in large enterprises. It has gradually moved beyond IT to impact competitiveness throughout the entire organisation.

Beyond the buzz, there is a strong correlation between companies who are making significant inroads into digital transformation and how successful they become. A study by Gartner found that 56% of CEOs have seen improved profits after carrying out digital improvements. It therefore brings little surprise that the same research found that 47% of CEOs are being challenged by their board of directors to make progress in digital business.

So what’s all the fuss about and why are the c-suite putting this at the top of their to-do lists?

The benefits of digital transformation

The term ‘digital transformation’ is extremely broad and encompasses a range of different initiatives and components. For example, some companies are focusing on creating digital solutions to improve the customer journey, some are looking at making internal processes more efficient to reduce operating costs, while others are aiming to do both.

While no two digital transformation strategies are the same, a similarity they often share is the end goal.

To help you get your head around the key benefits, I’ve summarised common strategic priorities that digital transformation aims to achieve.

Reduced costs by increasing efficiencies

By optimising business technology and operations, for example, shunning manual interventions in favour of technology that can automate tasks, businesses can better evaluate processes and identify problems further in advance. This often leads to cost-per-transaction savings. Moreover, efficiency speeds up process flows and leads to a much leaner organisation.

Optimised customer experiences

In order to survive this increasingly competitive business environment, companies must create customer-centric strategies. Now, more than ever, we’re seeing customer experience used as a differentiator and unique selling point. Of course audiences still want valuable solutions to their problems, but almost as importantly, they want them fast and personalised to their needs.

Businesses who focus on transforming the customer experience by modernising audience touchpoints benefit from hyper-personalisation, increased brand relevancy, and agility.

Ultimately, by shifting focus and paying attention to what customers want, they’ll improve client acquisition and retention while simultaneously reducing spend.

Improved insights

One of the greatest advantages of digitalising processes is improving your ability to track and analyse data. There’s a wealth of knowledge to be gained from data found from both inside and outside of your company. Whether you’re using internal data insights to improve manufacturing processes or external social media insights to optimise competitive intelligence, data is your friend.

By leveraging advanced technologies like machine learning, data mining and statistics, a company is better able to predict what is likely to happen next. This insight is commonly applied to solve a business problem, unveil new opportunities, or to forecast the future. Executives who leverage such insights to make data-led corporate decisions minimise risk, reduce costs and boost revenue.

Connecting the dots by consolidating data vendors

While technology brings about access to more business-critical insights than ever before, it has also made the landscape increasingly difficult for professionals to navigate. No industry is immune to the fact that they’re currently at the centre of a very chaotic conversation, rooted in both structured and unstructured data. Navigating this noisy data landscape is difficult when data sources are scattered and do not integrate with each other. This has led to major strategic decisions being made based on fragmented data sources, resulting in poor alignment and reduced comparability of data.

To overcome data fatigue, enterprises are beginning to transform how data is collected, analysed and stored via consolidation strategies.

Leveraging tools such as Tableau, Power BI, Qlik & Looker, businesses are able to benefit from a single source of truth – something that’s critical for accurate reporting. You see, comparing apples with apples is impossible when companies use multiple tools that do the same thing. Each tool provider tracks things differently due to where, when and how data is collected. One common example of this is metrics. Different tools may say they collect KPI data on the same metrics, but in reality, only the name of the metric is similar. This makes regional benchmarking extremely difficult.

When a single source of truth is in place, for example having one global vendor, the entire organisation is working from the same data, therefore improving alignment and analysis. Consolidating vendors also helps companies enjoy cost-effective procurement processes, streamlined business workflows and more robust decision making.

Increasing agility

Sustainable market leadership stems from having the ability to quickly spot, adapt, and react rapidly. This can be in light of a threat or an opportunity. Either way, businesses that fail to be agile and meet the demands of their industry environment will struggle to survive.

Staying ready for ‘the next big thing’ is crucial, as is being proactive. While we’re not superhuman and we can’t have our eyes on everything all of the time – technology can.

It’s worth bearing in mind that technology can also hinder agility if it’s outdated. We’re seeing more and more businesses transforming their company by eliminating slow legacy IT systems in favour of more nimble and responsive technology that is better able to keep up with market trends and demands.

Optimising internal communication

As the saying goes, “no man is an island”, yet we still see many divisions in companies act that way. Certain types of digitalisations fuel internal collaboration, something that’s needed to ensure all employees are aligned and working towards the same end goals. Employee engagement is a hot topic right now, and rightfully so. By optimising communication, employees can learn from their peers. Reducing siloed working also helps processes flow more effectively since workforces become more productive, systematic and consistent. As a result, organisations become more efficient.

As mentioned, businesses undergo digital transformation for a variety of reasons, however, it’s likely at least a handful of the above benefits resonate with your reasoning.

Remember, digital transformation is a journey, not a destination. It includes multiple connected intermediary goals and reaching them doesn’t happen overnight. The little steps you take all add up and make a big difference. Want to discuss how to start the process for your company? Direct message me on LinkedIn. Let's chat!