Result-Oriented Digital Transformation

Introduction

Opening the website of many major international companies or business consulting firms these days, there is a good chance that you will spot the phrase “Digital Transformation” somewhere in there. “Digital Transformation” being used so similarly by all these organizations, has yet a different meaning for each of them. It is also the same among academia. Sometimes the term is used to explain something like “Business process reengineering” or “Business model innovation”. In other cases, implementation of a new “core technology” is claimed as digital transformation.?

On one hand, there are some of larger companies that claim having been or just being through digital transformation while just adjusting few paragraphs or at best few pages on their website. They rephrase their value proposition and pretend to be doing something profoundly different from what they have been doing over their decades-long history. But what they in reality are doing, is what I call “digital washing” so that they look digital friendly. It is quite disturbing to see some of those home pages in which you find no information whatsoever about the real scope of work or products and services that these businesses are really delivering, among all the flashy infographics and digital-looking value proposition that they are trying to cast.

On the other hand, smaller companies may struggle in first understanding the applicability and second the roadmap for a digital transformation suitable for them. Can a small medium size enterprise (SME) or a small shop go also through digital transformation? And will their business benefit from such a transformation? How much does such a transformation cost and what is the return on such an investment??

But what Digital Transformation really is? Is digital transformation something which all businesses small or large should embark on? What is the role of technology or industry sector that a business belongs to in defining or achieving digital transformation? Can businesses claim digital transformation without adjustments or replacing their business processes and business models? These are some of the questions to which we will seek an answer in this article.

What Is Not Digital Transformation

Changing your website telling you love digital is for sure not. Telling your customers, you are publishing research papers about what the future of your business in a digitally transformed future would look like, is great! But that is also not digital transformation. Building a website for your business today, is not digital transformation, although could have been considered so, two decades ago. And playing with a lot of technologies and studying more of them while not using them in creating and delivering value for your customers and your stakeholders is also not digital transformation. This is what I called “digital washing” which is the act of some businesses who want to look digital friendly instead of using the real transformations to create more value for their customers, themselves, and their stakeholders.

What is Digital Transformation

Digital transformation has been defined as use of digital technologies to solve business problems (reference: Wikipedia). This definition is a good start but comes quickly too short. With this definition, even a simple software implementation to address a single problem, can be claimed as digital transformation. In some other definitions digital transformation has been defined as use of digital technologies to modify or create new business processes, culture, and customer experiences to meet changing business and market requirements (reference: salesforce). According to Gartner, “Digital transformation” can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.?

According to my preferred definition, Digital Transformation is?the process of transforming an organization’s business processes?and?technology infrastructure to enable greater?performance,?agility, and innovation. In order to stay competitive in today's marketplace, companies must be able to rapidly deploy new solutions and services, create new customer experiences, and scale their operations quickly. To achieve these goals, they need a modern technology infrastructure that can support the latest applications and technologies while reducing costs.

Digital Transformation Objectives

The ultimate aim of any action or project in business is to achieve results. Digital Transformation should not be an exception and hence should advance the business. Any application of digital technologies is a mean to achieve some form of advancement. Such an advancement should ultimately manifest itself in either increased revenues, profits, efficiency, or improved stakeholder satisfaction.

Business Model Innovation and Digital Transformation?

Digital Transformation can only be achieved by applying digital technologies to one or more business processes. That is why any successful transformation including a digital one, can only be achieved by understanding and adjusting the business model of any organization and its underlying business processes, before employing any technologies and solutions.

Business Model can be seen a “Virtual Twin” of a business as it shows how a business and its components function. Now imagine creating a simulation of this business model in which the business processes and their interactions are visible in motion, behaving as close to the real business as possible. This can be called a “Digital Twin” of the Business. Digital Transformation can be seen as bringing the “Digital Twin” of a Business and the “Real Business” closer and closer. This can be achieved by taking one process after another in the business model and re-engineer them to be suitable for partial or complete digitalization, resulting in an improved, replaced or removed business process blurring the boundaries between the physical and the digital components of the business.

Using software to partially or completely automate certain business processes is nothing new. CRMs, ERPs, and other systems are the enablers of these transformations since more than half a century. Hence the term Digital Transformation is not something new in nature and is quite close to what has for long been called (process) automation. But why do you then hear it more often lately?

Digital Transformation for Everyone

There are three main reasons which make the changes we see today fundamentally different from the ones of last half century. The first one is about Business Models. Although application of digital technologies has always been having direct impact on how businesses and societies function, and although there has always been the recognition of such an impact, there is something profoundly different happening today.?

Airbnb was established in August 2008. Summer houses or places for short stay were nothing new. But the very fact that someone has offered such an availability at such a large scale first in a city and then beyond across United states and then the rest of the world, without owning any of those properties, was something new. Uber was established in March the year after. Although there were taxi companies with websites (and few of them even with mobile apps or at least text message booking services), there was no such company at such a scale without owning any single cars yet being the largest taxi company in the world. This was a revolution. Now anyone owning a room, or a car could benefit from a new business model enabled by digital technology. Neither the asset (homes or cars) nor the technology (website or mobile Apps) was innovative. But the business model was. The very fact of making it possible for many people, as well as unbundling the ownership of asset (home, car or other) from being able to deliver a service (vacation home, transport service) are two of the potential results of digital transformation of a company or a whole sector. This transformation made everyone a potential seller and a potential customer for these businesses. That is how potential scale of benefits from application of digital technologies is the first reason why we hear about digital transformation more often than ever before.

Technological Evolutions

The second reason for the amount of digital transformation we see today is more technological. And that is due to “Cloud”. The Internet enabled access to local area networks of your business remotely (availability) and reduced the risk of downtimes or loss of data in case of a disaster (reliability). One of the remaining challenges to achieve digital transformation was the cost of running an army of servers and various applications as your business grew. As super-fast Internet penetration increased, there was a new possibility for all these servers and applications. They could retire! Storage and computation did not need to sit next to where the user was. And this way “The Cloud” at global and commercial scale was born. Now it was not only a ministry or a large corporation, but also the little shop in the corner who could run its business with almost no software and much less hardware in-house. That is why, despite the role of other technologies such as big data, Internet of things, and so on, it is primarily connectivity created by super-fast Internet and cloud computing which makes the digital transformation commercially feasible.

Everything as a Service

The next step in digital transformation was in shaping. You did not need your own servers to store your data anymore. You did not need most of your own local area network equipment you did before to communicate among your people and offices anymore. You did not need to install the same software in its full functionality on all your computers anymore. What else would you perhaps not need anymore?

Now you could buy “Storage as a Service,” “Virtual Private Network as a Service”, “Software as a Service” and “Computation as a Service.” The next step was to buy a “Total solution as a Service” or “Platform as a Service”. Instead of buying the infrastructure as a service and then installing your solutions for HR, Finance, Logistics, Operations, and so on, on that leased infrastructure, you could now even rent all these solutions as a service. Oracles, SAPs, Salesforces, and many more needed to adapt to this new reality and instead of selling you “On-premise” installed applications on your own (or the virtual) servers, they now could or should have provided you with “subscription” to their solutions.

This had two benefits. One for these providers and the other for their customers. The customer was saving all the investments and the efforts in the hardware and software they needed to install and maintain. The provider was able to create a “recurring income” from subscriptions which gave more predictability loved by their shareholders. That is how bringing down the high barriers for access to benefits of technology to affordable solutions for larger and smaller businesses by offering everything as a service, became the third reasons for massive digital transformations.

Result Oriented Digital Transformation

Every Business should be able to produce products and services which are loved by its customers. Think of Apple products. Even opening the box of a new Apple device is an experience, let alone using it seamlessly with other products produced by them or by others. But what is really transformative about Apple products? Let us take an iPhone as an example. The first iPhone had other competitors such as Windows Phone Operating System enabled products such as HTC and others. And at that point, there was nothing dramatically different about what these devices could do. And then compare those iPhones with the ones of today. Even the home screen looks almost the same. What has been so revolutionary about iPhone? Nothing!

The answer to the digital transformation brought by Apple is not in their devices. It is in their “App Store.” The concept of App Store has enabled the users to buy an already not so empty device, but yet fill it further with hundreds of new Apps giving them totally new experiences. From productivity Apps like Calendars and Planners to Educational Apps like Languages course Apps to also Gaming Apps. What App Store enabled was a new business Model, amending Apple’s way of making money through a “Digital Enabler” called “App Store.” Now Apple gained a percentage of the income of the App Developers selling their Apps and subscriptions on App Store which over years could sum up to a much higher amount than what one pays as the price of the iPhone itself. Moreover, creating this ecosystem, brickwalls the customers and other stakeholders, as moving away from your device is not anymore only a matter of few hundred dollars, but all the investments you did over years purchasing software and hardware working (only or mostly) within Apple’s ecosystem.

You may have to change, or “re-engineer your business processes” to be able to make such changes in your business. Think of moving to a subscription pricing model for the products you sell or the services you deliver. Or think of a powerful and functioning website, an eCommerce solution, a seamless payment gateway and connected shipping services and a customer engagement solution linked to your social media presence. Your customers get what they have been promised with few clicks and you do not need to do anything more! How much you use technology in delivering your products and services, is not necessarily important as far as you increase the value you deliver to your customers, enhance their experience, and make more sales and profits as a result of application of digital technologies. Adjusting or changing business models or “Business Model Innovation” is primary to “Technological advancement” as technology without business results is only an expensive hobby. Hence tangible improvement in business results in form of improved revenues, profits, efficiency or enhanced customer experiences or propositions is necessary, else there can be no claim of any transformation whatsoever.

Conclusion

Digital transformation is not usually about a sudden change in a specific moment in your business’s history when for example you change the “core technology” powering your product. Digital transformation is more a business management approach. Digital transformation is the outcome of a continuous process of reviewing your business performance, finding areas for improvement, and answering to these three questions: Can I achieve my next business improvement through an adjustment in existing business processes? Can I enhance my customers’ satisfaction through new experiences or offerings? Do I need to deploy a new solution (powered by an existing or a new technology) enabling me to get more return on the resources and investment necessary when answering these questions? If the answer to any of these questions is yes, then you need to embark on a digital transformation journey.

Digital transformation is any application of a solution to your business or any of its processes which has a digital enabler behind, making one or more of your business processes or your overall business model more efficient, effective, or redundant. An automation of marketing process is a way to make it more efficient. An automation of customer proposal creation by automating calculation of the elements on your offer or invoice makes your sales support and invoicing processes more effective. An automation of customer after sales registration and routing to technical support team may make your old office-based customer support process obsolete. These are example of real digital transformation enhancing your business and the value you create for yourself and your stakeholders. Remember! Digital transformation should improve one or more of your business results.

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What are key business results you want to achieve through digital transformations in your business? Write to me?here, should you wish to discuss those.

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Online Business Builders Club (OBB Club) is a membership program for people with passion to ideate, build, and transform businesses using digital technologies. Our mission is to enable consultants and advisors, as well as founders and owners of small businesses to build successful and thriving businesses. We help them understand the possibilities they have in creating digital businesses or digitalizing their existing businesses using available solutions and tools in the market.?We educate certified business builders?who can make an impact on their lives and the lives of their customers.

The Founder of Online Business Builders Club is Dr. Shahram Maralani who has more than two decades of experience as a?Corporate Leader. He is also an Author, Public Speaker, and Business Mentor,?helping entrepreneurs establish & digitalize their businesses. His mission is?“To help thousands of entrepreneurs shape, and operate online businesses", as?part of their portfolio career, or as their main?occupation.

You can become a member of the club?here.

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About The Author

Shahram G. Maralani is a corporate leader with more than two decades of multi-discipline experience in business and technology. Being passionate about Digital Transformation and its impact on the Entrepreneurship world, he studies developments in the technology and its role in transforming businesses and societies. He shares his insights with his audience through his publications, courses, and coaching programs.

He has experience in a wide range of industries such as Assurance, Automotive, Management Consulting and Investment Banking. He has dual studies in Engineering and Business Management and has been through different Business Leadership as well as a Digital Transformation programs with INSEAD and Berkley.

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