What is Digital Transformation? (Explore 5 pillars of the transformation)

What is digital transformation?

Digital transformation is the process in which businesses use digital technology to create and transform processes and cultures. The end result is a differentiated experience for customers in the marketplace and company employees for absolute business benefits.?

Have you ever watched the “Transformer” series of Hollywood blockbusters with the image of the car turned into a powerful giant robot? This is a metaphor for the word "Transform", which means qualitative change and great benefit.

For example:

• CRM application analyzes customer behavior from which sales and marketing departments can build experiences and improve customer satisfaction at retail stores.
• SCM application for inventory management and sales, based on this data warehouse combined with the use of artificial intelligence (AI) to predict the shopping behavior of customers. This helps the purchasing department to place key orders accurately, no excess of goods due to over-buying or no shortage of goods to lose business opportunities.

Benefits of digital transformation

• Cost reduction by applying technology to automate operational processes. Thanks to digitization, businesses can measure the efficiency of the process so they can optimize their operations.
• Balanced production and business plan thanks to accurate prediction on data describing the entire production and business activities. Accurate planning helps businesses avoid waste due to excess preparation of resources or loss of opportunities due to lack. For example, reduce the waste of over inventory as well as avoid losing business opportunities due to a shortage of goods to serve customers.
• Focus on taking care of customers' emotions and employees' creativity. When they get rid of repetitive manual work, employees will have time to focus on these tasks.
• Detailed and accurate customer segmentation. By measuring customer behavior, businesses can capture customer behavior, needs and identifying characteristics. Thereby, products and services are individually designed to make customers extremely satisfied.
• Successful new product and service creation. The challenge of new products and services is not lack of ideas but lack of market testability. Thanks to digital transformation, the process of testing new products and services is accelerated.
• Build successfully a new business model. Accurate data helps businesses to test and design an accurate and optimal business model.
• Outstanding growth in a short time many times over. Due to a solid business model and accurate data to verify, businesses can call for investment capital to multiply scale and benefits.

Why digital transformation

Today digital technology has grown tremendously and reached consumers' personal devices such as smartphones. This environment spawned many successful startups in the technology sector. This challenges businesses in traditional industries to transform themselves, creating new experiences for customers.

For example:

• Singers publish their works on Youtube and Spotify, even free of charge to listeners, instead of exclusively protecting traditional music discs.
• Taxi companies will have to go digital instead of finding a way to monopolize the traditional market, which is competed by Grab.

5 pillars of the transformation

1. Customer & Employee Experience / Value

All decisions and actions are derived from converting the value actually brought to corporate customers and employees. Customers and employees are the main factors that bring real value to the business. Therefore, when planning digital transformation, it’s necessary to pay attention to the value brought to them. The approaches such as deploying technology that only catches the eye, forcing employees to comply, or confusing the customer experience won’t make sense.

2. Culture

The entire company understands, supports, shares and cares about company-wide information and data. No more departmental or personal interests which leads to closure such as no sharing or refusal of data entry. The culture here is expressed in the point of not forcing but completely voluntary. The approaches like force, discipline by reward, or the promoting personal and department interest will fail.

3. Business Process

Digital transformation is ultimately about serving the business benefits of the entire business, including employees and customers. So business processes must be carefully designed and operated, adequately monitored and measured, delivering results in quality and quantity. Every process must take into account the value of benefits for employees and customers.

4. Application & Technology

There will be indispensable applications and surrounding technologies. The development of digital technology today has replaced or supported the traditional methods of business administration. The low cost of technology and ease of application have broken down all barriers to accessing technology for any business.?

The challenge now is not in the mystery of technology, but often in a purely technological approach that forgets about other pillars such as culture, processes and values brought to customers and employees. .

5. Data

The last pillar is data. Data is the source of information for businesses to make strategic decisions and create competitive advantages. Data helps avoid subjective, emotional, and unfounded guesswork.?

• Data can only be obtained through the help and enthusiasm of information sharing by employees and customers.?
• Data is generated and returned to help clear and efficient processes.?
• Data is also generated through touch points with employees and customers across the application and technology pillars.