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Your Ultimate Digital Transformation Guide

Digital Transformation Guide

Without a doubt, Covid-19 has sparked technological acceleration. Businesses immediately resorted to online platforms to stay functioning as restrictions forced many locations to close or limit their activity. During this period, technology has been a tremendous facilitator in our professional and personal lives – not only for collaboration, but also for maintaining continuity, delivering mission-critical activities, and keeping us linked. To help businesses navigate these transformational times, we decided to create this guide and discuss the main areas of digital transformation, including its trends, key components, challenges, and benefits. Let’s jump right into it!

What Is Digital Transformation?

Table of Contents

First things first. Let's define digital transformation. Businesses may use digital transformation services to help them design and implement a digital transformation plan to enhance their performance utilizing digital technology. The digital era has resulted in changes in technology, business models, and the IT environment as a whole. This implies that new technologies and IT projects are always being developed and implemented. Digital transformation is not limited to new enterprises but also includes changes to existing company processes and cultures, as well as the customer experience. But why is digital transformation important? To keep up with the ever-changing market demands, companies must become digital. It is a much easier process for companies that were created during the tech era, but it is quite challenging for long-standing businesses. However, digital transformation is inevitable if you want your organization to keep going successfully.

Digital Transformation Use Cases and Examples

Many companies reshaped their businesses through digital transformation and became world-known titan organizations that all of us know and admire. Let’s take a closer look at the digital transformation practices of some of them.

Netflix

Many leaders make the mistake of focusing solely on the product, forgetting about the real consumer need it serves. Not Netflix. It’s no secret that Netflix reinvented video distribution. The company was able to spot a shift in consumer demands and employ digital technologies to bridge that gap, changing from a DVD shipping service to a full-fledged digital media behemoth.

Spotify

The music-streaming business doesn't have a typical hierarchical structure in place. Spotify has chosen a strategy that promotes innovation, efficiency, and accountability. It is a very good example of an organization that constantly adapts, modifies, and grows its operations internally to satisfy consumer requirements. Spotify may appear to be a basic music-streaming service in which you log into your account, look for a song, playlist, or genre that you enjoy, and then press play. However, offering these features necessitates a complicated mix of behavioral prediction algorithms, innovation, and cross-departmental teamwork, which makes the infrastructure and scaling of Spotify one of the best.

McDonald’s

Customer-led transformation is another term for digital transformation. By reinventing the customer journey, the McDonald's team hoped to close the customer experience gap. They choose to do so by concentrating on customer experiences, such as improving in-store, drive-thrus, and home delivery technologies like ordering, payment, and mobile. Digital technologies, such as interactive ordering devices, AI drive-thrus, and smart mobile app experiences, have helped McDonald's close the gap in customer experience.

Domino’s Pizza

Domino's Pizza is a shining example of successful digital transformation. The pizza delivery company's future did not appear to be promising. The business recognized the need for a better product and, thus, increased customer involvement and process optimization across the delivery process. The company felt that by establishing solid IT/R&D departments, it would be able to invest in and create new digital breakthroughs.

Key Challenges and Benefits of Digital Transformation

Digital transformation is aimed at helping your organization survive in a fast-changing business environment. Companies obtain an immense amount of benefits that allow them to develop in the right direction. However, when adopting changes and creating a digital transformation strategy, organizations deal with some challenges.

Challenges of Digital Transformation

Lack of Technology Experience

Only successful employees with superior IT skills can lead digital change. However, putting together a dedicated team of developers is getting increasingly challenging. Sources report that over 50 percent of businesses said that talent shortages are preventing them from reaching their transformation objectives. The most lacking skills are, in particular, cybersecurity, enterprise architecture, advanced analytics, and technical architecture. To augment your in-house staff, consider employing outside specialists and software consultants. You should also concentrate on getting a deeper knowledge of your consumers, forming service provider relationships, and reducing development costs by using no-code/low-code platforms.

Unpreparedness for Cyber Attacks

The major cause of such a dreadful failure of businesses is cyber attacks. The fast advancement of new-age technology makes it tough for enterprises to keep up. Insufficient security results in a disastrous digital transition, causing uncertainty and volatility.

Lack of Defined Mapping and Strategy

One of the most important digital transformation steps is creating a productive strategy. The transformation cannot get off the ground if an effective strategy is not in place. That is why it is crucial to identify the businesses’ goals and objectives and conduct an accurate business analysis of digital transformation. Only after clarifying the former should companies start mapping the data into a personalized strategy. In fact, many digital transformation consulting firms help businesses create their unique digital transformation plans.

Organizational Culture

Organizational culture became the leading approach in developing digital transformation processes. To succeed in this fast-paced digital environment, a new mentality is necessary, in which the only way to stay ahead of the competition is to deliver answers. Furthermore, departmental networking activities are required to share data and adopt a systematic rather than function-based perspective.

Non-Involvement of Top Management in the Process

If the company's top executives do not believe in and support these changes, it will be tough for employees to change their ways and leave their comfort zones. External policies can assist businesses in this journey by providing resources to upgrade their information systems and technology, as well as learning programs.

Lack of Adequate Data Management

As stated before, one of the digital transformation key elements is customer data. Organizations can learn a lot about their customers' tastes, actions, and prospective future decisions with it, and the approaches that they are using become crucial, as it is difficult to combine and map the information. It's critical to simplify things in order to address these difficulties. The most effective method is to store this information in one data center.

Benefits of Digital Transformation

Improved Efficiency

Having the appropriate IT tools that operate together may help you boost productivity and optimize your workflow. It allows team members to work more effectively by automating numerous tedious activities and connecting data across the company. Also, it is simpler to increase income by lowering costs. Employees and management may enhance their best practices and increase revenue through pattern detection, trend appraisal, and capitalization of data-driven opportunities by increasing transparency in many parts of the organization.

Cost Efficiency

Many businesses waste a significant amount of money and time maintaining outdated systems and goods. Going through a digital transformation may save you not just money upfront, but also time, thanks to the integration of more efficient processes and faster problem detection.

Encouraged Digital Culture

Digital transformation fosters a digital culture by giving team members the proper tools, suited to their environment. While these technologies make communication simple, they also aid in the digital transformation of the entire business. This digital culture will become increasingly important in the future.

Better Customer Experience

It is no secret that customer expectations are sky-high. Customers have grown accustomed to a plethora of options, reasonable pricing, and quick delivery. The next battlefield is customer experience. For over half of businesses, customer experience is the primary competitive advantage.

Revenue Growth

It is easier to increase income by lowering costs. The key to moving a firm ahead is maximizing possibilities by identifying weaknesses in current business procedures. Employees and management may enhance their best practices and increase revenue through pattern detection, trend appraisal, and capitalization of data-driven opportunities by increasing transparency in many parts of the organization.

Increased Agility and Innovation

Digitally transformed firms become more flexible and responsive to current market trends and needs by removing their reliance on old IT systems.

Improving Competitive Advantage

By upgrading their infrastructure, companies get a competitive advantage in their sector. The easiest approach to achieving this is to think forward about the features and functions your new system will require to help your business grow. The features and functions of the software you choose should reflect your business's demands and increase your competitive advantage.

Digital Transformation Impact on Organization

Key Challenges of Digital Transformation Key Benefits of Digital Transformation
Lack of Tech Skills

Improved Efficiency

Unpreparedness for Cyber Attacks

Cost Efficiency

Lack of Defined Mapping and Strategy

Encouraged Digital Culture

Organizational Culture

Better Customer Experience

Non-Involvement of Top Management in the Process

Improving Competitive Advantage
Lack of Adequate Data Management

Increased Agility And Innovation

Revenue Growth

What Are the Main Areas of Digital Transformation?

This sort of change goes beyond typical sales, marketing, and customer service jobs to focus on how businesses interact with consumers. Organizations have the chance to re-examine how they do business by using new technologies. However, the adoption of new technology is only the beginning of the digital transformation. To embrace real digital transformation, organizations must go beyond technology. There are four key areas that a company should evaluate when embarking on a digital transformation.

Transformation of the Business Model

Many traditional business models are being changed through digital transformation. Corporations can accomplish a makeover that leads to major new chances for development by innovating and adding to their present model of success.

Transformation of Business Processes

When companies are looking for a drastic change and set new business goals, they should start with business processes transformation. Such alterations bring new technology and cost efficiency and incorporate new core systems. To achieve successful results in business processes transformation, some steps should be considered:

  • Determine the transformation's objectives
  • Create baseline metrics
  • Involve all stakeholders
  • Make a plan for the best scenario possible
  • Put the plan into action and monitor it

Transformation of Organizations' Culture

Implementing new technologies will not be enough for a successful transformation if an organization fails to align with the culture and internal values. If this is not taken into consideration, companies risk the loss of market competitiveness, failure of the initiative, and lost productivity and income. Companies should be as clear as possible about their vision for the change and convey it effectively throughout the business on a regular basis. To do so, some elements should be considered:

  • Highlight action over planning
  • Highlight delegation over control
  • Promote taking risks over caution
  • Highlight collaboration over individual effort
  • Highlight external orientation over internal orientation

Transformation of Business Directions

Digital business transformation opens new doors for businesses, allowing them to shift direction in their further development. Before implementing digital transformation, organizations should identify the business directions they want to update and follow the necessary business transformation steps to change their business directions.

What Do Digital Organisations Require: Key Components and Pillars of Digital Transformation Strategy

Many organizations are attempting large-scale change efforts to reap the benefits of these trends or merely to keep up with competitors as digital technologies drastically alter industry after industry. We have prepared a list of key components and pillars that companies should keep in mind when implementing a digital business transformation.

Key Pillars of Digital Transformation

Having the Proper Digitally Aware Leaders in Place

During a digital transition, change occurs at all levels, especially when it comes to personnel and competencies. One of the keys to transformation success is bringing in a tech-savvy leader. Leaders of particular projects and program-management or transformation office executives who are devoted full time to the change endeavor are crucial. Leadership dedication is another important factor in achieving success. The success of a digital transformation is more probable when key stakeholders are more involved than they were in previous change attempts.

Developing Capacities for the Future Workforce

One of the most significant criteria for success in a digital transformation environment is building talent and skills throughout the organization—a basic activity for conventional changes. People in these positions assist in the development of internal skills among coworkers. Using a broader range of techniques during recruitment can also help you succeed. In fact, when businesses have invested the proper amount in digital talent, transformation success is much more likely.

Encourage Employees to Work in New Ways

Cultural and behavioral changes, such as calculated risk-taking, increased collaboration, and customer-centricity, are required for digital transformations. Using formal mechanisms to reinforce new behaviors and ways of working has long been proven to help organizations change. Establishing practices related to working in new ways and challenging old working practices, letting employees say where technological adoption should be made and involving seniors and leaders in encouraging employees to experiment with new ideas all bring in the benefits of digital transformation in organizations much faster.

Giving Everyday Equipment a Digital Makeover

Adopting digital tools in everyday work life is the first rule of achieving success. The potential benefits of enterprise digital transformation are the adoption of digital tools to make information more accessible across the organization, the implementation of self-serve technologies for both employees and business partners, and the moderation of standard operating procedures. The digitalization of these doubles the likelihood of transformation’s success.

Frequent Communication Via Traditional and Digital Means

Transparent communication is what a successful digital transformation requires. To be more precise, correctly communicating to the employees you change the story, letting them better understand why it is important, what the next steps are, and where the company is headed. Using digital means of communication to convey the vision of the organization is a much more efficient way of securing success than with traditional channels. It is proven that the success rate is higher when leaders are reaching employees through new digital channels.

Key Components of Digital Transformation

There are seven key components of digital transformation across various industries. Let’s dig in and discuss them in detail.

Strategy and Leadership

There is the digitalization of your organization with a strategy and the correct technology, but transformation takes the right attitude and coaching. As a result, the first and most important component of a good digital transformation plan is strategy paired with the appropriate leadership. To develop your company's digital transformation plan, you must build or employ the proper team with daring leaders led by disruptive CEOs. Leaders during a digital transformation should have the following qualities:

  • Are adaptable to change
  • Have a mission
  • Have a vision for the future
  • Are experimenters and risk-takers
  • Try to form a partnership

Culture Change and Communication

Every team member should prepare for a major transformation in culture. Sometimes, clients and workers are apprehensive about big changes, which can make a transformation tough to implement. Any effective digital transformation program is built on a foundation of culture. As a result, preparing your staff for it ahead of time will be beneficial. Only effective communication will help build a bridge to a successful digital transformation.

Processes Improvement and Optimization

Every organization has a variety of procedures and activities that may be improved to make workflows run more smoothly and efficiently. The plan must guarantee that company processes are optimized while also fulfilling the objectives established for customers and the internal team. To attain maximum production, the strategy must encompass all interrelated business activities.

Data

Data integration and analysis can help you locate your organization’s pain points. When developing transformation plans, people frequently choose their technology before evaluating their data. Data analysis and dissemination of its findings may assist your team in identifying the best solutions to challenges, allowing you to create a better digital transformation strategy and maximize the transformation process.

Technologies

One of the most important phases in developing a digital transformation plan is identifying appropriate technology for your company. Incorporating technology into your business will necessitate a significant financial investment. To make the greatest selection, every successful digital transformation plan will always incorporate certain possibilities together with their financial needs. You must discover the most appropriate technology whether you are upgrading old systems, modernizing applications, or implementing entirely new digital systems.

Team Structure

The scope of your project will determine the size of your team. A well-balanced digital transformation initiative is essential. Your team structure will be influenced by the approach you take. The leader's job is to clear bottlenecks so that the team can march toward a single objective. The project leader and project managers must succeed in fostering cooperation and communicating effectively.

Outcome

The techniques you pick and the technology you use will always create different results. As your company expands, you must consider initial outcomes and develop a long-term strategy to scale the digital transformation and fulfill new goals. Your team must be adaptable enough to consider the outcomes and make changes as needed. The analytics assist you in determining whether all of your criteria are being met.

How to Lead a Digital Transformation? 5 Steps to Digital Transformation

It is very much expected that businesses will have trouble executing successful digital transformations, given that prior research has shown that digital transformations are more difficult to execute correctly than more traditional ones. However, a closer examination of the structure of digital and analytics transformations reveals five digital transformation guiding principles that help implement a successful digital transition. Let’s take a closer look at them.

Maintain a Certain Focus on Your Set of Goals

When it comes to digital disruptions, businesses have many options. Sometimes it is difficult to agree upon all the processes of main focus such as the business model, customer engagement, and investments, among many others. Rather than pursuing numerous diverse processes, keeping all the efforts focused on a few digital themes—such as high-level transformation objectives, fostering innovation, boosting efficiency, or redesigning an end-to-end customer journey that are connected to business results is crucial.

When Deciding on the Scope of Your Project, Don't Be Afraid to Take Risks

Digital strategies should be ambitious in scale and scope, which applies to digital transformations as well. Organizations undergoing digital shifts frequently deploy new digital technologies at scale to maximize the value of their technological investments. Moreover, new digital enterprises are created during the process of transformation itself.

Create a Flexible Digital Transformation Design

The rapid rate at which digital drives change explains why so many businesses are embarking on digital transformations, as well as why those changes must be adaptable. Defining the investment needs and performance objectives for a multiyear change upfront and then failing to revisit them has never been a good idea. Digital changes, on the other hand, require continual tweaking. Organizations that revise their approach from time to time are nearly three times more likely to achieve a successful digital transformation. Additionally, flexible talent allocation, together with adaptive transformation objectives, is a differentiator in the success of a change.

Adopt Agile Execution Mindsets, Approaches, and Techniques

The implementation of the transformation's efforts, just like its design, must be flexible. During a digital and analytics transition, companies should use more agile working methods, such as promoting risk-taking, creativity, and cooperation across departments. If we take a closer look at the agile features of a company's organizational culture, we can see how important agility is for transformation success. Incumbents typically fail to see the economic effect of their digital initiatives because they are risk-averse and compartmentalized. As a matter of fact, only if they have the proper digital skills can they rely on their staff to be inventive, take acceptable risks, and collaborate.

Make Leadership and Accountability Transparent

The question of who owns the digital and analytics transformation is frequently a contentious one because the projects that companies pursue will have an impact on how corporate resources are allocated and may even shift the organization's overall direction. Because responsibility frequently moves among different groups as the digital transformation proceeds, it's important to have a clear understanding of who owns what. Business units are in charge of overseeing the actual implementation of initiatives—that is, creating and improving them.

Digital Transformation Technologies and Services

Successful transformation initiatives require a digital experience platform as well as related services. The digital experience platform at the heart of your digital transformation must enable you to collect data at every step of the customer journey and use it to create rewarding customer experiences. Here are the most popular digital transformation trends you should consider.

Digital Transformation Services and Consulting

Businesses may benefit from digital transformation consulting services because they can guarantee that their digital technology and plans are integrated, thereby reducing the chance of failure. Consultants offer value by providing extra personnel, worldwide knowledge gained from working with hundreds of firms on comparable issues, and a fresh viewpoint. In digital transition, this is also true.

Digital Experience Platform

It's important to have a digital experience platform that can handle content management, digital marketing, and commerce all in one place. Your digital transformation planning and roll-out procedures should be guided by real-time customization, marketing automation, and omnichannel data gathering.

Digital Customer Experience

The digital customer experience is only a portion of the overall experience that your consumers will have during their contact with your organization. Ensure that all of your online tactics and particular activities are in accordance with the overall picture you want to portray. Make all of the components fit together, and you'll see an increase in client satisfaction.

Cloud and Hybrid Cloud Solutions

Cloud technology enables you to harness the power of digital marketing while benefiting from the cloud's speed and scalability. By using the appropriate combination of cloud infrastructure and marketing technologies, you may shorten the time to market while lowering the total cost of ownership.

Digital Business Analysis and Design

The primary beginning point for the service analysis is the business analysis strategy. It's a crucial communication and project commitment document ensuring that correct analysis methodologies, project team alignment, requirements, and timeframes are followed. The analysis plan serves as a project road map.

To Wrap Up

The way businesses operate has changed dramatically over the last decade. Investing in digital product transformation is a requirement for achieving effective business results. By the end of this article, you'll have all the knowledge you need about digital transformation guiding principles.

However, always remember that before putting your digital transformation strategy into action, you should conduct a thorough business analysis to assess your risks, define your objectives, and identify needs. Once you've completed this and followed the instructions in this tutorial, you'll be well on your way to successfully launching digital transformation.

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Written by

Roksolana Kerych

Digital Marketing Manager, focused on SEO and project development in the B2B niche.

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