It is easy to be flattered by new technologies as there are tremendous possibilities with innovative technologies such as 5G cellular, Internet of Things, Artificial Intelligence, and Machine Learning to transform the way businesses operate. Enterprises are finding ways to implement disruptive technologies to streamline their business processes and improve sales and customer service. In 2020 and beyond into the upcoming decade, technologies will continue to shine into enterprise business operations.
Though, the possibilities with technological implementation seem fascinating, the implementation isn’t as easy as it seems. Enterprises should have a digital transformation strategy to get the best out of their digital technologies implementation.
The basic purpose behind every digital transformation strategy is to identify the gaps in the existing business operations and analyze the company culture. This helps in finalizing the business objectives and calculating the risk associated with the implementation of digital technologies. Within a digital transformation strategy, an enterprise formulates the implementation roadmap which includes running pilots and tests and employee feedback on the changes.
Why is a Digital Transformation Strategy Essential for your Business?
Let us make it clear, a digital transformation strategy isn’t an option for your business, it is essential to ensure the success of your digital journey. A particular business can consider digital transformation for several reasons, but the most likely reason is that the business has to transform in order to sustain. Businesses only transform when they have failed to evolve.
Here is what happened to businesses like BHS and Austin Reed who failed to evolve. Both these companies couldn’t keep up with the latest shopping trends and offered a very dreadful online and digital presence. Coupled with the outdated stores and poor buying experience, it resulted in businesses that didn’t stack up.
The way brands have started planning for their digital journey, shows a growing awareness that they need to get in shape digitally. Otherwise, it would be hard for these businesses to survive. The digital transformation process is complex for well-established brands as it requires buy-in from all the stakeholders.
Businesses with new business models and startups have a head start over their traditional competitors. Most startups don’t require digital transformation as it is already in their DNA. Startups are often focused on incorporating a digital experience from their beginning.
For example, companies like Airbnb and UBER began with providing their services via mobile devices to capture a specific market. These companies knew the technology shift that was taking place in the travel and leisure segments. They recognised the area to penetrate and succeeded.
How to develop a Digital Transformation Strategy
The following are the steps you will take to develop your digital transformation strategy that surely will help your business transform:
1. Analyze your company culture
Evey digital transformation strategy will begin with the analysis of your own company culture. It is because your culture — e.g., your workforce, products and services, business location, and customers — can dictate the effectiveness of your digital transformation. By analyzing your company culture, you will be able to determine how a new technology will be perceived by your organization, and how it will impact the overall business strategy.
The effect of every technology differentiates among different industries. For instance, technologies such as AI, chatbot, blockchain, IoT, 5G will impact certain industries and cultures very different than others.
2. Define your business goals
There is an adage “without a vision, people perish”. The same goes with organizations. It is appealing to step into the technological transformation because it is new and everyone else is adopting it. The reality is that the timing may or may not be ideal for your company culture or industry that you operate in.
You are therefore required to be more strategic and realistic about the technological implementation, when identifying whether the digital technologies available would provide a net benefit to your business. Clearly defining business goals will eliminate the chance of there being a misalignment between business goals and technology goals.
3. Calculate the risks
Where there is innovation there is risk. Many organizations that have successfully implemented digital technologies into their business operations, knew the risk associated with digital transformation. This risk is somewhat similar to when a company makes some internal changes or releases a new product or service.
An issue that occurs many times with digital transformation is that companies calculate the risk but they fail to document and track the risks over a long period of time. One example for this can be the implementation of 5G cellular technology. As we look to 2021 and beyond, 5G technology has the potential to transform many businesses areas, yet the technology comes with the risk of the unknown.. It is currently uncertain which types of the companies will be able to benefit from 5G technology the best.
4. Run pilot tests
Once you have assessed the company culture, defined the business goals, and documented the risk, it’s time to run a pilot project and test the technology on a small scale, rather than rolling it out to every business area. For example, the digital technologies like chatbot can be tested on your website, rather than every possible customer touchpoint. Running pilot tests enable you to analyze whether your digital transformation strategy delivers the desired results.
5. Get feedback
The pilot phase will allow you to strengthen your strategy, but not without proper feedback from your internal departments, where the pilot project has been deployed. This phase of your digital transformation strategy heavily relies on the data received from the feedback. You can conduct a survey, which includes multiple focus groups to analyse the effectiveness of the pilot project.
Continuing the example from the previous stage where the chatbot was only implemented on the website, the business can analyse the increase in user engagement to see whether the chatbot is a successful implementation.
6. Roll out the new Technologies
When you have analyzed the pilot project implementation and made the necessary changes in your digital transformation strategy, it’s time for you to roll out the technologies into more departments or areas. However, it is advised to fully embrace the digital technologies into your departments one by one and keep working on feedback, as if you are doing a pilot test.
7. Keep analyzing the impact
For every digital transformation strategy, analysing the performance is essential for its success. It is easy to implement technology such as chatbot as a part of customer engagement and bitcoin as a transaction medium. But then to simply assume that these digital technologies have worked at par to the existing solution would be a foolish thought.
The implementation of technology has to be complete. Many times when companies partially implement technology and realise afterwards that there is something more to be done to reap the benefits. One example of this can be the AI implementation. When they integrate AI into their sales process, they see a little improvement in their operations, but after some time, they realise that they have to automate further to achieve the desired results.
What does a Digital Transformation Strategy look like?
Though the digital transformation strategy varies based on the goals and challenges of the organization. There are a few common goals that companies and business leaders usually consider going forward with during the digital transformation process.
For instance, the following digital technologies implementation outcomes are often cited:
- Operational agility
- Customer experience (CX)
- Workforce efficiency
- Company culture and leadership
- Digital technologies integration
Every digital transformation guide and recommendations have different steps and considerations and CIOs should look upon the aforementioned themes while developing their own digital transformation strategy.
Some real Digital Transformation examples
The fear of being overtaken by the agile competitors is triggering companies to be innovative, experiment new digital technologies, and offer services into the adjacent markets. The restaurant chains like IHOP and TGI Fridays are experimenting with new technologies such as virtual assistants to enable mobile ordering. This move shows even the big brands are fearful of being rendered obsolete by hipsters.
Grocery chain players such as Albertsons are working on providing a seamless customer buying experience by personalizing sales offers and digitizing the payment system. Similarly, other market players are investing in logistic management software to facilitate a transparent supply chain.
Software consultancies play a major role in the organisation’s digital transformation strategies. For instance, many fintech development service providers are helping banks accelerate their loan origination process by upgrading the bank’s digital infrastructure with modern-technology driven software solutions. Lately, the banks had to spend hours in drafting loan applications, which reduced the operational efficiency and the quality of customer experience.
Digital technologies are allowing businesses to transform their product-based business model into a product as a service model. For example, the digital twin technology is introducing a new reality into the manufacturing sector. Manufacturing giants including Boeing, General Electric, and McDermott International are working on creating software versions of their physical assets using technologies such as Digital twins and AI.
Digital Transformation expert tips
- Setting accountability — who is responsible for what — being clear with the steps and goals upfront is critically important, but businesses can take several steps to make all the roles and responsibilities related to the digital transformation process clear.
- Be bold but realistic while setting the scope – We’ve seen that bold digital transformation strategies are 1.5 times more likely to be successful in large-scale enterprises as compared to strategies that are overemphasized. Bold strategies help CIOs to get the most out of their technology investments. With strategies that are too cautious, the transformation often gets stuck in incremental changes, and the desired overall results does not meet expectations.
- Adaptive model – The days are gone when technology investments were inclined towards upfront requirements and rigid KPIs. Modern approach to digital transformation supports adaptive models which enable the CIOs to adopt iterations into the digital transformation strategy on a weekly or a monthly basis, including talent reallocation.
Most of the successful digital transformation strategies ingrain adaptability from the start. In fact, many CIOs have stated that the digital strategies which have been successful in transforming their business, were adjusted more than three times.
- Adopt an agile development model – the agile development approach enables even the lower-level personnel to take risks and learn fast. Disrupting the business process is very important, and the successful digital transformation strategy requires preemptive changes instead of just reacting to the competitor’s breakthrough in digital transformation.
One of the biggest misconceptions related to digital transformation is considering the transformation process as having an end destination. Thinking that if we do this, we’ll achieve the results and we’re done with this, is the worst digital transformation strategy.
As the industries are evolving, and with technology being the biggest disrupter, we’ll continue to see technologies as a critical part of business strategies. In 2021 and after, businesses will make use of digital technologies to remain relevant to the customers, shine in the competition, differentiate their products and services, and drive efficiencies into their business operations.