What is digital transformation?

Digital transformation is more than just a buzzword – it’s a process of using technology to radically change your business.

Look beyond the hype and you’ll find a daunting task at the heart of digital transformation. Rather than focusing on any single IT project, digital transformation describes a series of projects that, together, change every facet of an organisation, from back office operations to customer interactions, often with the end goal of making these different processes intrinsically linked.

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What is digital transformation?

The Global Center for Digital Business Transformation says that “organizational change is the foundation of digital business transformation”. That’s because changing the nature of an organisation means changing the way people work, challenging their mindsets and the daily work processes and strategies that they rely upon. While these present the most difficult problems, they also yield the most worthwhile rewards, allowing a business to become more efficient, data-driven and nimble, taking advantage of more business opportunities.

Why is digital transformation important?

Worldwide, digital transformation could be worth $18 trillion in additional business value, according to analyst house IDC.

Meanwhile, research firm Gartner’s CIO Agenda suggests digital business will represent an average of 36% of a business’s overall revenue by 2020.

The group’s report, Gartner’s IT Market Clocks for 2016: Digital Transformation Demands Rapid IT Modernization, found that 66% of companies doing digital transformation expect to generate more revenue from their operations, while 48% predict that more business will arrive through digital channels. Other reasons for doing it were to empower employees with digital tools (cited by 40%) and to reduce costs (cited by 39%). It’s clear that there’s no better time to embark on your own digital transformation journey if you want to reap the rewards down the line.

Define ‘digital’ in digital transformation

While the focus is on changing how the business works at every level, technology underpins all digital transformation projects. But what technology?

Obviously this changes as time goes on, but typically businesses want to adopt technologies that help them harness and make sense of the vast quantities of data they are sitting on, as well as preparing for trends like the Internet of Things (IoT) and mobile.

That means analytics tools are high up on the agenda, as well as cloud computing, which lets you store data outside your own data centre, potentially closing this down. You might also want to focus on collaborative tools, like file-sharing, mobile devices, and apps, that let your employees work wherever they are, and which give them instant access to information — especially useful for salespeople visiting customers, for instance.

Finding the right digital transformation strategy

Every business needs a digital transformation strategy as without one, it can be a long and difficult journey.

Deloitte thinks that in order to become a digitally mature enterprise it is down to your strategy, not necessarily technology, which drives your business’s transformation.

In its report, titled ‘Strategy, not technology, drives digital transformation’, it says the ultimate power of a digital strategy lies in its scope and objectives. Businesses need to avoid falling into the trap of focusing on technology as an end in itself, but look at it as a means to an end.

Deloitte writes: “Digital strategies will need to address the increasingly blurred distinction between the online and offline worlds. At the Metropolitan Museum of Art, for example, the goal is to create compelling online experiences that induce people to visit the New York City museum and then stay connected through social and mobile.”

The company added: “Digitally maturing companies behave differently than their less mature peers do. The difference has less to do with technology and more to do with business fundamentals. Digitally maturing organizations are committed to transformative strategies supported by collaborative cultures that are open to taking risk. Equally important, leaders and employees at digitally maturing organizations have access to the resources they need to develop digital skills and know-how.”

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Forrester, an analyst firm, recommends a dual-path approach. This allows IT to achieve long term transformation goals and reach a number of quick-wins to bring about business buy-in.

Forrester analyst Ted Schadler wrote in his report, titled ‘Take Two Technology Roads to Digital Experience Success’, that a business should begin by prioritising investments that give benefits to customers and generate business value. From there, you can then split the strategy into the two paths of quick projects and longer term transformation.

When describing the quick-win path he highlights: “On this path, you will turn on functionality you aren’t using and extend your existing platform with new software. The cloud is your best way to layer in new functionality without rebuilding your existing platform.”

And for the longer-term path, he underlines: “You will define, select, and implement a modern platform to deliver long-term agility and capabilities. The cloud is also your friend here: It’s the future of digital experience platforms.”

Main image credit: Bigstock

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