The key to success always lies in innovation. Businesses that implement digital transformation are on the path of innovation-driven success that would future proof their enterprise. Digital transformation goes beyond shifting from paper to Google Docs. It aims to impact the company at an organizational level to bring a shift in the culture and revolutionize the operational system of the company. Technology is more of a catalyst to this transformation than the objective.
To understand digital transformation,it might help to see what it is not, it differs from digitization and digitalization.
Digital Transformation
Digital transformation is more than the technological advancements used to impact work models and is different from processes of digitization and digitalization although these helped enable and usher in the smooth shift to digital transformation. Let’s start with digitization.
Digitization
Digitization is simply the act of converting physical material to a digital file, converting analog to digital. It constitutes the transfer of data that was filed physically to now being stored on computer files and sent digitally. But this does not warrant the change in the ways the data is used or analyzed by the business.
Digitalization
Digitalization on the other hand makes the data easier to access and handier to use. By uploading the files to a cloud-based system, the data can now be analyzed and better interpreted to bring in better insights. Digitalization makes the work more efficient and faster. This again does not necessarily mean a shift in the work model but rather an efficient way of finding and recording important information. It also makes engaging with the customer easier by helping them log queries or complaints online.
Digital transformation
Digital transformation is facilitated by digitized data and the digitalized process of utilizing this data. It intends to use insights and analysis to make an impact on the way the business is run. It’s not just about bringing advanced technology into the business but changing the culture of work. Sometimes even shifting or bringing in new areas or classes into the organizational model.
Digital transformations work on a more internal level to build better relationships with customers, employees and to bring an overall boost in productivity to the business. Technological innovations enable this transformation of a culture within the business that looks for innovative ways to carry out the work. The aim is to build a business that is ready to adapt to any changes that the future may throw at your business. Using technological advancements to increase efficiency, productivity and to automate certain tasks can further help the business experiment and be comfortable with change and take risks. Moving away from the traditional playbook is not easy for a larger company but digital transformation hopes to make the shift easier and more approachable.
The Need for Digital Transformation
Digital transformation sounds well and good but is it necessary?
Review the impact brought in by the pandemic on businesses of different industries. The distress that it caused to the flow of business, calls for a change to a flexible model that can adapt to unforeseen situations.
Digital transformation brings in better possibilities for customers and employees. Let’s take the implementation of AI as an example. Integrating AI in businesses can offer personalized and relevant products to its customers and make communication simple yet efficient and can streamline production. The use of conversational AI in websites helps customers get quick and accurate replies for often asked questions. This means that employees can focus on customers with complex queries. It also offers the customers the leisure of a 24/7 connection with the business, hence breaking barriers that slow down efficiency and communication. AI in predictive analytics can bring in more accurate insights and analyze hidden patterns so that the business can stretch itself to better heights. The possibilities are endless.
In the era of data, the success of a business goes beyond acquiring data. Leveraging the true potential of the data silos by gaining actionable insights from them is what will help gain an edge over the competition. This transformation to finding and acting on the true potential of the data and the technology at hand is what makes digital transformation such a necessity for any business in any industry.
Adapting to the new normal
Dare I say that the pandemic was a silver lining for digital transformation?
During these unprecedented times with entire organizations shifting to remote work, it became an urgent necessity to bring in reform to meet the renewed demands of the customers. This brought in the apparent need for digital transformation and its accelerated adoption into the regular workspace. Most businesses were left to adapt the methods in a short period since the demands of the economy and the customers were shifting at a faster rate. The expectations of the employees were also a matter of concern. To tackle all these challenges and the disruption to the “normal”, companies looked into the management of their data and their competition to find ways to incorporate a better and efficient way of dealing with issues. Automation and video conferencing were among some of the digital transformation strategies that were widely received through industries. The pandemic also made it evident that the switch to digital is a constant process with an evolving game plan that requires the business to innovate and adapt to stay on top of the competition. The uncertainty that we have endured during the time has brought in massive changes to the “proved and tested” methods that companies safely followed. This accelerated need to jump to digital transformation was a result of the chaos the pandemic brought with its arrival.
Opportunities with Digital Transformation
The article has talked so far about the need for digital transformation but what are the opportunities it brings with its implementation. As mentioned prior digital transformation is not just about the technologies used, but rather the innovation and shift in culture that is enabled by technological advancements. The innovative implementation of technology in different sectors has brought in opportunities spread across different industries. Let’s look at a few examples:
Retail
The digital transformation in retail brings in new opportunities to the shopping experience for both in-store retailers and the e-commerce industry. Analytics, QR codes, augmented reality, and visual search are features that boost customer experience. Retail analytics and footfall counting can help the business understand the in-store traffic pattern and place products accordingly. QR codes make payments much easier and allow coupons to be interactive and cashed online. Augmented reality offers a “try before you buy” feature that helps the customer understand the product before buying it, hence presenting more customer satisfaction. The visual search feature allows customers to find a certain product that they might have seen elsewhere. Voice-enabled search helps ease the buying process.
Beyond customer satisfaction, digital transformation can aid the employee by providing more knowledge about the product and they can use it to sell the product. Having access to accurate information about the product can boost the confidence of the employee while providing recommendations to the customer.
By using predictive analytics retailers are privy to data-driven information and predictions about emerging trends and can set up inventory to match this. This operational level change can help retail businesses make better and quicker decisions. The accurate data about demand can help reduce unwanted purchases and thus be cost-effective as well.
Insurance
The opportunities in the insurance industry like automating claims processing can make it an efficient and less time-consuming process for the customer. Digital transformation brings the option of better customer relations as well. It can also aid in fraud detection in claims and documents submitted for claims processing. Video analytics can help with pricing by scanning and identifying the damages on vehicle accidents and thus reducing the time and manpower spent on small accidents.
AI systems can also make personalized offers for customers according to their needs. Paying bills, viewing claims, feedback and updates can be sent and received online thus making the process easier and quicker for the customer and economic and time saving for the business. Digital transformation also makes it easier for the employees to take accurate decisions about underwritings, policies, and products. Using the power of digital transformation, the insurance industry has many innovative ways to make the process efficient and agile.
Banking
In the banking sector, digital transformation has come to ensure efficient management of data and increased efficiency in processes. Fraud detection again plays an important role. Banking sectors can benefit from smart contracts and blockchain technology in their process to ensure the security of stored data.
Fintech can ensure the smooth running of backend processes like e-commerce transactions, accounting, obtaining loans, and payment processing. The implementation of open banking can boost customer engagement by providing them personalized offers and the option to manage all their accounts from one app. It can also help traditional banks receive an extra revenue stream and provide online services to the customers according to their needs. This can help the industry future-proof itself by attracting new customers as well as retaining existing customers.
Digital transformation metrics
The opportunities offered by digital transformation are interesting and spread out in different sectors but how does a company gauge the success of implementation within the organization, given below are some metrics that can be used to measure the success of the digital transformation.
● Active usage
By measuring the active usage of the digital assets, the company can gauge success. By taking into consideration daily active users, conversion rates, and abandonment rates the company can measure if the digital strategies used had a positive impact upon implementation.
● Engagement
Measuring the engagement of the user and the reception of the employees are important ways to measure the success of digital initiatives. It helps the business understand if the system implemented is truly efficient enough to make the employee change their old methods. It also gives a view about how much the user finds it attractive and engaging.
● Performance
If the digital initiative is adopted smoothly across the organization and if it improves the employee performance then the transformation was a success. The performance of the employee ensures the effectiveness of the initiative along with a high rate of adoption which can mean its ease of use and understanding.
● Measure RoI
If the digital initiative provides a good return on investment then surely it is worth the price. If the comparisons of the amount spend and the return have a good balance and its adoption rate is high then the investment is successful.
● Productivity
Based on the value and the volume of work presented by the employees the company can measure the productivity of the employee. The efficiency of the work, their engagement with the work, the effectiveness of automation can all be indicators of a successful digital transformation.
Challenges to a successful digital transformation
The concept of digital transformation brings in a lot of benefits and opportunities but its implementation is not without challenges. While trying to adapt there are a few things that can hold back the success of the digital transformation.
● Lack of digital strategy
Before transforming systems and methods to the digital mode the company must have a clear digital strategy that can help outline the objectives of the digital transformation based on the gaps present in the smooth working of the company and what the company hopes to achieve through it. Without a strong strategy, it’s easy to lose sight of what the business hopes to achieve and its objectives, and which areas require more attention and resources. Mismanagement of these can hinder the success the business hopes to see upon implementing digital transformation.
● Lack of fluidity in organizational structure
Since digital transformation brings in changes on the organizational level, to facilitate this change the organization must lose rigid structures and leadership methods. The pandemic and the remote work environment emphasized the need for flexibility in organizational structure. Digital transformation aims to make the company efficient and innovative, to achieve this it is important to be open to understanding and altering the outdated legacy systems.
● Overcoming the legacy systems
One of the biggest challenges to overcome is legacy methods and frameworks that are still set in place, these systems may not present any value in terms of efficiency and effective management of the data available. Changing this and leveraging the data to bring in actionable insights can lead the digital transformation to success in the company.
● Employee engagement
As mentioned above, digital transformation works on an organizational level, so convincing the employees about the change is a big step to a successful transformation. Even with a compelling strategy, it might still require some convincing to deal with the change. Making the employees feel included in the process, keeping the process transparent, and providing them the required resources can help overcome the fears and reservations about the change the employees feel.
● Lack of skill to implement digital transformation
Since digital transformation is enabled by advanced technology it is imperative to have a dedicated and skilled IT workforce to help with the implementation of digital transformation. Lacking this can set back the company in its journey. Consultations with businesses that have expertise in digital transformation and technologies can help overcome this obstacle.
● Budget constraints
Implementing a digital transformation within an allowed budget will help the company set realistic goals. Knowing the budgetary limitations can help create a strategy that can work well without putting the company at too many risks. It helps space objectives throughout a longer period.
Each company would have a different rate of reception and outcomes based on the objectives they set and how well they implemented digital transformation. Regardless, it hopes to bring a technology-driven future rooted in the culture of innovation. Digital transformation is never a one-time process hence continuous evaluation and improvement would create better impacts and help achieve the success of the marked objectives.
