We are currently living in a highly technological world where everything can be done through a mobile device or a laptop; where all the daily processes have been influenced by new tools and technologies; where every and each company has experienced massive changes due to a fast-changing digital environment.
In easy words, the world has gone online, expanding and distinguishing new ways of communication, interacting and doing business. It is rather difficult to stay away from all these innovations and keep up with doing work in an old-fashioned way. Big and small companies, retail and beauty industries, sports and healthcare need to adjust and get used to the highly digitalized world in order to keep the existing clients, get new ones and increase their interaction with the brand.
Digital transformation is something people have heard of but have not yet seen or tried implementing it. Nevertheless, it is something that will affect them all, either they want it or not.
- What does digital transformation mean?
- WHAT DRIVES DIGITAL TRANSFORMATION?
- The 4 key drivers of digital transformation
- Benefits of digital transformation
- How to implement a digital transformation?
- The difference between digital transformation, digitization, digitalization
What does digital transformation mean?
Digital transformation is all about new technologies and digital tools which are already being implemented in all types of businesses and their work models. Entering the digital world means changing the way the brand interacts with its customers, the way all the inside systems work and the way the company organizes its day-to-day activities and tasks.
It is rather difficult to act according to familiar methods when the whole world is going digital and does not want to accept the old ways of doing things. Even though there exist a lot of industries that are still loyal to working the same traditional way, they will not be an exception and will anyway have to adapt in the near future.
Digital transformation is important due to several reasons and helps with:
- Increasing customer satisfaction;
- Increasing interaction between the brand and its clients;
- Updating work processes;
- Upgrading business models;
- Developing digital skills and discovering new talents.
Tools of digital transformation help companies to keep up with the trends and survive in a fast-growing environment. In order to provide better customer service and a higher level of customer satisfaction, companies need to change multiple ways of interacting with their clients and learn more about digital transformation.
The definition of digital transformation
As far as buzzwords go, ‘Digital Transformation’ has been a very popular phrase in different discussions of businesses lately. With a variety of interpretations, digital transformation is something that could revolutionize the way businesses deliver value to customers. The reason for this wide range of interpretations is that for every company, this transformation will look different. Technically speaking, digital transformation is a combination of people, processes, and tools all working in harmony to help the system provide its customers with better ease and care, by adopting digital technology to improve value, efficiency, or innovation.
As we know the definition of digitization is the process of transforming analog information into digital forms, using converters. Digital transformation, however, has a much broader definition when compared to digitization. When we talk about digitization, we are solely thinking about a certain transformation process, but on the other hand, we need to consider how products, processes, and organizations can change through new technologies.
The difference between digital transformation and Business Process Reengineering
Many researchers think that Business Process re-engineering (BPR) and digital transformation have a lot in common. Meanwhile, they define BPR as the process of rethinking and reengineering business-related processes to lower costs and improve the quality of products and services. BP’s main focus is on making rule-based processes automated. These rule-based processes are defined as those which can be automated by technologies. As you can see, they are very alike. But the big difference is that in the digital transformation we normally deal with how employees interpret the newly acquitted know-how and they try to use it to provide better decision-making capabilities.
WHAT DRIVES DIGITAL TRANSFORMATION?
Just like everything in our lives in these times, nothing has a single purpose anymore, and just like everything else, not one single factor could lead such a behemoth of occasions single-handedly. Hence, here we will discuss 4 key drivers of digital transformation
The 4 key drivers of digital transformation
1. Customer expectations continuing to rise
Once gone digital, you can never let go of the ease of access and use of digitization. As a Principal Analyst says, whenever a consumer is exposed to an improved digital experience, their expectations are immediately set to a new higher level. So you really cannot expect consumers to be all content in previous settings. Many believe that huge companies like Uber, Amazon, and Netflix are to blame for new levels of expectations among consumers.
2. Speed is more important than ever
Many speakers and entrepreneurs are emphasizing the ever-increasing priority of speed in modern times, and as a CIO of InterContinental Hotel Group says; no longer can the case of slows beating the fasts be seen, but it is the time of fasts beating the slows.
3. Customer insight continues to be essential
The ability to respond to the expectations of empowered customers rapidly needs a strong focus on the insight of customers. The insight of customers is not something to be exactly found in traditional surveys, but rather good investors and designers need to deeply understand their customers. This understanding comes from studying and understanding many anecdotes.
This insight needs to be implemented at many levels, from understanding your customer base overall and the understanding of the needs of each segment, to increasing understanding of individual consumers’ needs to personalize their experience. Acquiring this level of insight doesn’t only mean developing customer intuition and making a bank of anecdotes, but also leveraging data to continuously feed the pulse of customers to organizations
4. Digital transformation means business transformation
Digital transformation will not only affect the way employees upgrade the interfaces they work with, or the interfaces organizations provide to consumers, but rather, in many cases, it also means re-inventing great portions of the business including operating processes and business models.
A VP of Global Product at Expedia gave some examples of the long reach of digital transformation, such as the need for Starbucks to redesign their stores’ layout to handle the logistics of ‘order ahead’ customers, or how Hilton wanted to allow customers to unlock doors through an application. This not only meant software development challenges but also the challenge of having to change thousands of door locks at their properties. Add the challenge of retraining teams of different facilities to learn how to properly maintain and repair the new locks.
Benefits of digital transformation
Digital transformation is the affinity that has kept digital technology into all areas of a business. It makes fundamental changes in the operation of a business. It leads businesses to greater innovation, continued relevance, flexibility, and better responsiveness.
Experts believe that there are interrelated digital transformation benefits that we are going to take a look at.
One of the common goals of digital transformation is to help with the growth and improvement of how creative and productive individuals and organizations can get and help them with decision-making, connectivity, etc. digital technologies can open the door to unfamiliar data and help us get through the process, some of these technologies include: cloud computing, fog computing, smart devices, data analytics, social media, and networking, etc.
Digital transformation uses the possibilities and opportunities of new technologies as well as fundamental expansion of a company’s reach for a better and faster experience. True digital transformation, such as change and digital innovation, is a continuous journey, and effective strategies recognize that the ultimate goal will continue to move.
Better customer experiences
Customers always have high expectations; when they know more about the process of a business, they trust more. When you give them the control to make decisions around their data it gives them a feeling that you value their privacy.
On the other hand, a customer service agent can track all the orders in the system by just looking at the system and the process is done in the best and simple way.
Better employee engagement and culture
Culture is always essential for society. When you provide your team members with the right tools, you encourage them to have a digital culture which is a necessity for a business to remain sustainable.
Therefore digital culture not only helps the employees work efficiently but also helps them to stay organized. You can automate many manual tasks and integrate data throughout the organization. It helps their job become less stressful and their time at the company more enjoyable.
A lot of organizations put all their efforts into refreshing old mechanisms. Instead of spending a large amount of money on maintaining old systems and products, digital transformation helps you to save both time and money in the process of promoting products. It also leads the process to quicker problem-solving which is a great advantage.
In digital transformation, The way your employees communicate, the way data is flown through the organization, etc are helping you to save time, money, and resources. This is one of the biggest benefits of digital transformation.
To provide a way to improve, you need faster innovation. Digital transformation makes the operation of a business more agile. By agility with the digital transformation, you can reach continuous improvement strategies.
Better resource management
The average number of applications used in businesses in 2020 is 900. Digital transformation can consolidate applications, databases, and software into a greater treasure for businesses.
The advantage of digital transformation is that it is not an individual department, you can access its data in every area you want.
Since organizations with digital transformation have efficient customer engagement, they are also able to make better communication with customers to know more about their requirements. That’s why customers can trust you and it leads you to a better responsibility.
Digital transformation is a great step for industries toward being more creative. It helps your company to use opportunities to make new products and produce services that were hidden before.
As we said before, the flexibility and agility the digital transformation provide for you help you to adapt to new changes in the environment to deliver value. At the same time, you can stay relevant to the industry you are in.
Improving competitive advantage
When you improve the main structure of your business, you improve the result you are going to get in your business. You should stay organized and make a schedule ahead for the features and functionalities of the system to make a stronger company.
How to implement a digital transformation?
While thinking about digital transformation, a lot of people will agree that it is mainly about technologies which, as a rule, is not particularly true. Digital transformation covers a lot of aspects of a company’s organization and cannot be successfully implemented unless they all are covered in the process.
Among the things that need to be involved in the process of digital transformation are:
- Digital-oriented leaders;
- Soft-skilled talents;
- Digital trainings;
- Digital tools;
- Inside communication.
Developing a new digital strategy, companies have to make sure that each and every aspect is reviewed and implemented in order to get a successful new model of doing business.
It all starts at the top. Unless the company has a good leader, regardless of how hard people work, or how talented they are, all the work will be useless. Employees need to have a good example and someone who will guide them through all the new processes and implementations. When leaders are familiar with all the new technologies, it is much more effective and beneficial for the company. When they are fully involved with the process, know how the new system works and ready to help everyone with better and faster adaptation, the company is meant to succeed in digital transformation.
An interesting fact about modern recruitment is that no matter how valuable hard skills are, more and more employers tend to choose people who are creative, fast-learning and curious towards new knowledge and experience. And the demand is only increasing as the companies are implementing digital transformation.
It is very important to have talented people in the team, those who will be able to adapt and change when needed, who will be flexible and skilled. Technology, as a matter of fact, will not function without people who are able to make it work while people will not succeed unless they get acquainted with all the technological innovations.
Digital transformation opens doors for many new directions and job opportunities and it is just the right time for people to realize that the more adaptable they are the easier it will be for them to upskill and get a place under the sun. The companies, in return, should see people as the main mechanics in the whole system of digital transformation. Investing in people with smart minds will give an opportunity to benefit from digital transformation faster and more efficiently.
Getting the right leaders and talented people on board is half of the battle. Both of them require good training and day-to-day practice in order to understand the way digital transformation works. It all starts with distinguishing the differences and advantages of the new business model, practicing it and discussing all the possible ways it can make everyday working life easier and efficient.
It is essential to show and teach people how to integrate digital transformation into traditional processes in order to avoid massive confusion. Hiring professionals who are strong at technology implementation and integration will help to speed it all up and provide a better understanding of all the technical features of new and unknown technologies.
Digital tools are vital for implementing the transformation itself and making the overall process easier and more accessible. The company can step-by-step start using numerous available digital tools and make them an integral part of everyday workflow. Some of them will perfectly work, while others will be useless. Every company can give it a try and practice various methods in order to find the perfect one.
Getting rid of paper stuff, downloading smart software, digitalizing to-do lists with numerous dashboards that help keep the tasks unified and track the results of the whole team are just a small part of available things on the market. The only thing left is making the whole team involved and encouraging them to try it.
While it may seem quite a tough thing to accomplish, it is true that everyone will eventually get used, as they once did with new smartphones.
Having so many new things to get acquainted with, people might get lost and confused unless there is good communication established in the first place. Digital transformation requires constant interaction among all the employees with them sharing their results and overall impressions.
First of all, it is rather essential to explain what are the new things that are planned to be implemented, what is the main reason for changing the business model and how everyone will benefit from it. The more people know, the more eager to participate they will be.
Secondly, it is important to establish new ways of communication. Old-time favourite emails are a bit outdated way of communicating with colleagues and companies have already come up with new and more convenient ways to be in touch. The company can create a general chat on one of the social media platforms where people can share updates, give ideas and conduct discussions.
Thirdly, communication between the leaders and the employees is vital like never before. When the company is undergoing a so-called renovation and redevelopment with the implementation of digital transformation, everyone should be involved. A good way to integrate technology is asking for constructive feedback every now and then. It will help to understand whether the company is moving in the right direction and get rid of those methods which do not seem to work properly. Regular meetings with all the departments, product development, marketing and others, will be beneficial to brainstorm and come up with new and creative solutions.
The fact that all of the new tools and technologies require financing is not new and rather obvious. Technology implementation managers, digital-oriented employees, a set of digital tools along with regular training can be quite expensive. Companies need to be ready for that and what is more important they should want it and understand that it will all eventually work for the common good.
Another helpful thing is understanding that each and every aspect is needed. A company can buy all of the latest technologies, but without a professional ready to show how to implement them and people with required skills, the investment will not bring any results. The same works when there are enough people and tools but there is no available training material to implement it in the best possible way.
The difference between digital transformation, digitization, digitalization
Even though we’re in the perfect spot when it comes to digital technologies, and we are aware of the necessities there are still confusing moments on the way of creating and leveraging digital transformation strategies.
But where does this confusion come from and what’s the cause? When we take a brief look into the matter it’s obvious that most of these uncertainties are related to the language and terms that we use for the description. When it comes to the key terms that we use for digital transformation it can get confusing real quick. Digitization and digitalization are the most common terms that are used in the digital transformation topic. So in the following, we’re going to take a look at these terms and how they are different from each other.
Let’s put it in simple words, the most basic digitization it’s like trying to change from the analog form to the digitized version. The process of change is what’s called digitization also known as digital enablement. But what is the process and what does it do? Well, as we said it’s like transferring old-fashioned formatting to modern ones. For instance, converting paper files to digital ones or changing from CDs to mp3s.
But how does this translate in business? In business, the changing process often happens when companies decide to convert to an online system or even legacy modernization. The most important part of these conversions is becoming digital whether the matter that we’re converting is physical or not. When the process is digitized it means that we can have access to it through a computer, that’s why having a digital format is important for businesses.
When businesses create digital formats of what we consider physical barriers for the information it allows them to have instant access to data that can help optimize upcoming processes, even get processed, and transmitted itself. In other words, you can say that digital transmission can include the existing paperwork or physical information and automate these and their processes.
Digitization can help with creating value. But how does digitization create value for businesses? First of all, digitization cuts unnecessary costs and can help businesses to build the foundation of leveraging their data.
Digitalization and digitization are significantly different when it comes to concepts. However, the implications are noticeably different as well. So you can’t just detangle these two.
Let’s take a look at one of the most accurate ways to describe digitalization. Using data that we have digitized alongside digital technologies so that we can have some transformation around the work we’re doing and create better and more impactful engagement with customers and finally creating new revenue streams is a wealthy definition of digitalization.
Now that we are familiar with digitalization, we know that it can’t happen without digitization. Remember the paper files example? In that example, digitalization is like when we turn those paper files to the digital format we have a purpose for it, it can be uploading those files to the cloud so that we can have an impact on the collaboration process of the business and therefore, the process of reporting and use analytics tools to gain insight for a more efficient way of working.
Well, digitization is the process of digitizing existing data, but digitalization is using digital technologies to capture data and shape them for better and more efficient business decisions.
So far, we are familiar with digitization and digitalization, but how are they impactful on digital transformation? Digitalization is an important aspect of digital transformation, and it can be impactful on customers, employees, and overall your business delivery. This represents a cultural shift within an organization that is redesigning value creation and business operations.
Digital transformation is more extensive than just applying and implementing digital technology to the businesses that exist already. It’s about how quickly the businesses will adopt the technology and use the information to do so.
The common definition for digital transformation is something like the following: Digital transformation is the strategic and prioritized use of change and opportunities brought about by digital technology and its social impacts on business activities, processes, competencies, and models. It’s a transformation that accelerates in the depths.
Combined with the previous term, digital transformation is a broader strategic and ongoing mission that relies on the integration of digitized data and digitized applications.
Culture and digital transformation
Companies tend to struggle when it comes to digital transformation since there is lots of ground to cover with the rush of digital technologies. Experts say the major issue isn’t the technology they need to choose but it’s the cultural aspect. Digitally mature companies are more innovative
and supportive than their competitors. With a dedicated employee who is fully adaptable to the changes in digital technology, you are ready to challenge anything. Companies that take digital transformation seriously are not afraid to hire skills from other sectors and enjoy listening to and implementing suggestions from employees at all levels. And they recognize the need for continuous innovation, do more, and are constantly looking for ways to improve.
This means that every company moving towards digital maturity must experience cultural change as it grows. But you can’t just impose a different culture. The conditions of the workplace framework need to be visibly changed.
Going through changes
Companies need to consider a few factors when it comes to embracing changes. Much of these factors are related to how people work together to make decisions. Here is what you need to do as a company:
- Try changing from the traditional forms and slow, layered bureaucracy and analyze and process data more agile
- Try to go for a more efficient approach as you use traditional functional boundaries to achieve common goals
- Learn to move to a culture based on constant low-level development and assess occasional failures as an opportunity to “better fail” rather than the turmoil of years
The right environment
Another important factor is going for a technical and physical environment that can be supportive of collaborative and agile approaches. For instance, Google Cloud facilitated collaboration by providing offices with a variety of social areas in addition to traditional desks and meeting rooms. When we say creating the right environment we mean sharing effectively anywhere, from smart, collaborative digital workspaces to mobile apps that are custom for your business processes to business intelligence tools that users can easily explore and use. It also means providing employees with tools to innovate and work.
When it comes to IT teams, creating the right environment means providing a cloud-based platform that frees them from their day-to-day operations and allows them to focus on new projects that take the company further on the journey of digital transformation.
Digital transformation is something that sooner or later every company will face and undergo. It doesn’t really matter whether it is a big company or a small agency, the fast-changing world will make everyone play under new rules in order to catch up and not lose it all.
Those companies, who are already working on implementing digital transformation or just starting the journey, need to remember that the process includes many factors, each of which is very important and cannot be left behind. In order to make new technologies work and bring positive change to the company, it needs to have smart and skilled people who will, on one hand, show how to use the tools and, on the other hand, integrate them in the most efficient way.
Digital transformation is changing the way people interact in the work environment, the way they address their customers and stay active on the market through social media platforms. Although the process of implementing new technology and various digital tools might, at first sight, seem challenging and costly, it is indeed worth it.