Digital Transformation: Retooling Business for a New Age
Digital transformation started many years ago, but the term has only become popular in recent years. Many analysts and business executives have used the term without realizing the true meaning of digital transformation. Some interpret digital transformation as interacting with their clients through their websites and social platforms. Others consider it as the shift from paper records to computerized databases. What is the true meaning of digital transformation? What drives the transformation, and why is it important to businesses?
The definition of digital transformation
One of the definitions of digital transformation is the investment in new business models, technology, and processes that increase value to customers and employees, and enable businesses to compete effectively in a digital world. Digital transformation has also been defined as the result of aligning IT innovation with an elaborate business strategy to transform how an organization serves its customer, partners and employees.
The process is also aimed at improving business operations, inventing new businesses, disrupting existing markets and businesses, and creating new business models. The true digital transformation has a holistic approach. It covers all internal processes, services, and operations involved in winning, serving, and retaining customers. In other words, business owners cannot ignore any aspect of their business when adopting new technologies.
Why invest in digital transformation
The findings of one recent survey that involved more than 500 C-suite executives explain the importance of digital transformation. The participants of the study were drawn from different parts of the U.S. and Europe. The findings show that about 65% of the respondents believed that 40% of the existing Fortune 500 companies would not be in business in the next ten years. About 91% of the participants were enthusiastic about the future of technology in their businesses. More than half were worried about competition from disruptive businesses.
The percentage of top companies that are likely to go out of business is worrying. What separates the businesses that will continue to grow in decades to come from those that will close down is their approach in adopting the technology. The approach of existing businesses adopting new technology will determine their ability to beat their rising competitors. The competition, in this case, includes startups that are highly focused and willing to adopt all new technologies to improve their processes and services.
Given the current evolution in technology, business owners must focus on automating their processes as much as possible. Developers will continue to introduce new technologies in the business world. The businesses that will be agile and flexible enough to evolve with emerging technologies will remain competitive in the long-term. Otherwise, business owners risk being pushed out of the market by startups that are willing to invest largely in digital transformation.
Drivers of digital transformation
How can business owners adjust their digital transformation strategies in light of the increasing competition from start-ups? Altimeter released a report in September 2016 after conducting a survey of 528 executives and digital transformation strategists. The participants were from different industries in the UK, U.S., Germany, France, and Canada. All the companies represented in the survey had more than 250 employees.
Altimeter found out that customer experience was the leading driver of digital transformation. Many companies were adopting IT innovation in response to the changes in customer behavior and preferences. Other drivers of digital transformation from the survey results were the need to expand business operations to new markets and responding to increasing competition. Respondents also pointed out the need to comply with standards and accommodate new regulations as a key driver of digital transformation.
Participants in a similar study conducted by 451 Research identified the drivers of digital transformation as intelligence, agility, and customer- centricity. Intelligence, in this case, refers to making data-driven decisions and drawing new insights from data. Both studies point to the need for business owners to improve and personalized customer experience to remain competitive. 451 Research identified three main areas in organizations that require digital transformation. The areas include technology platforms, information usage, and business processes.
It is clear from the results of recent surveys that existing businesses must shift their focus to digital transformation to remain competitive in the future. Some may go out of business within the next ten years if they ignore or use the wrong approach in adopting new technology. Digital transformation will enable a business to improve their interactions and relations with clients, partners, and employees. Digital transformation is not limited to a few processes or operations in a business. It requires a holistic approach that will reshape the organizational culture to have the desired results in improving and maintaining a company’s competitiveness.