Eight questions about digital transformation
These are the times when digital transformation is a hot topic, with media and experts writing about it on a daily basis, and deservedly so. Digital transformation is a very broad area that every company needs to address nowadays. But let’s take a look at digital transformation in terms of the impact it has on the company’s administration system, which is a challenging issue for many clients.
#1 What is digital transformation?
Digital transformation is a set of activities supported by modern information technology which radically transforms the organization’s business performance and covers internal as well as customer processes.
Digital transformation is never just about transferring current business processes and working practices to digital; it’s a change in the way we think, a switch in business modeling, an optimization of business processes, an upgrade of company competencies, and a shift of our value system that defines how we serve customers.
Companies which undergo digital transformation improve their internal organization, become more flexible on the market, and are able to provide faster and better service for the right price.
#2 What is the difference between digitization, digitalization, and digital transformation?
A short definition:
Digitization – Conversion of analog information into digital form. (The content is the same, the form is digital.)
Digitalization – The process of connecting and using digital data in order to automate the execution of tasks.
Example: To avoid working with paper documents, these are first converted to digital format and then distributed through the system, approved, and digitally signed. (The function of the process is the same, but the process itself is digital.)
Digital transformation – A set of processes and integrated technologies in all facets of business operation that, when deployed, leads to radical change and improvement of the company’s internal organization and business management in the market.
#3 When is the right time to start?
The ‘right’ time depends on each company’s journey. There is no set rule because digital transformation is a challenge that affects every company differently, depending on how far it has come on its journey of going digital. In companies that have been around for a long time, the digital transformation process will be different than in fresh startups that set up their business deep in the digital era.
The questions you need to ask yourself are:
- What will be the future of our business?
- What supply chain network are we working with?
- How will digital growth impact our added value?
- How do we respond to change?
- Do we have the know-how (i.e. competencies) to get started?
Transformation is a challenge because it requires changes in consciousness, habits, routines, and relationships. Technology is the smallest part of the challenge. There are various solutions and services that support digital transformation, whether as standalone solutions or as cloud services. Companies can choose from a broad variety of technology options.
#4 How to start?
The next steps are of utmost importance:
- Set up a plan and goals you want to achieve
- Ensure the competencies that will set the plan in motion
- Connect with partners that support you on your digital path
When setting up a plan, think about how digital supports, enables, and ensures the company’s growth (New Digital Growth).
#5 What do you need?
There is no one fix-all recipe for successful digital transformation. The results are most beneficial when you strike the right mix of procedures and resources.
Management plays a crucial part in ensuring smooth digital transformation. It has to lead the company towards transformation with an understanding and vision of going digital, bearing in mind the following important factors:
- Encouraging corporate culture to be open to change
- Empowering and motivating people with needed knowledge and skills
- Increasing operational efficiency
- Welcoming healthy competition
#6 What are the most common obstacles?
Digital transformation requires us to change our consciousness and our habits and, yes, accept new roles in operations. If that doesn’t happen, we will face different obstacles, mainly manifested in attitudes like the following:
- Our business will remain the same, nothing will change…
- We don’t have enough resources or the possibilities to re-allocate them…
- Our old tools (apps and software) are good enough…
- Our processes are good, that's how we work…
#7 What business case is the going-digital investment based on?
The classic straightforward cost-effectiveness analysis does not work here. The digital age brings complexity. It’s in its nature. If you're not going digital, you won’t be able to handle this complexity and, sooner or later, you’ll be out of the game. Also, you won’t be able to deliver the experience your customers expect. Investment in digital needs to be analyzed through the lens of customer benefits and user experience, which is becoming the basis and foundation for future long-term revenue streams.
Traditional perspective: A company that wants to go paperless and use a digital archive assesses the project’s viability solely by calculating the savings on printing-related costs. In the end, it rejects the idea because the project is not financially viable…
Digital perspective: a digital archive in the cloud not only provides access to documents and information anywhere and anytime, but it also saves money on printing material and cuts down the document search time. It ensures efficiency and opens new business opportunities by providing a safe and compliant way of receiving and issuing business documentation and providing customers with high-end user experience faster. Employees can focus on the customer, building a personalized relationship that results in customer loyalty.
#8 What are the most common obstacles?
There are different approaches companies use to start their digital journey. There’s no rule to what’s best, each company can start the way that suits it best.
- Business model analysis that shows possible options to achieve the company’s goals, choosing the right path and actions, and implementing the steps of digitalization.
- Considering the customer as the center of digitalization (customer-centric view), creating the best user experience that leads back to the internal organization, and showing what changes need to be implemented in terms of digital.
- Starting the digitalization process within one department, where certain employees have good initiatives (bottom-up approach), spreading it step by step across the company to other departments.
The past, based on paper and physical relations, is real. But the future is digital and fast-changing. The reality is a hybrid where both worlds merge and coexist in physical in digital forms.
Imagine yourself looking back upon this moment and try imagining what steps you should take to set everything in motion to take you to that desired place in the future.
Imagine instant availability, a paperless office where all the documents and data are available anytime, anywhere regardless of the media used (laptop, computer, tablet, or phone). Imagine creating a company’s digital backbone, integrated into daily operations, to serve your customers better, to serve your employees better, and to help your company transform digitally.
The rules of the digital game are set. Just play the game!