Many companies focus on digital transformation as a way to set themselves apart in a crowded marketplace, with Santoku reporting 51 percent of executives are pushing for transformation initiatives over the next year. However, organizations often assume all change is digital transformation, especially when it involves new technology. However, your IT tools only act as enablers of change; you need to understand the exact definition of digital transformation to take full advantage of it.
What Digital Transformation Is
Nearly every industry sees some form of disruption due to digital influence, whether you're driving the disruptive forces or simply adapting to the marketplace changes. Your digital transformation strategy revolves around using your organization's digital capabilities to create a framework capable of supporting new business models, services and products. You must coordinate your business goals with your IT transformation to embrace digital transformation across your company.
The Goals of Digital Transformation
From our standpoint, a digital transformation strategy has three primary focus areas: the customer experience, process digitization and new business models. In the global marketplace, many companies move away from attempting to compete solely on price or product availability. Instead, as Gartner found, 89 percent of companies expect to focus significantly on customer experience as the primary differentiator between businesses. A full digital transformation provides customers with a seamless, positive and consistent experience every time they engage with a company.
Digital transformation doesn't stop at the customer-facing side of your business: It also addresses your back-office functionality through better process design. You support your business objectives by increasing your operational efficiency and streamlining existing processes. You can accomplish this through automation and machine learning, digitizing manual tasks and transforming other routine job duties to free up staff resources to focus on growth objectives.
Your existing business model may have lasted for decades, but digitization makes it possible to expand into new lines of business or completely overhaul your current model. This digital transformation goal helps to uncover ways to bring new technology into your business and innovate the very way you do compete in your industry.
What Digital Transformation Isn't
Where companies often set themselves up for failure is when they equate any digital solution as a digital transformation initiative. If you fall into this trap, your strategy may fail to meet all of your goals and properly address disruption. For example, many businesses offer mobile apps for their audience but neglect to tie the app deployment to any business objectives. While the app is a useful tool on its own, it lacks the ability to drive a true transformation without connecting with a business model change or a new process.
The cloud provides another area commonly confused as digital transformation on its own. Moving your infrastructure or an existing application to a cloud platform represents a significant change, but it's still not enough to be a digital transformation without having far-reaching effects on the way you do business. You also run into this problem with the Internet of Things, big-data solutions and mobile technology.
Your digital transformation strategy has a major impact on your short- and long-term business growth. Customers have come to expect a frictionless user experience and seek out companies capable of catering to their needs through new technology and solutions. If you want to keep up with the innovative front runners in your industry, your first step is to fully understand what digital transformation is and what it looks like for your organization.