Definition of Digital Transformation
Digital transformation has been used as a buzzword in business for many years, but its exact meaning is often confused and misunderstood. Digital transformation is not a new piece of software, technology, tool, the cloud, or even a system upgrade. It is not to be confused with digitisation and digitalisation.
Digitisation is the process of converting information from analogue to digital. Digitalisation is using digital data to simplify how you work. It’s not about changing how you do business or create new types of business, but how you can improve productivity now that data is instantly accessible.
Digital transformation is leveraging advancement in technology to create strategic foundational change. It involves the integration of technology into all areas of a business, resulting in fundamental changes to how businesses operate and how they deliver value to customers. This sometimes means walking away from long-standing business processes that companies were built upon in favour of relatively new practices that are still being defined.
Digital transformation is not asking “how much faster can we do things the same way?” but “what is our technology really capable of, and how can we adapt our business and processes to make the most of our technology investments?”
Reasons for Digital Transformation
When considering undertaking a digital transformation strategy, businesses should begin with a problem statement, a clear opportunity or an aspirational goal they want to achieve. What is their “why” for change?
A business may take on digital transformation for several reasons. The most likely reason is for means of “survival” - adapting quickly to the industry. Other common themes that are found in the digital transformation process for a company are customer experience, operational agility, culture and leadership, workforce enablement and digital technology integration.
An example of digital transformation is moving from legacy systems to the cloud. A media and entertainment company may realise that storing their work on hard drives isn’t very secure and is expensive. By moving everything to cloud storage, the business adapts their operational workflow to a more secure, efficient process, thus saving time and money.
How to implement Digitial Transformation
Digital transformation is a strategy and not a project. For example, consider continuous improvement, meaning the ongoing improvement of products, services or processes through incremental improvements. Digital Transformation is not continuous improvement, instead it is a fundamental core change. For a business implementing digital transformation, essentially the process of continuous improvement is stopped, while the business is innovating a new solution. Then, using advancements in technology to transform the business is implemented, before continuous improvement of the new way of business is resumed.
Transformation in the company is ongoing, even after any new tools have been introduced and enablement of innovation within the company. By implementing digital transformation, acknowledging change is required. In turn it will help empower people to work differently, embrace innovation, and modernise company culture.
How to measure the effectiveness of your Digital Transformation
Digital transformation needs to be approached from more of a holistic view of business efforts. It’s best to set initial metrics in advance and develop smaller metrics for experiments with the goal being to learn, adjust and incorporate business outcomes: strategic impact (revenue growth, customer value, time to market), operational impact (productivity, scale, operational efficiencies), and cost impact.
Overall, you will need to be willing and capable to adjust your roadmap according to results. Consider outside help in mapping a strategy and collaborate with employees on technology decisions and investments. The goal is to build bridges, not silos.
To conclude, digital transformation is leveraging advancement in technology to create strategic foundational change. It is not to be confused with digitisation and digitalisation. It will drive a multitude of benefits for your business, including strategic, operational and cost. If you would like to speak to a digital transformation expert to understand how the process could benefit your organisation, please get in touch.