As the world becomes increasingly data driven, it's clear that digital transformation is essential for businesses to move with the times, whether you run an SME or a global corporation. What's not so clear is what digital transformation actually means. Does it mean diving headfirst into virtual or mixed reality or is it just a fancy way of saying that you're moving to the cloud? Does it involve reskilling? And how do you measure its success?
In this post, we aim to answer those questions (and more) to help give you clarity and the confidence to reshape your business model.
Digital transformation is the process of integrating digital technology into all areas of business operations to help drive change. You do this by identifying how you can use technologies such as machine learning, artificial intelligence (AI), mixed reality and big data to deliver new services or improve existing ones.
Say you have one business that has undergone a digital transformation and another that hasn't. The traditional company carries on producing products according to what customers order. The modernised company, on the other hand, uses real-time data to determine which products bring in the most profit and who is buying them. Not only does this help maximise efficiency today but also predicts what people will want tomorrow.
Going digital means different things to different people, but examples of digital transformation in the workplace include:
Going paperless across your entire business estate
Automating your supply chain and workflows
Using AI or machine learning to transform the customer journey
Using predictive analytics to develop products customers will want in the future
Automating employee performance management to identify skills shortages
Introducing a hybrid work model and allowing employees to work and collaborate in the cloud
Using virtual or mixed reality to enable collaboration between teams
Although everyone's journey will be different, delivering any digital transformation project requires effective collaboration and communication. It's a chance for companies to be bold and shed outdated practices that can no longer keep pace with today's interconnected world. It's also an opportunity for all employees to learn exciting new technologies and eliminate some of the tedious, mundane tasks from their daily lives.
Done right, digital transformation can propel your business to a new level of growth. The goal is to work smarter and gain a competitive edge by deploying technology at scale.
Two words related to digital transformation are digitalisation and digitisation. While they may look very similar, they have different meanings.
This is the practice of moving existing processes to digital technology. Much more than scanning a document to store in the cloud, it allows you to collect data, predict trends and make better business decisions based on the results. But it can be less comprehensive than a full digital transformation, which changes your entire workplace culture.
Examples include:
Moving parts of your business online
Sharing documents on a cloud drive
Adding a QR code to your products
Analysing data in real time to mitigate risk
Upskilling employees to use new software platforms
This is the process of converting existing data and documents from analogue to digital form.
Examples include:
Scanning a photo to store in an online file
Converting a paper report to a PDF
Turning a physical presentation into an audio file
As technology evolves, digital transformation is necessary for companies to not only thrive but survive. That's why most CEOs continue to prioritise digital opportunities, with 72% pursuing an aggressive digital investment strategy, according to KPMG.
Research from Accenture also stresses the importance of digital transformation. It found that leading companies in enterprise technology are growing five times faster than tech laggards – companies slower to adopt new technologies.
Expand the boxes below to learn more about the benefits of digital transformation.
Going fully digital isn't without its challenges – it's a complex and multi-layered process that takes a lot of planning and collaboration. But taking these six steps can help you on the road to a successful digital transformation.
First, identify specific goals and objectives you hope to achieve through digital transformation. Think about what could generate the most revenue for your business. For example, is your main aim to boost efficiency? Improve the customer experience? Or tap into new revenue streams?
Asking yourself these questions can help you create better processes across the board, whether that's moving key services to the cloud or building a multichannel platform for your customers. Indeed, for most companies, the top goal is an improved customer experience, according to TEKsystem's 2023 State of Digital Transformation report. Whatever your aim, it's a good idea to create a road map detailing the solutions and a timeframe to deliver change.
Simply implementing new technology isn't enough – it needs to be tied to KPIs to track progress. You'll need to measure the impact of your digital transformation efforts to know whether they're working or not.
Digital transformation can give you a few quick wins, but allow for the fact that it could take at least two years before you really start to see clear cut returns on your investment. In the meantime, if you're not seeing the results you want, make changes to your strategy.
For your digital transformation to succeed, you'll need to take people with you. It's important that all employees have an understanding of what you're hoping to achieve so the entire organisation is aligned with your digital goals. Be transparent – don't confine valuable knowledge to the boardroom. Keeping the information flowing at every level is a vital ingredient in digital transformation.
Invest in the technology solutions you really need to support your transformation efforts, whether that's AI, cloud-based solutions or automation tools.
Choose software that's highly rated and trusted by your peers within the industry. And, ideally, go for a technology that your employees are already familiar with or capable of picking up quickly. Making processes too complicated will undoubtedly leave you with a long and difficult implementation period.
Put together a team that will be responsible for delivering your digital transformation. It should include individuals with expertise in digital technologies, as well as those with knowledge of your specific industry.
Team leaders will need to communicate effectively throughout the digital transformation so all employees understand what's going on. Upskill staff on the latest software, and hold regular training sessions to facilitate a smooth transition. With the right training and support, new technologies can quickly become ingrained in the culture of your organisation and help build a more resilient workforce.
Change starts from the top. Don't let poor leadership derail your transformation. Understanding what digital means to your organisation is essential so that you can drive your digitalisation processes forwards. Leaders must be passionate about change and provide a unifying link between departments as the tech is rolled out across the business.
As a McKinsey report says: "An inconvenient truth for businesses undertaking digital transformations is that without focused and active CEO commitment, there is almost no chance of success."
Implementing a digital transformation strategy is undoubtedly a big undertaking for any business. Upgrading or replacing existing systems is expensive, but try to stay focused on the opportunities that it could bring. If you're able to cut everyday costs or find a new market that could expand your customer base, it'll be worth it.
But remember, digital transformation is an ever-evolving process. The journey never ends. You always need to be looking ahead to the next step to improve the lives of both your employees and customers.