Is digital transformation a necessary disruption for modern businesses? An in-depth review
With the world economy getting engulfed by the recent pandemic, digital transformation has gained more importance for C-level management personalities. Yes, the world economy is moving at a languid pace, and there are massive budget constraints due to COVID-19. Even in this diverse situation, digital transformation technologies and services are expected to grow to $2.3 trillion in 2023.
The reason for zero slowdowns on such spending is that large-scale projects already underway are instrumental to the long-term business growth strategy.
What is digital transformation?
“Customer expectations are far exceeding what you can really do” — George Westerman, Principal research scientist, MIT
Digital transformation is an aggregation of modern tools and processes for solving business problems and enhancing customer satisfaction.
CIOs employ various methods for executing digital transformation drivers.
Business owners have their views and thoughts about using technologies, resources, and processes for enhancing their business performance.
Digital transformation cannot be undertaken without cross-departmental collaboration fused with the help of rapid application development models.
CEOs, CIOS, CHROs must brainstorm and develop the best strategy for successfully implementing digital transformation in their organization.
Example of digital transformation
Prudential Financials acquired Assurance IQ in 2019. This move highlighted the accommodation of consumer preferences for interacting with brands via digital channels. Assurance IQ provides an option to their buyers with life, health, Medicare, and auto insurance. The businesses can purchase online or can take the help of their live agents too.
The developers in Prudential are leveraging Agile and DevOps processes. They are collaborating cross-functional teams, including product managers, analysts, and other critical business staff.
Staff relying on self-service capabilities to help “test and learn and fail fast and ideate” as they build new apps. Engineers are leaning heavily into Microsoft Teams and other tools to collaborate on code and other aspects of their jobs.
Employees work towards boosting software time-to-market and improve customer experiences. Prudential’s hybrid model of cloud and data center operations has defied the pandemic. This stands as a perfect example of digital transformation in the modern business world.
Tips for significant digital transformation
Achieving effective digital transformation is a necessity for businesses, as perfectly explained in the above example. We will be sharing some of the crucial tips that businesses can consider
1. Align your business objectives with business goals
Answer this simple question first.
What business outcomes do you want to achieve for customers?
IT leaders are responsible for knowing the answer to this question because they know the nature of the problem they are trying to solve. So, the task of aligning the business objectives and goals falls upon them.
Companies that have aligned their business goals and objectives with their outcome will experience successful digital transformation.
2. Set bold scopes
Businesses must carry out enterprise-wide actions with their technological investments for successful digital transformations. CIOs must recognize they need to set wider scopes for this purpose to achieve 2x success for their digital transformation.
3. Co-creating digital transformation using IT
In the traditional world, IT departments were looked upon as people who fixed broken services. In the modern world, they have become problem solvers that help businesses deliver their customers’ best value. Companies must demand specialized services to achieve digital transformation.
4. Embracing the adaptive design
Businesses no longer make upfront technological investments or follow rigid KPIs. CIO has adapted to making monthly adjustments to its transformation strategies with the adaptive system. Such a development process also enables businesses to free allocate their resources.
5. Adopting agile
- It is okay to disrupt your business from the legacy system.
- You must take a risk as a company, give employees feedback, fail fast, and learn from the mistakes.
- You must grow and reach your potential, and it can be done with planned disruption.
Modern business organizations rush to address the trends their competitors are following. You need to make pre-emptive changes than blindly reacting to the competition. Do thorough research before you start utilizing your resources, especially when you are exploring unchartered territory.
The digital transformation lifecycle
Digital transformation is a pervasive process that enables businesses to get the key to triumphant future success. Many companies have started taking the high road to digital transformation but are not seeing the expected outcome.
What is the issue?
Well, it is the confusion of applying the various actions that businesses can take under digital transformation. Many options make it unclear for firms to see where and when the digital transformation must start and its result.
This section will discuss the phases that will help businesses achieve digital transformation successfully in this section.
The modern business world is experiencing rapid technological growth. With that, the dynamics of implementing innovation is also witnessing significant upgrades. You cannot rely on the traditional waterfall process for a successful implementation of digital transformation.
Another reason that makes digital transformation important is that it enables companies to transform their process to continuous improvement flexibly. It is vital that your business operation becomes agile and starts embracing business operations changes as a business.
Yeah, we know, it sounds a lot easier than done practically. We are going to break the digital transformation lifecycle into identifiable steps.
But before we start
There is an exponential change in the market and the demands of the consumer. Companies are not investing in a singular technology because they know that diverse investments are competitive.
In the modern business age, staying relevant to the market has taken center stage for business owners. And for staying relevant, they must quickly adapt to the technological changes happening around them. It is necessary to capitalize on the opportunities as they come your way quickly.
That is a continuous and ongoing process, which businesses are more aware of now. Implementing changes with a constant cycle is the norm, and when you have gone through every phase of the process, you start over.
The step by step digital transformation lifecycle
As we mentioned above, digital transformation needs to be a continuous innovative change that helps your business make better advancements. The digital lifecycle helps you smoothly get through the stages with measurable results for deriving great value for your business.
We are breaking the digital transformation cycle into these crucial steps:
Defining the goals
The first and foremost step to a successful digitalization is that businesses must include their organizational goals while inculcating the new technology into the mix.
Start by defining the business value you are planning to derive from the latest technology.
Doing so makes it easier to break every step into smaller, easily achievable sets of tasks.
Once you have done this, the next step is introducing the technology into the business architecture. Technology is merely a tool that helps you accomplish business goals; it is not the ultimate goal.
Aligning the key players
If you want to transform your organization comprehensively rather than just patch over the old ways of doing business, you will need to make sure you have your employees on board. The enthusiasm for the change has to come from the top.
Explain to your workforce how digital transformation will benefit both themselves and the company.
You might need to help them understand that robots are not coming after their jobs.
After all, the change is not about reducing job positions. It is a different approach in which the company and its employees will succeed in new ways: improve their existing skills and acquire new ones to work in the digital world.
Whatever your transformation goals are, you will need to get the people to embrace your strategy.
Carrying out your transformation strategy
Now is the time to choose the right tech solutions and implement them. In the transformation’s primary cycle, this stage gives you a chance to select a small project that will demonstrate the transformation’s value and convince the skeptics.
Later, you will improve, scale up, and implement those solutions company-wide. If you decide to work with an outside software development partner, look for someone capable of scaling up alongside you.
Evaluation
Gather feedback. Evaluate the results critically and honestly. Are they what you expected? If they are not, there is space to make changes — that’s why you begin with a project that’s small and quick to implement.
Or perhaps the objectives have shifted in the meantime, and you need to make some adjustments? That’s fine, too.
The most significant change during the transformation journey might be that your company will become agile and flexible and that you will learn how to function amidst constant change.
Continuous improvement
By now, you should see the results that you defined in the initial transformation strategy. They will encourage further innovations until the change becomes part and parcel of the company’s DNA. It is also time to think about how to scale up the tech solutions you introduced and add new features. Remember, you have reached one destination, but there are many others ahead.
What are the three pillars of digital transformation?
To understand the digital transformation magnitude, you must find out how this will affect the way you run your business and communicate with your users and partners.
Let’s, talk in-depth regarding the three pillars of digital transformation
1. Transforming the customer-experience
A customer walks inside a physical store and inquires if there is any discount on the particular merchandise. He also mentions that an online retail store is selling the same products at a discounted rate.
So, what does digital transformation change for businesses?
- Sales channels
- Advertisement of products and services
- Point of sale
- Consumer engagement
- Attributes of the product and services
- Prices
Consumers are now immersed in the virtual worlds, and businesses must keep this fact in mind.
2. Transforming the operational process
Digital transformation is incomplete without providing a better customer experience via smoother shopping and world-class customer service.
With the help of process modeling, businesses can start delivering value at each stage of the chain with
- better flow of information
- collaboration
- teamwork
These three elements play a crucial role in assisting companies to achieve a smoother digital transformation.
3. Transformation of the business model
When you have successfully planned out the two above points, working on the business model transformation becomes easier. You now know that you must change your product and deliver value to your users, and now you have to think about how the competition will use digital transformation.
Waze disrupted the GPS industry; Uber shook up the urban transport sector, and Airbnb dismantled hospitality. In addition to being disruptive and innovative, your business must focus on being competitive.
Digital transformation pitfalls
Digital transformations are lagging or even failing for several reasons, including
- poor leadership
- disconnects between IT and the business
- lagging employee engagement
But the critical culprits of a derailed digital transformation are an obsession with significant bang change, focus on cost-cutting as a business driver, and failure to loop in the business.
“Boardrooms and C-suites talk about digital, and there is pressure to show something and show results, which creates wrong expectations about how quickly what can be done and when,” says Genpact CEO Tyger Tyagarajan.
Moreover, approaching digital transformation as a technology journey independent of the business is a recipe for failure. You must ensure that the company owns the process. “When they own the process, you drive the end-to-end transformation that includes processes, people, policies, and tech,” Tyagarajan says. “The siloed approach always fails.”
Rampant myths regarding digital transformation
We would like to talk about some prevalent myths around digital transformation before we provide you with digital transformation tips.
1. Digital transformation is about improving IT systems
Digital transformation has much more to do with strategy and new ways of thinking. The goal is to adapt companies to an ideal way of competing amid a digital economy. And incredible as it may seem, changing technology is not enough. You must know how to choose the right new technologies and use them in the right way to generate innovation and sustainable competitive advantage.
2. Digital transformation means improving the operations of the company
Being good at what you do vs. Having a performing well, you can read between the lines. You can have technology on your side, but you also need a better strategy.
Having an apt strategy enables businesses to make suitable businesses changes in a much more sustainable manner. That is at the core of enterprise digital transformation.
3. Digitalized marketing is at the core of digitization.
No. As a business, you must integrate these three components
- Communication
- Technologies
- Effective leadership
Yes, as a business dealing with a modern age user, you must use digital communication, but do not give it all the importance. The three components we mentioned above will help you achieve a partnership between
- Leaders
- Employees
- Consumers
- Business Partners
4. You need to have ‘a’ good strategy
How do you find out that the digital transformation strategy that you have devised is consistent with your business problems? On what basis should business leaders adopt a digitalization strategy? Do you have clarity of what a good or a bad strategy is?
Your digital transformation strategy must identify one or two fundamental points in a situation. It should help your business become more efficient in obtaining better results and assist in proper allocations of efforts, roles, and resources.
As a business leader, you can take note of these steps:
- Spotting the problem within your organization
- Defining apt policies for redressal of the issues
- Take continuous steps and actions in mitigating these issues
5. Using Agile, Lean, Sprints, etc. help you with your digital transformation
That is not entirely right. They are just development methods that businesses can use. They are not a strategy-building tool; they are merely part of the strategy.
You can use these development methods to deliver or define the digital transformation strategy.
Start by creating new competitive advantages. Battle test them and make your solutions. The next step is to deliver these solutions in the form of technology.
So yes, having a digital transformation strategy is essential, and then work upon the inclusion of the said suitable development methodology.
Adopt agile execution
Encourage risk-taking, enabling even lower-level employees to make decisions, fail fast, and learn. This has been a critical tenet of IT’s success at Prudential, Goodman says.
It’s okay to disrupt yourself
Even though many organizations rush to address rivals, the best digital transformations require pre-emptive changes rather than reacting to competitive pressures, says Martin Reeves, BCG’s Henderson Institute. He says companies should begin searching well before they exhaust their current profit sources and employ a mix of significant steps to explore uncharted terrain and smaller steps to tap adjacent markets. Regardless, having a strong bias toward change is critical.
Essential digital transformation roles
To become a progressive business, it is vital that you match steps with emerging tech. It is important to note that you must revamp your processes, but you also need to check it with the right skills. These ingredients are essential for successful digital transformation.
You will have your software engineers, cloud computing specialists, and product managers who will keep rolling out the new products and services.
The DevOps team will keep merging development with operations by disrupting software development and will enable you to deliver software to the market at a faster rate.
Data scientists will keep on supporting businesses to get valuable insights from the vast data collection.
Digital transformations will help businesses grow using disruptive technologies like machine learning and artificial intelligence.
IT departments will play a critical role in business-wide transformations. These people will play respective roles in making your digital transformation process successful.
- UX designers
- Digital trainers
- Writers
- Brand strategists
- Analysts
- Compliance managers
- Digital technology managers
- Workplace technology managers
Corporations must start looking at digital transformation with a broader mindset
We hope this article was able to help you understand more about digital transformation. We will give you a brief of what has been discussed till now.
First, digital transformation is not massive. Digital transformation comprises of
- business process
- business model
- domain
- cultural/organizational
Never focus only on a strategy or organizational change. You want to address all four segments to bring more value to the table.
Second, digital transformation is a multi-dimensional process, so it will require everyone to chip in
- Chief Information Officer (CIO) or Chief Digital Officer (CDO)
- Strategy and Business Unit leadership
- CEO
Pursue digital transformation in these four segments
Process Transformation
Process transformation helps businesses create significant value by adopting disruptive technologies. Digital transformations are generally focused around specific areas of a company under the CIO or CDO command.
As a business owner, you will agree that most corporate activities are focused on creating better business processes.
With the help of big data, analytical tools, APIs, and machine learning, businesses get valuable insights into reinventing their processes. The ultimate is to
- lower the costs
- reduce the cycle times
- increase the quality of service or product
The best example of process transformation is how Domino’s Pizza re-imagined food processing with Dominos’ AnyWare that lets customers order their favorite over-baked pizzas from any device. Even the way RPA (robotic process automation) has helped streamline the back-office processes is an excellent example of process transformation.
Business Model Transformation
Many businesses out in the world are pursuing modern technologies for transforming their traditional digital business models. While process transformation focuses on specific business areas, business model transformations aim to build the stage for delivering value.
- Netflix reinvented video distribution.
- Apple reinvented music streaming with iTunes.
- Uber disrupted the taxi service industry.
Insurance companies are focusing on helping customers pay by the mile in the auto insurance business model. And they are using machine learning and big data analytics for gaining the required insight helpful in unbundling the insurance contracts.
Domain Transformation
Although domain transformations have less focus put on it, it holds immense opportunity for businesses.
Businesses are using disruptive technologies for
- redefining their products and services
- blurring industry boundaries
- creating entirely new sets of non-traditional competitors
Domain transformation allows companies to unlock new business opportunities that offer to create new business value.
Amazon is the best example in this category.
They expanded into a new market by launching the Amazon Web Services (AWS), which is now the largest cloud computing service. And let us remind you that this domain was previously dominated by IT giants such as IBM and Microsoft.
So how did Amazon achieve this feat? Amazon combined its digital capabilities, built-in storage, and computing databases and used it for continuously supporting its retail business. Its relationship with the many new and growing companies that needed computing services also helped Amazon win in this segment.
The point to be noted here is that AWS is not just an extension of their primary business. It is an individual business model that contributes around 67% of its yearly profit.
The modern business world has removed the technological barrier from this market. Every business can acquire new technologies and use them to grow their business more efficiently.
Organizational Transformation
A complete digital transformation involves redefined organizational mindsets, processes, and talent. The successful businesses in implementing digital transformation include agile workflows, battle testing the segments, and improving their business ecosystems. They don’t enforce it; they take it one step at a time.
Let’s take the example of Experian, a consumer credit agency. They embedded agile development methodology and collaboration into their business workflows. They diverted their employees’ focus from equipment towards data.
They didn’t initially focus their attention on implementing digitalization on an organizational level. They fused innovative skills, created digital mindsets, and brought agility into the corporate mix for driving growth.
Choose Rapidops as your digital transformation partner
As a digital transformation partner, we helped one of the US retail giant deliver a hands-free shopping experience to their customers.
Being honored by Inc. 5000 goes on to show that our digital solutions help businesses with their problems. Using innovative and disruptive technologies, we have helped start-ups monetize their digital opportunities and transform their business. Rapidops has a knack for building high-quality, scalable, and re-usable “digital assets”.
If you want to understand or know more about how we can help you transform your traditional business ecosystem with digital reinvention, then feel free to get in touch with our team.
We will help you capitalize on the prevalent digital opportunities with innovative technologies to realize your business’s true potential more efficiently.
