In this guide, Digital Transformation 101, we’ll explore digital transformation from top to bottom – from the most basic concepts to advanced strategies and tactics.
Readers will learn everything there is to know about digital transformation, including:
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- The definition of digital transformation
- Why digital transformation has penetrated every area of the business world
- The benefits (and the necessity) of digital transformation
- Strategies, techniques, and best practices
Among many other topics.
We will begin with fundamental concepts – explaining what digital transformation is and why it matters.
A Digital Transformation Definition: What Is Digital Transformation?
A minimalist definition of digital transformation might go something like this:
“The implementation and adoption of digital technologies to improve business processes, deliver better value to customers, innovate, and improve organizational results.”
A concise definition such as this is easy to understand, but this is just one among many definitions.
Here are several others:
“Digital Transformation is an ongoing effort to rewire all operations for the ever-evolving digital world, by adopting the latest technologies in order to improve processes, strategies, and the bottom line.”
“Digital transformation is the strategic adoption of digital technologies. It’s used to improve processes and productivity, deliver better customer and employee experiences, manage business risk, and control costs. Digital transformation represents myriad tools, solutions, and processes. An effective strategy is one that’s customized for each unique organization.”
“Digital transformation is the process of integrating digital technology into all aspects of business, requiring fundamental changes in technology, culture, operations, and value delivery.”
“Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation.”
“Digital business transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.”
The words may differ, but most definitions of digital transformation tend to revolve around the same themes.
That is, digital transformation involves leveraging digital technology to enhance a business from end-to-end … from internal process efficiency to the end user’s experience.
Digital Transformation FAQ
A good definition of digital transformation helps us understand what people mean when they discuss digital transformation.
But a definition still leaves many questions unanswered.
Why is digital transformation so important?
Digital transformation is process that drives today’s digital revolution, which some say will result in Industry 4.0.
Like the industrial revolution, the digital revolution is fundamentally changing every aspect of our economy, including:
- Business models and operations
- The way people collaborate, communicate, and work
- How businesses deliver value to customers
- The very nature of the business ecosystem
To keep up with such drastic, revolutionary changes, organizations must use digital technology to evolve and transform.
Is digital transformation the same as digitization or digitalization?
Digital transformation, as we have seen, involves fundamental changes to many dimensions of a business.
Digitization, technically speaking, refers to the transition from analog to digitial. Most businesses have already taken this step – replacing typewriters with computers, paper records with digital records, and so forth.
This is a necessary first step for the next step, digitalization.
Digitalization refers to the automation of business processes through technology. Today’s modern office software, for instance, automates processes such as bookkeeping and inventory management.
Digital transformation, however, refers to a fundamental shift in the way businesses operate and leverage technology to deliver value.
Digital transformation vs. digital adoption – what’s the difference?
Digital adoption is one of the most important steps in any digital transformation process.
Truly effective digital adoption focuses on:
- Implementing new digital tools and using them to their fullest extent
- Seamlessly integrating them into the workplace
- Maximizing software utilization, productivity, and its bottom-line value
In short, merely “installing” new technology is not enough.
To maximize the value of that software, organizations must ensure that their employees are engaged, proficient, and productive.
See below for more details on digital adoption.
What are the benefits of digital transformation?
Digital transformation offers many benefits, ranging from:
- Better experiences for employees and customers
- More efficient, effective business operations
- Innovative solutions that can deliver more value to end users and customers
- Improved ability to survive and compete in the digital economy
The benefits of a digital transformation approach will naturally vary, depending on the nature of the transformation, the business, stakeholder commitment, and many other factors.
However, the bottom line is this: to compete in a business ecosystem that is digitally transforming, businesses themselves must also evolve.
What are the biggest challenges to digital transformation?
Digital transformation, like other organizational changes, is not easy.
According to a report by Altimeter, top challenges include:
- Organizational buy-in
- Digital transformation being perceived as a cost center
- Proving ROI
- Organizational culture and resistance to change
Resistance to change, as we will discover below, is a major obstacle to any organizational change initiative, digital transformations included.
For this reason, effectively managing such obstacles (through change management) can make a major difference between the success and failure of change initiatives.
What’s the end goal of digital transformation?
According to one article on CIO.com, transformation is the goal and digital is the tool.
Eventually, the author says, “digital will be just the way everything is done. Transformation is the goal, and it will never go away.”
This perspective certainly makes sense in today’s ever-changing marketplace.
After all, if the economy is continually transforming, businesses must also continue to transform.
According to Masato Miyamaru of ABeam Consulting, “that age has arrived which, by necessity, requires the generation of new competitive advantages with shorter lifecycles.”
This concept may very well become a defining feature of the coming digital era.
Digital transformation may result in an economy that requires continual adaptation, innovation by necessity, and fast delivery.
In simpler terms, digital transformation should focus on:
- Seamlessly integrate technology into their workplace
- Use that technology – as well as new mindsets and ideas – to innovate continuously and quickly
- Become agile and adaptable
The digital revolution will look very different from the industrial revolution.
Digital transformation is the path to success in that industry – and it may also be the end goal.
What does the future hold for digital transformation?
Digital transformation is gaining significant momentum, and investments will only increase in the coming years.
There are many reasons for this:
- New technologies continue to emerge, such as AI, AR, RPA, IoT, among others
- Innovators and early adopters continue to disrupt entire marketplaces, forcing competitors to adapt
- Most organizations have only tapped the tip of the iceberg when it comes to digital technology
Regardless of the industry or the business, digital technology will continue to have an impact for the next several decades.
Core Hallmarks of Successful Digital Transformation
Despite slight differences in how professionals view digital transformation, there are also significant overlaps.
Most agree that there are a few important elements that characterize successful digital transformation efforts.
- Leveraging modern technology to improve business outcomes. Digital technology forms the backbone of any digital transformation effort. Though it is only one piece of the puzzle, it is a critical one. The right technology – along with the right adoption and implementation approach – can mean the difference between success and failure.
- Focusing on the customer experience – as well as the employee experience. As we will see below, both experiences matter. They are interdependent. Successful employee experiences improve customer interactions in a number of ways: employees are more engaged with employees, provide better service, and they will be more willing to offer insight into customer perspectives.
- Being agile and adaptable. Fast-paced disruption is driving transformation across industries. And unless organizations can change quickly, they can quickly fall behind. In worst case scenarios, they won’t be able to keep up with their competition or the marketplace itself.
- Innovation. With a vast array of new technology at our disposal, innovation differentiates the leaders from the followers. Effective digital transformation should put innovation at the fore. To lead and stay ahead, businesses must make innovation a central tenet of their digital transformation efforts.
- Speed. Another hallmark of today’s successful company is speed. That is, speed of organizational change, business process changes, product releases, innovation, and more. The faster an organization can innovate and adapt, the greater their competitive edge.
Ultimately, what drives successful digital transformation is assessing the business environment – then adopting traits to fuel success in that environment.
Step-by-Step Roadmaps for Effective Transformation
To change successfully, organizations must follow a systematic, step-by-step approach.
There are differing views on how best to execute transformation efforts.
Here are a few examples:
Deloitte’s Digital Transformation Framework
- Developing a strategy and a vision – a “north star” to guide the organization during long-term transformations
- Modifying or building new business models
- Enhancing organizational capabilities
- Transforming operating models
- Changing people, processes, and technology
Each stage of this process has its own agenda, goals, and strategic imperatives.
More details can be found on their website.
McKinsey’s Roadmap for Digital Transformation
McKinsey advises a roadmap that is broken down into three main stages and ten sub-goals:
- Defining value. During this stage, proponents of change secure commitment from business leaders, set clear targets, and secure investment.
- Launch and acceleration. Execution begins by starting with “lighthouse” projects, appointing a launch team, promoting new, agile ways of working, and cultivating a digital culture.
- Scaling up. Finally, organizations must sequence initiatives for quick returns, build capabilities, and adopt a new operating model.
Finally, McKinsey notes that the term “digital transformation” emphasizes technological change.
However, digital transformation is less about technology adoption and more about “a fundamental rethink of the corporate model.”
Salesforce’s Steps for Digital Transformation
Salesforce advises a transformation framework built around five important steps:
- Start big. That is, focus on the most important, impactful processes first. Once these are improved and optimized, an organization can work down the list in order of priority.
- Build the right workforce. The right workforce is essential. Workers should be able to make the most of SMAC (Social, Mobile, Analytics, Cloud) in order to think ahead and transform effectively.
- Focus everything on the customers. Customers should lie at the center of every business process. Transformations should focus on enhancing the customer experience as much as possible – eliminating pain points, building customer-centric solutions, and ensuring that the entire workforce can tap into customer data.
- Connect the digital dots. Digital technology connects everything. By ensuring that an organization connects its processes, people, and dots, businesses can solve issues before they become problems.
- Empower employees with data. When employees have access to the appropriate data, they can do their jobs better and keep businesses running efficiently and productively.
Today’s world is in a state of transition, Salesforce says.
To keep up with customers’ changing expectations and new technologies, businesses must embrace these changes.
A Change Management Framework for Digital Transformation
Technology may be the catalyst for digital transformation, but people drive change.
For this reason, change management offers an ideal approach to executing, managing, and leading digital transformation efforts.
Change management is a business discipline devoted to driving organizational change from the level of the individual.
After all, employees run organizations – without their support, organizational changes can easily fail.
A change management framework would follow steps such as the following:
- Assessing current business needs and solutions. Assessment and analysis are critical to successful transformation. First and foremost, an organization must know where it stands regarding digital maturity, change readiness, change management capabilities, the work culture, and any other areas that could impact digital transformation.
- Building awareness of the need for change. Communication is essential during any change project. Managers must first build awareness of the need for change by explaining it in detail – what the change is, why it is occurring, how it will benefit everyone involved, and the consequences of not changing.
- Motivating employees. If employees aren’t motivated, they will be less engaged and less productive. This, in turn, means that they will become fatigued more quickly, less supportive of the change project, and they may even burn out.
- Tackling common obstacles to change. There are a number of barriers that stand between an organization and its end aim. Employee resistance, lack of executive support, budget constraints, technology constraints … change managers make it a point to minimize and avoid these barriers whenever possible.
- Providing employees with the skills they need to succeed. Unless employees have the right skills and knowledge, they won’t be able to implement change programs. For instance, if an organization is adopting digital software as part of its transformation efforts, employees must become competent in order to use that software productively.
- Reinforcing change. The final stage for most change management frameworks is reinforcing change. It is all too easy for employees to slip back into old habits, behaviors, or workflows. Reinforcing changes ensures that a change sticks and stays permanent.
Throughout the entire process, change teams monitor progress, track data in real time, and respond when necessary.
Agile change management, for instance, applies agile thinking to change management.
Instead of focusing on rigid plans and schedules, managers collaborate often, respond quickly, and change their management approach as needed.
Best Practices for Successful Digital Transformation
Digital transformation – like any other organizational transformation – are difficult, costly, and time-consuming.
True digital transformation programs often take years to complete, and success is not guaranteed.
To maximize outcomes and improve the chances of success, businesses should focus on a few best practices and strategies.
Here are some ingredients that every digital transformation project needs to succeed:
A Digital Transformation Strategy
As Deloitte mentioned, a digital transformation strategy is crucial to successful transformation.
To successfully transform, businesses need a light at the end of the tunnel. Or, as Deloitte puts it, a “north star” to guide their transformation efforts.
Developing that vision and strategy will take time and effort.
It often involves collaboration between business leaders, department heads, outside vendors, employees, and even customers.
But with the right strategy, a company can develop a journey map that guides them through the inevitable difficulties that come with any organizational change.
Preparing for the Future, Not the Present
A business that adapts to the present may be well-prepared for the present.
But the digital revolution is far from over.
Digital transformations are long-term organizational transformations. And, as such, they should look ahead and plan ahead.
A digital transformation’s vision and strategy should prepare, in other words, for competitive marketplace that is:
- Fully digital
- Running on modern, agile business processes
- Innovating with today’s emerging technologies – such as AI, IoT, and mixed reality
Effective preparation will involve transformations built around tomorrow’s digital economy, not today’s business environment.
One feature of the digital economy is continual change.
Continual change affects virtually every area of the economy, including:
- The workforce. To stay skilled and productive, employees must continually learn new tools, processes, and workflows.
- Business processes. Digital transformation also fuels new, innovative business processes, such as agile and lean.
- The workplace. The workplace itself is also shifting – from online collaboration to remote working, new ways of working can add new value to businesses, increase efficiency, and organizational results.
- Technology itself. Of course, technology itself is constantly changing. This means that businesses must keep up with those technology changes in order to stay relevant, competitive, and modern.
- Product and service cycles. Continual change and fast innovation are creating an economy that is transitory and ever-changing. Digital transformation projects should design business operations that can thrive and compete in such a fast-paced market.
Today, it is hard to see an end to the digital revolution – if there is an end.
As mentioned earlier, perhaps continual change will become a permanent feature of Industry 4.0.
This will require businesses to fundamentally reinvent the way they conduct business and interact within the digital ecosystem.
A Seamless, Streamlined Digital Workplace
There are many factors that can inhibit digital transformation efforts.
- Workers who lack proficiency and skills with their tools
- A workforce that is not culturally prepared for the digital age
- Productivity lags that result from inefficient digital adoption
- Poor user experiences
A digital workplace that is streamlined is more efficient, productive, and profitable.
One core aim of digital transformation efforts should be to develop an efficient, streamlined workplace.
- Seamlessly integrating users and their tools – by improving proficiency, productivity, and engagement
- Developing a workplace culture that is centered around the employee experience, as well as digital technology
- Effective employee onboarding and training
- A workforce that fits the culture of the organization
To name a few things.
Alignment between workers, their tools, and their workflows, in other words, is critical to successful digital companies.
Tighter Integration Between Business Functions
Another crucial consideration is the alignment and integration of business functions.
To enable agility and adaptability across an organization, in other words:
- Business units should collaborate, share information, and align their objectives
- They should also align their efforts and aims with the organization’s strategy
- Worker efforts should stay in sync with their department’s objectives
Among other things.
For large businesses to innovate and stay agile, organizational functions must stay tightly aligned.
The more integrated they are, the more they will be able to move and transform quickly when necessary.
A Focus on Customer Success
As mentioned the customer experience is a key determiner of business success.
To enable customer success, organizations should:
- Understand their customers as deeply as possible. Deep research can help businesses segment their audience and develop detailed customer profiles and personas. That information, in turn, can help companies create products and services that are more relevant and more valuable for the end user.
- Utilize analytics, data, and other information to design consistent, cross-channel experiences. Today’s user journey is non-linear. User journey maps, therefore, should also be non-linear. They should consist of several potential pathways that cross multiple channels and devices – yet, at the same time, the experience should remain consistent.
- Create experiences that are personal and delivered in real-time. Today’s customers live in the moment. Experiences, therefore, should be contextualized, personalized, and immediately relevant.
Customer success translates into better profit margins, more revenue, and better prospects for the business itself.
The right customer experience approach is one of several factors that can make a real difference in bottom-line profits … and, as a consequence, the overall success or failure of an organization.
The Employee Experience
Another element that drives successful digital organizations is good employee experiences.
Like the customer experience, the employee experience plays a large role in workforce:
- Motivation and engagement. Employees who are motivated and engaged will be more open to change, more willing to learn new things, and more supportive of digital transformation efforts.
- Proficiency and productivity. When it comes to digital tools and digital adoption, proficiency directly affects productivity. And, as a result, it affects the overall performance of digital transformation and adoption efforts.
- Loyalty and retention. Loyal, supportive employees can make a great difference in the results of digital transformation efforts. High turnover – caused, for instance, by inappropriate cultural fit or poor training – can seriously inhibit digital transformation efforts.
Today, workforce productivity plays a crucial role in the success of the digital organization.
Improving the employee experience certainly requires effort, but good experiences pay for themselves in the long run.
There are a few ways to help prepare employees for working in the modern digital enterprise:
- Effective onboarding and training. Good onboarding and training eases the inevitable transitions that occur during digital adoption, digital transformation, and other organizational changes. Streamlining this experience can dramatically accelerate time-to-competency, as well as employee engagement.
- Inculcating the right culture. An organization’s culture should fit the organization’s mission, values, and aim. It is important to align the workplace culture with the organization’s aim. Because, after all, the more aligned a culture is with the organization’s aim, the more efficient the organization will be at transformation and change.
- Hiring the right talent. The right talent doesn’t just mean hiring those with the right skills. It also means hiring those who fit the organizational culture, agree with the company mission, and have the traits needed to be successful in today’s digitally transforming workplace.
Among other things.
As mentioned, the right culture and the right workplace climate can make a massive difference in employees’ contribution to digital transformation efforts.
A Digital Adoption Solution
Digital adoption solutions help businesses streamline adoption in a number of ways:
- In-app guidance automatically trains users on workflows and processes. In-app tutorials, instructions, and interactive guidance provide users with information on-demand. They learn exactly the right information at exactly the right time, improving knowledge retention and productivity.
- They accelerate employee training time and time-to-competency. Automated, in-app training delivers reduces the need for technical support calls or individual research. With the right information at their fingertips, users can apply the right information at the right time. This greatly increases training efficiency and time-to-productivity.
- Onboarding and training become simpler, streamlined, and more effective. Streamlined onboarding and training reduces user frustration, increases engagement, and ultimately increases employee productivity.
- Organizations use software platforms to their fullest extent. To maximize the value of any software platform, organizations must use those platforms to their fullest extent. Digital Adoption Platforms promote feature usage automatically, encouraging users to boost their skills and make full use of a tool.
- Digital Adoption Platforms help maximize workplace efficiency. The more proficient and productive users are with their tools, the more efficiently and effectively they can work. Their workplace contributions will be greater, they will be more engaged, and the software itself will deliver a greater ROI.
Ultimately, the right digital adoption solution can help streamline the user experience, improve user proficiency, and generate higher returns from any software investment.
And because successful digital transformation hinges on effective software use – it also hinges on successful, true digital adoption.
Where to Go From Here: Getting Started with Digital Transformation
In this guide, we have covered a great many topics around digital transformation.
We have looked at:
- What digital transformation is
- Why it is so important
- Frequently asked questions about digital transformation
- Digital transformation frameworks and models
- Best practices for digital transformation
And many other topics.
However, this is certainly a lot of information.
For those new to digital transformation, where do you even begin?
If your organization is just dipping its toes in the waters of digital transformation, then here are a few first steps to consider:
- Research digital transformation thoroughly. First and foremost, it is important to understand digital transformation as deeply as possible. This guide can act as a first, essential step. However, it pays to research other experts on the subject, such as WalkMe, Deloitte, and Accenture.
- Understand the value and necessity of digital transformation. Next, it is critical to understand the bottom-line business value of digital transformation. How can it benefit your organization? And why is it a necessity for success in the digital age?
- Choose the right partners. The right business partners can make all the difference in the world. Good partners – whether they are consultants or software providers – play a large role in how successful a transformation project is.
- Learn the importance of the topics covered here. Many of the topics covered here – such as the customer experience, agility, and digital adoption – are crucially important for successful transformation. Understand how and why these concepts are pertinent to digital transformation.
- Start the ball rolling in your organization. Finally – or, rather, firstly – it is important to begin a dialogue about digital transformation within your organization. This dialogue should openly discuss every aspect of digital transformation. That discussion should include benefits, costs, obstacles, and many of the other ideas covered here.
Digital transformation, as explained, can cover a wide variety of technology-based changes.
Though it has become a buzzword for many professionals and organizations – it is also a very real phenomena.
It is a type of organizational transformation that requires rapid, revolutionary change. Those changes can impact every area of an organization, from the culture to the tools to the customers themselves.
In an era defined by global digital change, digital transformation should not be viewed as a buzzword…
It should become a catalyst for successful growth, evolution, and success.
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