In today’s world, digital transformation is the way forward. And the benefits of it are one too many. Digitizing a process can lead to a dramatic cut down on costs. And what’s more, the decrease in costs comes with an increase in the quality of work. For starters, better software and connectivity save time. So when an employee is not spending their time being frustrated working with unsupportive tech, they can focus on doing the real work.
Think about it. Wouldn’t you rather have someone generating new product ideas for you or deriving new ways for revenue growth- things that will lead to profit maximization, than to have them screaming internally at a slow computer. Every. Single. Day?
To put it in other words, digital transformation increases people’s output at work. And if someone’s output increases, then the company not only has a happier set of employees, but more productive ones as well!
Stop. Moving. In. Circles
Even if you are not yet fully familiar with it, you’ve probably heard the phrase digital transformation constantly circulating around in the market. And probably especially so ever since the pandemic surfaced in 2019, when most operations had to be moved online. Suddenly, it seemed as though businesses were left with no other option. It’s true that at the time, it might just have felt like a way out of the situation. In reality though, digital transformation is more than just a business continuity plan.
It is not just meant to be used in times of emergency.
Instead, it is the key to ensuring that your business thrives in the year 2021 and all years henceforth.
In fact, according to Gartner, a global research and advisory firm, by the year 2025 more than 55% of large organizations are expected to move onto a cloud-only strategy. So really, a pattern can be observed in the way business is being done today.
Needless to point out, the alarm bells have started to go off for those who continually resist the process of digital transformation.
To put it simply, resisting digital transformation today is like going around in circles when the solution stands right in front of you.
The meaning of Digital Transformation
But what exactly does a fancy term like ‘digital transformation’ even mean? To put it in the words of George Westerman, a principal research scientist at MIT and the author of Leading Digital: Turning Technology into Business Transformation,
“Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance”
In other words, it is the necessary disruption that businesses must undergo if they want to aim for longevity. And no. We are not talking about planning for the next thirty or forty years. If left undigitized, businesses run the risk of losing a significant part of the market within just the next five years or so.
Take what happened with Amazon and local suppliers for instance. A lot of vendors began facing serious struggles as the market giant came in and began wiping them out. Amazon’s competitors were forced into a vigorous innovation race just to keep pace and maintain at least a little bit of their own portion in the economic pie.
As a result of these unprecedented shifts in market power, it is now being suggested that for businesses which aim to grow- or even keep their place a constant, critical analysis of company processes is vital. Taking preemptive measures is not even an option anymore. Although to the unsuccessful business, it may seem like one.
One of these preemptive measures thus, is knowing how to disrupt yourself, before others disrupt you.
But how does a business disrupt itself?
The answer- Yep, you guessed it: Digital transformation.
The Four Types of Digital Transformation
Yes, it is true that digitization is a sure way for any business to reinvigorate itself. Going into it blindly, however, often leads to failure rather than success. Or at least that is what happened with companies like Forde and P&G where the attempts at transformation left a damaging effect on the business rather than causing a successful disruption in the company.
That is why it is helpful to keep the following four segments in mind when going about the process of digital transformation.
- Business Model Transformation
- A transformation of Business Processes
- Organizational Change
- Domain Transformation
Taking note of these early on, can allow you to break down an otherwise bulky process into simpler, more manageable areas.
Business Model Transformation
Before going into the detailed aspect of things, take a moment and consider the overall model your business is currently running on. Ask yourself, what parts of it have become so traditional that they are now in desperate need of innovation?
Companies such as Uber and Airbnb are excellent examples of what it looks like to have a complete digital transformation of pre-existing business models. For decades, taxis were being run in the same old way and no one thought about shorter leasing schemes for houses. These startups, instead, managed to reimagine it all. They challenged the old, rusty parts of the business model and instead came up with a newer, more profitable one. But what’s most interesting, is that none of that ‘revamping’ process could have been possible without the help of digital transformation tools.
A Transformation of Business Processes
But re-structuring of business models is the broader idea. It leads to the kind of disruption which can be grasped even by laymen. Real change, on the other hand, doesn’t just occur on the surface. And it is not as simple as some would have you believe. An effective digital transformation is not just needed in re-thinking the business model. It needs to come in the business processes around which a company revolves.
Sure, the idea of converting an old taxi system into one that is driven by mobile apps might sound like a new and potentially transformative idea but what about the backend processes? What about things which need to be dealt with prior to carrying such a dream to fruition?
Often, this is also where the need for talent comes in- not that other areas of digital transformation can do without it. But here, it is of the utmost importance. Take the task of data analytics for instance. How can a company deal with humungous amounts of data if it lacks the sufficient resources to do so? Simply put, it cannot.
Usually, this is also where third party service providers come in. According to the Harvard Business Review, research shows that partnering with an engaged and experienced information technology (IT) vendor, can help midsize businesses clear these hurdles to digital transformation and growth.
Unfortunately, however, many companies do not carry this segment out to term properly. Most successful transformation stories have people at their core who highlight that technology is not just taken up by people by virtue of the fact that it is technology. For employees to use something- even tech, they need to see a benefit in it. A process, therefore, needs to be designed with end users in mind. A user centric approach to things is of paramount importance but is often neglected, setting back the whole process by several feet.
In the end, however, the core thing to keep in mind is that any transformation needs to lead to maximum levels of efficiency. And maximum efficiency is achieved when you take expert advice on matters. In other words, this is the segment where consultation cannot be taken lightly.
For any transformative process to occur, it is important that the people involved in it believe that the change being brought in will lead to something of value. Technology cannot just be bundled up and thrown at random processes.
No amount of technological shifts would make a business more effectiveunless, the organizational mindset is redefined first.
Taking stock of how reluctant employees may be to a given change and addressing their concerns is one of the many ways in which organizational change can be ensured.
Last, although arguably the most important, is domain transformation. While incremental changes do tend to improve the manner in which a company is run, it in no way leads to radical growth. Or at least not the kind of growth businesses expect when they think of digital transformation. The truth is that real improvement means expansion. And this requires exploration into new, unchartered territories. But that being said, one needs to be equipped with the right supplies when trying to dive into newer business opportunities. Take for instance, the huge amounts of data that will suddenly need to be dealt with once a business expands. To be able to deal with this problem efficiently, the company needs to re-ensure process optimization.
Amazon Web Services is frequently cited as an example of domain transformation. But with huge competitors like IBM and Microsoft already there, Amazon had to carve its place out. It was not able to enter the new domain of web service provision and claim its place in the market, without first handling the essentials. One of the things that facilitated its entry was the efficient use of tools already at its disposal. It already possessed strong digital capabilities, computing databases and test worthy storage capacities. And all of this made domain transformation journey far easier for Amazon than it was for other competitors.
The Digital Overwhelm
For companies that have only just started to look into digitally transforming their business, the task can sometimes seem daunting and almost unsurmountable. Tackling all the different segments of digital transformation sounds great, but the real question is: how exactly does one go about it?
Like any tremendous task, the digital overwhelm only exists if the problem is seen as too huge to be countered. Breaking it down, however, could potentially lead to easier solutions. One way to break this problem down into simpler, easy to follow steps is by looking at the following areas:
- Emphasizing on Cloud First Strategies
- Challenging Legacy Systems
- Maximizing Efficiency
Formulating a Cloud First Strategy
A cloud first strategy, as the name suggests, refers to tapping into cloud-based solutions to a problem before looking at alternatives. As a rule of thumb, it is often observed that corporations which have Enterprise Applications that rely on the cloud and third-party servers, instead of on individual servers, tend to find things to be simpler. For them, it is easier to focus on the actual tasks at hand rather than wasting precious energy and human capital into server maintenance.
At its core, the cloud offers a third-party solution to data management and storage problems. Companies such as Azure for instance, offer all the main types of cloud solutions from Software as a Service (SaaS) to Platform as a Service (PaaS) all the way down to Infrastructure as a Service (Iaas). Any individual business can pick whichever solution fits them best.
In addition to taking the burden off your shoulders, cloud-based solutions offer greater accessibility and allow for better business continuity. As an example, take the current pandemic where remote work is in far greater demand than was previously imagined. Corporations which had already invested in cloud first strategies fared far better in carrying out operations remotely compared to those which had not.
Challenging Legacy Systems
One of the biggest roadblocks to successful digital transformation lies in the existence of legacy systems. Any corporation which aims to transform its ways, needs to challenge these head on.
Briefly put, a legacy system is an outdated software or hardware that makes it difficult to build onto or even interact with newer technology. Most companies which insist on keeping their legacy systems intact tend to hold onto certain myths. Sadly, one of these myths is that newer things are always expensive. Such companies believe that replacing an old system would cost a lot more than running older systems might. One example of these would be the pagers that are still widely used at hospitals today. As you can probably tell on your own, this is certainly not true.
Even a simple, surface level examination of the situation often reveals that whilst the initial costs may seem high, replacing older technology with a newer one can actually lead to a reduction in overhead costs.
Besides, maintenance is a tedious process and weighs heavily on what are already scarce resources. The source code for instance is usually old and long. Updating it can feel like nothing short of a nightmare. To top it off, storage points are often divided and need to be tackled manually, which only adds to the cumulative burden of maintenance. And even if a company was too attached to its old systems and did not care about costs, the truth is that legacy software simply does not integrate well with modern day, third party API solutions due to an intolerable lack of compatibility.
It is as the saying goes,
‘Don’t lose the forest for the trees.’
Digital transformation of an entire corporation can sometimes seem like there are just too many tasks to focus on. So instead of hyper focusing on tackling one problem such as legacy systems or UI design, try to keep the overall picture in mind. Try going through the process by formulating an end-to-end approach to things. If something does not lead to efficiency, then perhaps focus on something which you think does bring in a greater amount of it. The core idea here is to maximize output.
The fact of the matter is, with the increased penetration of technology in recent decades, the job of the CMO and CEO have already become exhausting. It is understandable therefore if such a task can sometimes feel like too big of a monster to deal with. It is also the reason why maximizing efficiency must be kept in mind as the central goal of digital transformation. One simply cannot lose sight of it at any point.
Wrapping It Up One size hardly ever fits all. Some companies may find it easier to opt for hybrid cloud solutions and some may reap greater benefits from carrying out a complete shift to the cloud. Alternatively, some companies may need to focus a bit longer on the optimization of their individual business processes, before delving into other domains. Whatever path you choose for your company, the core idea that must be kept in mind is that digital transformation is no longer an option, although it appeared to be one several years ago. In the times that we live in today, rejecting to transform and update your corporation is an invitation for corporate stagnation and nothing else.