The last two years have changed the way that businesses think and feel about all things digital, making it important for professionals to understand how digital transformation can benefit their businesses.
Companies need to be able to keep up with the ever-evolving technology landscape to remain competitive. This means embracing automation across the whole organization, more secure data storage, and improved customer insights, among other technologies.
But are businesses really ready for more reliance on technology? According to a 2022 study by Gartner, many midsize organizations hold intentions of accelerating their digital business initiatives, but lack a complete vision of the key elements of success.1
This guide will outline the ways in which you can become a more digital enterprise and the advantages that it can have on your business. It will also help you build a framework for executing your own digital transformation.
What Is Digital Transformation?
Digital transformation is the process of using technology to create new or modify existing processes, cultures, and customer experiences to meet evolving business and market requirements. This includes utilizing data-driven insights to develop new strategies that maximize operational efficiency.
It can also be seen as the integration of digital technology into all areas of a business, resulting in fundamental changes to how businesses operate and how they deliver value to customers.
What does the future of digital transformation look like?
The integration of artificial intelligence (AI), automation, and the Internet of things (IoT) into everyday life is paving the way for more efficient and streamlined processes. This will allow organizations to better understand customer needs and preferences through the use of sophisticated analytics and data-driven decision making.
However, uncertainty in the economy has led many executives to take a defensive stance on automation investments. According to a Forrester Predictions Report from October 2022, in 2023, executives will redirect funds from ML-based decision support for loan approvals or omnichannel customer self-service support to risk and resilience efforts that shore up supply chain gaps, or they’ll invest in physical automation to ensure business continuity to offset labor shortages.2
Why Explore Digital Transformation?
An increase in technology adoption over the last two years has brought many benefits to businesses and customers. By making business processes more efficient, saving on costs, and opening up new growth opportunities, digital transformation enables organizations to better serve their customers and provide them with personalized experiences.
The Risk of “Business as Usual”
During disruption or uncertainty, “business as usual” becomes riskier than innovation and automation. Standing still compromises resilience, competitiveness, and results in “catch-up” costs as businesses are forced to spend heavily to maintain parity.
Benefits Of Digital Transformation
Embracing digital transformation has many benefits—and not just for business, but for customers as well. For one, it helps to drive economic change by increasing productivity, creating new business models, and creating new sources of revenue. Furthermore, knowing how to use digital tools, systems, and platforms helps professionals get ahead in their industry.
Take the financial industry, for example. Digital transformation allows financial institutions to offer online banking options or automated investment advice tools that help customers manage their finances more efficiently. There’s no longer a need for customers to wait on the phone or head to the bank for a meeting—they can get what they need from the nearest computer or smartphone.
With digitally-focused operations, businesses gain access to data and insights that can be used to create new products/services, increase efficiency, and become more competitive in the global market. Digital technology can help businesses reach customers across the world, allowing them to expand their customer base and increase their profits.
Technology can also provide valuable customer insights. By collecting data from customers and analyzing it in real-time, businesses gain a better understanding of their target audience’s needs and preferences. This allows for the tailoring of services accordingly—making organizations better at meeting the needs of their customers. Using such data-driven insights provides a competitive edge.
Some other benefits of digital transformation include:
- Greater Efficiency
The primary concern with most digital transformation initiatives is improving business efficiency. For example, a transformational tool like intelligent document processing can increase document processing efficiency by automating document classification and data extraction with accuracy. This can be particularly useful in industries where there is a large amount of data that needs to be processed, such as insurance or financial services.
- Increased Revenue
By leveraging digital technologies, businesses can create innovative products and services that generate additional revenue streams.
- Reduced Operating Costs
Automating manual tasks and streamlining processes can also decrease operating costs, leading to a healthier bottom line.
- Enhanced Security
Digital transformation can improve security by implementing stronger encryption, better authentication protocols, and more robust access control measures.
- Improved customer service
A more personalized customer experience can be given by using digital solutions such as data analytics, marketing automation, and AI-driven customer segmentation. This can help companies provide personalized services and experiences to their customers. Using digital technologies such as AI-powered chatbots and conversational AI to increase the speed and accuracy of customer service. This can help to reduce customer wait times and improve customer satisfaction.
Overcoming Digital Transformation Challenges
Despite its many benefits, there are some challenges associated with digital transformation as well. Here are some of the common challenges faced when pursuing digital transformation.
Resistance to Change
Employees may be resistant to new technologies or changes in the way they work. Organizations can address this by involving employees in the decision-making process, selecting tools with an easy and intuitive user interface, and providing training and support to help them adjust to the changes.
Lack of Digital Skills
Many employees may lack the necessary digital skills to effectively use new technologies. This can be overcome by providing training and development opportunities to help employees acquire the necessary skills.
Integration with Existing Systems
Integrating new digital technologies with existing systems and processes can be challenging. This can be resolved by conducting a thorough analysis of existing systems and processes and planning the integration carefully to minimize disruption.
Data Privacy and Security
Ensuring data privacy and security is critical in a digital transformation, and can be difficult to implement. To address this, businesses can implement security measures such as encryption, firewalls, and access controls.
Limited Budget and Resources
Digital transformation can be costly, and may require significant investments in technology and training. This can be overcome by focusing on the most critical areas of the business and prioritizing initiatives that will have the greatest impact. Additionally, looking into cost-effective solutions such as open-source software and cloud computing can help mitigate this challenge.
How To Plan for Digital Transformation
Digital transformation is a complex process. It requires a deep understanding of the business, the technology, and the people involved. Here are a few steps to consider when planning the rollout of transformative technology.
Assess Current Digital Capabilities
Before embarking on a digital transformation initiative, it is important to understand your current digital maturity level. This includes identifying your current digital assets, such as technology, data, and processes, and assessing how they are used within your organization.
It’s also important to understand the gaps in your current capabilities and where improvements can be made. Setting clear goals for your digital transformation initiatives is essential to ensure that you are focusing on the areas that will have the greatest impact and return on investment.
Identifying the areas of your business that will benefit most from digital transformation is crucial to ensure that you are focusing on the initiatives that will have the greatest impact and return on investment. This can be done by conducting a thorough analysis of your current processes, systems, and customer needs.
Prioritizing initiatives will help you to focus on the most critical areas of the business and will ensure that you are getting the most out of your digital transformation efforts.
Develop a Comprehensive Plan
Developing a comprehensive plan is essential to ensure that your digital transformation initiatives are executed successfully. The plan should include a clear strategy for achieving your goals, timelines, budget, and resources. It should also include measures to mitigate potential challenges and risks, as well as a clear strategy for communication and change management. It’s important to involve all stakeholders in the planning process, including employees, customers, and partners, to ensure that the plan is aligned with the overall business strategy and goals.
Additionally, it’s important to continuously monitor and adapt the plan as circumstances change and to adapt to the outcome of the execution of the plan. This will ensure that you can make adjustments as needed and stay on track to achieving your goals.
Digital Transformation: Navigating the Road to Business Success
Digital transformation provides many opportunities for businesses and organizations looking for ways to stay ahead of the competition, build resilience, and deliver better services for their customers. It allows them to automate manual tasks, make data-driven decisions based on customer feedback, and reduce operational costs by eliminating redundant labor requirements.
And while there are some challenges associated with digital transformation, these challenges should not be seen as deterrents but rather as opportunities for growth through innovation and adaptation. With careful planning and execution, any organization can reap the rewards of successful digital transformation initiatives.
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
2. Predictions 2023: Fortune Favors The Bold And Focused, Forrester Research, Inc., October 25, 2022.