TABLE OF CONTENTS
- What is digital transformation?
- Why does digital transformation matter?
- What role does culture play in digital transformation?
- What is driving digital transformation?
- What are the key trends of digital transformation in 2021?
- How can I measure the ROI from digital transformation?
- How to start digital transformation?
Digital transformation is nothing more than integrating digital technology in all areas of your business and changing the way you operate and deliver value to your customers. It is also a cultural change that requires organizations to challenge themselves, experiment, and accept failure constantly.
Digital transformation is an inevitable process, regardless of the size of the enterprise. However, there is no doubt that it is not obvious to everyone. This is spoken of in panel discussions, articles, or research on how companies can remain competitive as the environment is increasingly digital. However, many business leaders do not fully understand the importance of digital transformation. Is it just a catchy placeholder for a move to the cloud? What are the specific stages of the transformation? Do you need to design new jobs to help yourself create the framework for your digital transformation or hire a third party? What parts of our business strategy need to be changed? Is it really worth it?
Some leaders believe that the term "digital transformation" has become so widely used that it has lost its value. Entrepreneurs, however, need to know this concept. It means rethinking old operating models, experimenting with digital solutions, and being more agile in responding to customer needs and rivals' progress.
What is digital transformation?
Since digital transformation will be different for each business, it can be difficult to pinpoint a single definition that applies to everyone. However, broadly speaking, we define digital transformation as the integration of digital technology in all business areas, resulting in fundamental changes in the way a company operates and delivers its services. Plus, it's a cultural shift that requires organizations to constantly challenge the status quo, experiment a lot, and deal with failure. Sometimes it means moving away from the old business processes on which companies have been built in favor of relatively new practices that are still being developed.
The definition from Agile Elephant lists the segments in which companies will need to change their existing practices: “Digital transformation involves a change of leadership and mindset. It is also associated with introducing innovations and new business models, including the digitization of resources and increasing the use of technology that improves the comfort of employees, customers, suppliers, partners, and stakeholders of the organization. "
And Wikipedia's definition describes the effects of digital transformation and its overall impact on society - "Digital transformation is changes related to the application of digital technology to all aspects of human society."
Why does digital transformation matter?
A business can undertake digital transformation for several reasons. However, it is often forced to do so because it is simply a matter of survival. In an article for The Guardian, Howard King put it this way: “Companies don't change by choice because it is too expensive and too risky. Instead, companies go through a transformation when they stop growing.
What role does culture play in digital transformation?
In recent years, the role of IT has changed significantly. CEOs increasingly want CIO to help generate revenue for the organization. However, among CIOs, the highest operational priority is "developing innovative products." Instead of focusing on savings, IT has become the engine of business innovation.
IT plays an important role in delivering your digital transformation strategy. However, work on implementing and adapting to the massive changes accompanying digital transformation rests with the employees. Therefore, digital transformation is a human problem.
IT leaders work in cross-functional teams. Digital transformation initiatives often transform workgroups, jobs, and long-running business processes. When people are concerned about losing the value of their job and, therefore, their workplace, IT leaders will feel opposition.
What is driving digital transformation?
Technology is, of course, an important element in digital transformation. But it is often more about ditching outdated processes and legacy solutions than just adopting new technology.
What are the key trends of digital transformation in 2021?
2021 will be a year of settlement with digital initiatives. However, organizations that still underestimate the need to change cultures do so at their own risk. There are eight key trends in digital transformation that business and IT leaders should be aware of:
- The rapid adoption of digital operating models, including integrated multifunctional teams.
- Restructuring - Those who have invested in large database analytics and management will stay ahead of the competition.
- Better use of artificial intelligence and machine learning.
- Continuation of mergers and acquisitions in the IT outsourcing industry.
- Consultation creating new digital partnerships.
- Continue to implement the public cloud.
- New indicators for the success of the digital transformation.
- Increasing attention to the long-term value of digital initiatives
How can I measure the ROI from digital transformation?
To prove the success of digital transformation efforts, leaders need to calculate ROI. This is not easy for projects that cross the boundaries of functionality and business, change the way a company enters the market, and often even change the interactions with customers and employees. For example, a mobile app modernization project may have short-term benefits, but other projects seek long-term business value.
Then consider best practices on digital transformation indicators. These include setting up preliminary data in advance. Next, business outcomes need to be considered. Consider strategic impact (e.g., revenue growth, lifetime customer value, time to market), operational impact (e.g., performance improvements, scale, operational efficiency), and cost impact.
How to start digital transformation?
All of this may sound overwhelming. However, remember that the biggest mistake is assuming that all competitors are much more advanced. This is because the fastest popular transformations of the biggest players in the market are admired. Still, no mention is made of how difficult the transformation is or how long it may take for a typical smaller company.
As companies formulate their own digital transformation strategy, much can be learned from IT executives and IT leaders who have already started the process. Of course, digital transformation is a huge undertaking, especially for larger and established companies. However, it will transform the company into one that is better adapted to customer requirements and resistant to the rapidly changing digital future if it is properly carried out.