Everyone says you need a digital transformation strategy to succeed in business today but what does that actually mean? Here at In Cloud Solutions we want to help you make the most of new opportunities by running you through some of the best information out there to save you time.
Digital Transformation Explained: What Is it and Why Do You Need It?
If you read any blog or paper focused on the business or digital world, then you have probably come across one or all of these terms: “digital transformation”, “digital strategy” or “digital maturity”. Indeed, a McKinsey Global Survey has found that more than eight in ten organizations they spoke to have undertaken such efforts in the past five years. But the terms are wildly over-used and under-explained, so it’s no wonder that few senior leaders and business owners can tell you what digital transformation actually is.
Many believe that a digital transformation strategy is about investing in more pieces of expensive technology or just having a collection of digital tools. But in truth it’s about understanding consumer trends and shifts towards digital. Put simply, a digital transformation strategy is about bridging the gap between where your company is currently and where it wants to be in the longer term, particularly overcoming the obstacles that your unique business will face. That means that as the name suggests, digital transformation is holistic: it transforms all aspects of your business and its effects can be felt from HR and strategy to sales and marketing.
So now you know what a digital transformation is. But if you’re still not convinced and can’t help but wonder: why does my business need this then read on. Taking a considered approach to a digital strategy is now necessary for business survival. As the company who helped roll out the Lloyds Register digital transformation we know how extensive and thorough the process needs to be.
Neither is it enough to be a trend-follower; to keep competitive, you have to drive digital innovation and stay ahead of the curve. That is why a poll by CIO found that 41% say they are either “extremely” or “very” at risk for disruption by emerging companies or technologies. What’s more, employees want to work for digital leaders. Deloitte has found that across age groups from 22 to 60, the vast majority of respondents want to work for digitally enabled organizations. Employees will be on the lookout for the best digital opportunities, and businesses will have to continually up their digital game to retain and attract them.
Best Practices for Successful Transformation: How to Achieve Digital Maturity
Now that you understand what a digital transformation is fundamentally, it doesn’t seem that hard to achieve – right? Well, in reality, 70% of all digital transformation initiatives do not reach their goals. With hundreds of articles, step-by-step guides and contradicting statements, it’s no wonder that business leaders and managers don’t know how to successfully guide digital transformation. Lucky for you, we have scoured the internet to bring you a comprehensive compilation of the best strategies out there. So, what is the best model for digital transformation? The truth is there is no one size fits all! That is why it is important to hold off on jumping headfirst into “how-to” guides straightaway. At the same time, simply just “winging it” will stall your digital maturity. Start by taking the following steps. Only once you have done that, proceed to the drawing board and begin drafting your digital strategy.
Align All the Key Players
Before even beginning to implement your digital transformation framework, you have to secure top-down executive buy-in. This will ensure that a fast and smooth transition occurs. Without this alignment of all the necessary stakeholders, your digital transformation process will struggle to even get off the ground. First, without the support of senior management, the business plan will fail from an organisational standpoint, particularly in regard to decision-making and budgetary concerns. Second, senior management is key in securing buy-in throughout the organisation. They must take proactive action in communicating the need and desired outcome of the business plan to all employees. Without this, your digital agenda will stall as a result of organisational gaps from further down the business.
“The CEO cannot simply sanction a digital transformation; he or she must communicate a vision of what needs to be achieved, and why, in order to demonstrate that digital is an unquestionable priority, make other leaders accountable, and make it harder to back-track.”
Find out more: https://bit.ly/3h1H40A
Put Together the Right Team
With companies increasingly at risk of falling victim to digital disruption you need to ensure that someone has overall ownership for the project. Not only this, but the entire launch team needs to have the digital skills to ensure the company stays ahead. Many organisations have interpreted this by setting up independent digital units with digital progress as its primary focus.
“However, McKinsey warned this could cause other problems if mismanaged, stating, “Separating a digital component from the rest of the organisation is not entirely the answer, however. They can start to create channel conflict, particularly if innovations threaten to cannibalise revenue streams. The digital unit therefore needs to be reintegrated at some stage, and that becomes more difficult as time passes. Whatever the choice, the ultimate goal has to be to enmesh the old and the new.””
Find out more: https://bit.ly/3h1H40A
Whatever method you choose, develop the company’s digital capabilities one way or another.
Research and Analyse Your Current State and Processes
Before starting to draw up any digital transformation strategy, it’s important to analyse company culture. Ask yourself: what, where, when, why, how and who. Simple questions like these will help you to analyse the needs, skillset, culture, current processes, roles, structures, pain points and risks that are unique to your company. This will allow you to reach digital maturity faster. Ultimately, without an understanding of the basics of your company and its culture, you won’t be able to start picturing the impact that a technology should and will have on both your customers and staff. Remember that artificial intelligence, chatbots, and so on will impact all companies and industries differently. So, if you don’t know the answer, do the research. It’s important to understand the customer – their behaviour, their drivers and their needs. Analytics can prove useful in understanding digital processes.
“One of the biggest mistakes companies make when undergoing a digital transformation is assuming that they can simply migrate their current technology to a new platform or system (like the cloud or AWS) without considering their current processes. Conducting a current state assessment gives you the information you need to make strategic decisions about your digital processes and resources.”
Find out more: https://bit.ly/2UeRAIc
Allocating funds towards your digital transformation initiative is not always easy. The strategy often requires considerable capital over an ongoing period of time stretching over all department, customer and personnel. The budget will ultimately determine your priorities as you allocate resources and determine scope.
“Investment is likely to result in lower profits for a while—but without it there is a serious risk to profits in the longer term. Importantly, companies will need to allocate investment both to improve the current business and to build new businesses as the insurance model evolves. To acquire expertise in new fields and keep abreast of innovation, for instance, insurers will need to invest in partnerships or a venture capital arm, perhaps both, as well as in their own innovation labs.”
Find out more: https://mck.co/3eWsaGX
Set Business Objectives
A lack of direction can be the ultimate cause of failure for your business transformation.
It is important to highlight key milestones and digital goals for the business to meet. Focus on the questions that you had answered previously concerning your digital experience and be ambitious! Once you have identified your longer term, strategic objectives, set smaller targets alongside these in order to build momentum and make sure that stakeholders remain satisfied.
“Once you create a vision and analyze the market, it’s time to focus on an experience you want to create for your customers and employees. According to the report prepared by Actual Experience , 93% of business leaders believe that their business’s success directly depends on customers’ digital experience . Besides, 88% have the same opinion concerning their employees’ experience.”
Find out more: https://bit.ly/2UjPvdM
It is vital that that key players remain informed throughout the process about what stage the business is in and what goals are next. Regular team meetings and newsletters can keep the organisation set on hitting its targets.
“Targets are needed for each source of value creation – cost savings, revenues, improved performance of agents, and satisfaction of employees and customers—and for new ways of working and the new capabilities required. They can be set, for example, for the frequency of releases, the percentage of processes that will be automated, the percentage of transactions that will be migrated from one channel to another, the fraction of new code that will be tested automatically, the level of personalisation that will be achieved, and the number of campaigns that will be run each month.”
Find out more: https://mck.co/3eWsaGX
Set Technology Goals
Once your business goals are in place, you can go ahead and translate these into digital technology processes.
“In maturing companies […] digital technologies are more clearly being used to achieve strategic ends. Nearly 90% of respondents say that business transformation is a directive of their digital strategies. The importance that these organizations place on using digital technology to improve innovation and decision making also reflects a broad scope beyond the technologies themselves. In companies with low digital maturity, approximately 60% of respondents say that improving innovation and decision making are digital strategy objectives. In digitally maturing organizations, nearly 90% of strategies focus on improving decisions and innovation.”
Find out more: https://bit.ly/2MCDLPA
However, don’t jump the gun and skip the previous step! Clear business objectives will ensure that the focus remains on YOUR unique transformation. It’s always tempting to throw money at new shiny technologies with powerful advertisements that others are adopting, but that doesn’t necessarily mean that it’s the right fit for you – be it timing or culture-wise. Technology should help your business operations run smoother, not create additional problems.
“A digital system is built to support and perform daily tasks and functions that machines could do to lessen the struggles of the human workforce. It also allows for more output in less time. Make sure that digital systems meet certain qualifications that make them user-friendly. In other words ensure that the purpose of having digital technology is justified.”
Find out more: https://bit.ly/2APJHBR
Document the Risks
It’s important to recognise, as with any investment, there are associated risks with implementing a digital transformation strategy. However, what many companies fail to do beyond recognising the risks is write them down. Documenting, monitoring and analysing the risks continuously will allow you to best avoid them and make strategic choices at every step of your digital transformation process.
Write It Up
You have now identified your current business state, its long-term objectives and the associated risks. It’s time to draft your coherent plan that will transform your business model by bridging the gap between where you are now and where you want to be. Does this include updating your technology or reframing business infrastructure? Recruiting new talent or re-skilling current staff? Each business is different so only you know! However, make sure your digital plan lays out exactly how you’re going to get there – as you will have discovered from the previous steps. Make sure to include a timeline, key roles, key players, business goals, objectives, risks and priorities. This will help you oversee a successful transformation and follow the general framework even when some things are bound to go wrong.
Run Pilot Tests
While a digital transformation strategy requires risk taking, that doesn’t mean there aren’t ways to mitigate this. Prior to rolling out the technology across the entire organisation, pilot test it internally with a single department or externally with a segment of the business. This will help to identify small problems and areas of concern straightaway and enable your company to deal with larger changes and issues as they arise more readily. Above all, it will ensure that the technology that you have selected is indeed the right fit for your business.
Set the Culture
Great! You now have a clear digital strategy that you have made sure works. This knowledge needs to be disseminated to all employees. Without transparency in place in regard to the current state of the company, the reason behind the changes, and how to successfully oversee the change, it will be hard to successfully implement your business plan. A transparent approach is a key part of change management.
“46% of financial services executives feel cultural or behavioural change is the biggest challenge they face in pursuing their digital strategies.”
Find out more: https://bit.ly/30r8HdN
You can even get creative with boosting morale for your digital initiative! Take note:
“In our interviews, we found that storytelling is becoming a popular means of gaining employee buy-in and organizational traction for digital transformation. Disney is a prime example. To capture the hearts and minds of its employees, Disney carefully crafts internal messages so that they are highly relevant. We develop stories all day long at Disney, says Disney senior vice president Milovich. A great story is a key element in getting funding for a pilot for our TV shows, and we apply this same storytelling capability to allocate capital for our employee digital initiatives.”
Find out more: https://bit.ly/2MCDLPA
Release the New Technology
If your technology has successfully passed the pilot test and/or been adjusted accordingly, you can now start to release it across your business. A partial roll-out will only slow your digital maturity; the pilot tests have already been conducted and the results have been analysed so embrace the change!
Like with any research and development undertaking, a digital transformation is not a one-stop shop. It’s an ongoing, changing process. That means that your business strategy has to be constantly adapting and evolving. Consumer behaviours and trends keep shifting; your digital strategy needs to reflect that. Once implemented, keep analysing the impact of your digital rollout. Continue to monitor analytics to measure your success and adjust the plan to suit emerging patterns and new goals. Often when implementing a technology, you will find that there are ways to keep improving and managing it, most notably in the case of artificial intelligence. One of the easiest ways to do this is to ask for feedback. Conducting surveys, focus groups and analysing big data should extend beyond the pilot period. The digital economy is continuously changing so continuously look for ways to gain insight into how to improve the customer experience.
“These are your organisation’s GPS. You need to know where you are, where you’re going, what your customers are doing, what your competitors are up to and key metrics in place for your finances. Data informs decision making, validates decisions and removes endless subjectivity and arguments discussions. Without data you’re flying blind and in the digital world you might run into a drone or a driverless car. Proceed with caution.”
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Successful Digital Transformation
A Common Thread
With $900 billion out of $1.3 trillion spent on Digital Transformation in 2019 going to waste, it’s important to have a clear plan and measurable goals.
Each and every successful digital transformation will have its own unique character which is why it is so important to work with trusted partners. They will work with you to create a plan and help you stick to it.
At the end of the day every Digital Transformation project shares a focus on the future. Indeed, if anything is to be drawn from the digital success of these companies, it’s that they played the long game. Digital transformation is not a sprint, but a marathon. Those taking small steps are ultimately the ones who come out on top.
If you would like to talk about your company’s plans and ideas for the future please book a free consultation with [email protected]
In Cloud Solutions are the UK’s centre of excellence for SAP’s Business ByDesign – the top digital ERP solution for growing mid-market business of all kinds.
Article compiled by Maria Kareeva