What Is Digital Transformation?

Why is digital transformation important?

Sometimes the ability to adapt using technology can be the difference between business continuity and closing one's doors—like in the face of a global pandemic.

In a recent survey by Dell Technologies of over 4,300 global businesses, 80% of leaders indicated they fast-tracked their digital transformation programs during the pandemic so they could sustain operations. Some of their focus areas were on implementing technologies that empowered remote work, reinvented digital experiences for customers and employees, and strengthened cybersecurity.

Rather than waiting for another global event to force digital transformation, businesses should continue to expedite their initiatives. These efforts will not only create fail-safes for continuity but help them meet their market's demands more effectively.

What drives digital transformation?

There are three primary technologies or drivers of digital change in businesses, including cloud computing, data analytics, artificial intelligence (AI), Automation and mobile applications (apps).

Here is a closer look at each of those technologies:

• Cloud computing: Delivers services like servers, storage, databases and software on-demand via the Internet (“the cloud”), giving businesses greater flexibility in accessing essential information and customers an improved, more efficient user experience.

• Data Analytics: Data analytics is the process of identifying patterns, correlations, and trends in big swaths of raw data — from scientific study results to customer surveys.

• Artificial intelligence (AI): Uses machines and computers to mimic human problem-solving and decision-making skills.

• Automation: Automation refers to the use of technology to perform repetitive tasks, minimizing the need for human intervention. Automation can be applied to various business processes, such as managing employee schedules, payroll, and customer relationships. For example, an e-commerce store can automate sending a follow-up email to customers asking them to review products they ordered.

• Mobile applications (apps): A computer program or software designed to run on a mobile device, like a phone.

Although these technologies can be valuable tools, it's essential to implement them for the right reasons—like replacing antiquated or legacy technology rather than for the sake of having the latest and greatest.

What are the components of a digital transformation framework?

A strong digital transformation framework focuses on three essential components: people, process and platforms.

People

Digital transformation must start with the people—specifically employees and customers. A practical framework focuses on empowering the workforce, improving the customer experience and enhancing culture and leadership.

For employees, you may need to address any concerns about job security by ensuring your message is loud and clear: technology isn't replacing anyone. Explain how the changes will help them solve problems faster and make their lives easier. A solid change management practice can help lead the people-side of change so your organization can achieve desired outcomes.

It's also essential to equip all departments and business units equally. Competition and resentment may form if workers feel that management is playing favorites, so make sure everyone has the same basic setup and broadly shared expectations.

Process

It might not be implementing an entire lean work process and eliminating all waste, but digital transformation means assessing your processes. Finding bottlenecks and places where new technologies could save money will be time well spent.

Additionally, this component of digital transformation focuses on process standardization to promote more and better collaboration. For example, instead of every department having different means of getting approval sign-offs (like printing, attaching a document to an email or working within a document on a server), a business may implement digital document workflows to allow all needed parties to share and edit documents quickly through secure links.

One process that should also get a lot of attention during a digital transformation initiative is change management, i.e., the steps to ensure a smooth digital transformation.

Platforms

The final component of a digital transformation framework is platforms, meaning the intelligent technologies you integrate into your business's operations, offerings and culture to work more effectively.

Implementing a new platform won't be a one-and-done situation where you can say, “We did digital transformation!” Instead, regularly assess platforms to ensure you have the optimal technology to meet your market's needs.

How to create a digital transformation strategy

1. Align objectives with your company's vision

Take a step back from the drawing board and reflect on your company's vision. What kind of experience do you want your customers and employees to have? Some other questions to ask include:

• What are my customers' needs and expectations?
• How is my organization falling short?
• What can we learn from our competitors by what they're doing well or not so well?
• How can my company better support our workforce through technology?

Defining your digital transformation goals based on your company's ambitions will ensure you move forward in the right direction.

2. Identify key leaders

Know who needs to be on board to make meaningful progress and align those leaders with a unifying goal. The ongoing involvement of these leaders and collaboration in executing the initiative can expedite work.

A recent McKinsey survey found companies that engage a Chief Digital Officer (CDO) to support their evolutions were 1.6 times more likely to report a successful digital transformation. Key leaders like the CDO are instrumental in instilling a change mindset and determining how to prioritize actions.

3. Determine your team and platforms

Work with pivotal leaders to build a team of people who can oversee the initiative and ensure your organization meets its goals. Some examples of people that may be good candidates for your team are power users of technologies you've introduced in the past or people with positive attitudes towards exploring new ideas with a track record of ambition.

In addition to constructing a team, this step is a great time to shortlist any platforms or technologies your company needs to meet market demands. This step will require thorough, thoughtful research to ensure you pick the best option(s) out of the many possibilities.

4. Restructure around customer outcomes

When building your transformation team and researching solutions, it's essential to keep your customers' needs top of mind. Doing this can help all other elements of a digital transformation strategy fall into place. You'll find that the processes and platforms that most comprehensively improve customer outcomes will shape your plan and guide how you put it into practice.

5. Empower employees

This last step is perhaps the most critical, especially for employees who work remotely and can't attend any in-person training. It also relies heavily on change management principles to empower employees to help implement change.

In this step, your transformation team will need to work closely with all business units to ensure employees get the necessary training and support to operate new technologies confidently.

Instead of limiting technology training to a how-to webinar or two, you might also create a robust library of resources and provide training that focuses predominantly on how it benefits employees. Using an enterprise social networking service or another company forum, you can keep the dialogue going with open and consistent communication.

What are the benefits of digital transformation?

Increased operational efficiency

Effective operational changes from digital transformation can often make employees look back and think, “Can you believe we used to do this manually?”

One example of this change is the integration of secure electronic signature technology. eSigning can eliminate many manual tasks, including:

• Meeting with clients, vendors or stakeholders in person to sign contracts and paperwork
• Physically mailing paperwork to sign
• Scanning and printing pages and pages of documents

With eSign software, they can securely sign, send and track paperwork electronically near instantaneously, saving them hours of valuable time.

Boosted innovation

Innovation can appear like a luxury in business environments with a high degree of manual work and frequent fire drills.

Streamlining work through a digital transformation initiative gives employees valuable time for brainstorming and creative problem-solving. Once you create more space for collaboration and ambitious research, you’ll be able to find ideas that lead to new market opportunities, better brand perception and competitive advantages.

Improved customer experience

Customers may not care how advanced your technology is, but they recognize whether their experience is smooth. When you take stock of which practices positively impact customer outcomes and make them happier, you'll be able to focus on increasing net new customers, maintain repeat customers and increase top and bottom-line revenue.

Reduced costs

Legacy software can be costly to maintain and often has sparse or nonexistent updates that hinder productivity. While the cost of switching to new software can be high, the operational efficiency and reduced expenses you gain will be worth it in the long run.

Digital transformation can help reduce costs in other areas, too. For example, when a company goes paperless, they save on physical resources like postage, envelopes, paper, ink and filing systems. Additionally, with a secure eSigning solution in place instead of paper, an organization can help prevent fraudulent activities from occurring, which can cost thousands of dollars to remediate.

More employee engagement

Although digital transformation comes with an initial learning curve for current employees, it can help improve long-term engagement. As employees' jobs become more straightforward, efficient and intuitive, they become more capable and confident in their work.

An investment in your workforce's tools will feel like a direct investment in them. This can increase satisfaction and, therefore, employee retention.

How to measure the ROI of digital transformation

In practice, a KPI may be a measurement of improved customer experience that you capture through brief, closed-loop customer feedback surveys. Another example may be the amount of time saved on a particular task through automation relative to how long it used to take manually. Other analytics could include optimized processes and usage or impact on sustainability.

To help you identify appropriate KPIs for your initiative, ask yourself:

• What metrics will help us tell the story of our digital transformation?
• What type and level of growth are we hoping to achieve?
• What are attainable yet ambitious goals?
• What kinds of reports will we use to keep an eye on our KPIs?
• How often will we run reports and adjust our strategy?

Digital transformation team roles

While finding the best solutions and adjusting your processes is essential, putting the right people in the right roles can significantly boost your efforts.

Here are a few of the roles that you'll want to ensure you have on your team:

• CIO/CDO: Many CIOs have taken on the role of Chief Digital Officer (CDO). This individual helps a company drive growth by leading the charge in transitioning from analog to digital technologies.

• CFO: A CFO will be critical to budgetary approval for projects and will be able to advise on opportunities to spend efficiently.

• IT/Helpdesk Managers: The frontline deployment team for new technologies.

• Software Engineers: Including cloud computing specialists and digital product managers, software engineers are responsible for software solutions from ideation to testing to implementation.

• Implementation Leads: Several UX roles—designers, writers and UX architects—can help guide the implementation of digital transformation.

• Project Managers: Project managers keep work organized and moving. They can connect team members with resources and raise concerns when necessary.

• Marketers: Spreading the word—both within the company and to customers—is where marketers make the most impact.

• Customer Support: The voice of the customer is always helpful in determining pain points in any process or product that digital transformation can improve upon.

What are the challenges of digital transformation?

• Poor communication

  Whether the result is duplicative efforts, ambiguous goals or confusion on the progress of a project, poor communication is the challenge that can most quickly bring digital transformation to a screeching halt.

• Lack of employee buy-in

  People are creatures of habit, and technology comes with a learning curve. Companies with immature digital cultures might face challenges when rolling out solutions.

• Budgetary constraints

  Transformative technologies are becoming more and more accessible, but every business has budget limitations.

Setting up a stream of effective communication, proper change management training and careful budgeting will help safeguard against these challenges.

Digital transformation trends

There are several tech trends around digital transformation that are important to keep in mind, including:

• Continued migration from legacy hardware to cloud computing
• Digital documents in place of paper
• Increased access to AI and machine learning
• Remote-work options
• More mobile development

With these trends, the focus has stayed on and will likely remain on the most critical component of change: people.

For customers, it's all about improving their journey with your brand and delivering offerings as smoothly as possible. For employees, implementing technology that helps them accelerate and catalyze their work can substantially boost productivity and retention.

Transform your business with Codeflux

Digital transformation is more than investing in new technology—it’s a decision to change a company’s culture. Hopefully, this comprehensive look at digital transformation from people to processes to platforms leaves you feeling ready for action.

If you’re still unsure where to start, we can help. The Codeflux team is passionate about driving the digital economy with better workflows, increased productivity and improved customer and employee experience—backed by white-glove service to support your unique organizational objectives.

Write to tranform@codeflux.au