DIGITAL TRANSFORMATION is at the center of any discussion today, be it the board room, CxO agendas, conferences, blogs, etc. Why? Is this another passing phase? FAD? Marketing ploy of the Tech world? Does size matter? Is it for me? Before we attempt to find answers to these, lets take a deeper look at what Digital Transformation means and what does it entail to embark on such a transformation journey.
What does “DIGITAL” mean to you? For most it’s another word for “Information Technology. Is it? In reality, “Digital”means the broad range of platforms, solutions, technologies, devices/machines, software and data and application of these in an integrated fashion together with people and processes that enable a more effective or an efficient means of achieving an organization’s goals and objectives whilst enabling an organization to serve its clientele in a frictionless way and create a one-on-one relationships which is more personalized and meaningful. This also potentially paves the way for a new entrant to disrupt the market in differentiating his offering by leveraging the “Digital” stack.
Digital transformation is defined as part of a larger technological process, and is the change associated with the application of Digital Technology in all aspects of human society. Digital transformation is mature phase of digital adaption where one would acquire the necessary knowledge/competence on Digital Technologies; start applying the Digital Technologies to solve real-world problems; and finally start using same for it’s transformative potential in creating new products/services, markets, eco-systems, platforms, etc.
Digital, Digitization, Digitalization and Digital Transformation
The Digital transformation has three phase of evolution and namely DIGITIZATION, DIGITALIZATION, and DIGITAL TRANSFORMATION. One may ask, but aren’t these one and the same? Though these terms are very often than not used very loosely and in an interchangeable manner in most articles and blogs, these are three DISTINGUISHABLE phases in the DIGITAL TRANSFORMATION journey.
DIGITIZATION is the application of technology to digitize data to get a better and more meaningful information that may be used to drive better outcomes for stakeholders.
DIGITALIZATION is the process of driving technologically induced change within a given context, organization, market, industry, etc. by which one could create a significant strategic lineage for oneself or a closed/open community.
DIGITAL TRANSFORMATION is the total effect arising from ones ability to tap into the opportunities to transform and change existing business models, socio-economic structures, legal and policy measures, organizational patterns, cultural barriers, etc.
Now that we have clarity of what’s what, let switch gear to understand why Digital Transformation must be a key STRATEGIC PRIORITY for ANY organization.
Why Digital Transformation? What’s in it for us?
Today, more than ever, every business is faced with threats as well as opportunities that never existed or were not significant enough to be focused upon. The NET economy fueled by growing penetration of MOBILE devices; ever multiplying SOCIAL platforms catering to different aspirations/interests; CLOUD platforms which have removed strictures around capital investment on technology; Internet of Things (IoT) which is enabling businesses to connect the dots in terms of creating the data lake and finally BIGDATA and associated AI based Predictive modelling and capability in creating a better engagement with stakeholders based on new business use-cases, new expectations, competitive positioning, multi-channel approach, as well as new business models in primarily eliminating existing or perceived POINTS OF FRICTION and in creating NEW EXPERIENCES.
Today, as everything around us is getting smarter by the day from connected devices to wearables, organizations have an immense opportunity to deliver digitally abled products and/or services or transforming what they do by using data that they could gather and use insights to rapidly optimize their value chain in gaining the added competitive advantage.
Businesses that use DIGITAL creatively will TRANSFORM and be able to connect more closely with their stakeholders, speed up the pace of innovation and, as a result, claim a greater share of profit in their respective industries thus creating an edge. This will be an absolute imperative for any business to survive and only digitally enabled businesses will survive let alone being successful.
Further, there are three compelling reasons which make DIGITAL TRANSFORMATION a STRATEGIC PRIORITY for ANY ORGANIZATION and they are:
Acceleration of Change – The pace of digital change is rising exponentially, making it very difficult to maintain a position of industry leadership, and requiring an acceleration of new digital solutions brought to market
Digital Competition – Companies are under ever increasing pressure to compete digitally, and long established business models are being disrupted by “born digital” start-ups
Customer Expectations – Customers expect a good experience across all touch points, you must ensure their interactions are seamless and exceptional.
In order to achieve the above, companies must embrace digital capabilities at the core of their corporate DNA in order to thrive in the new economy. As per MIT Sloan Management Review article, there are 3 pillars& 9 building blocks for Digital Transformation:
Transform Customer Experience:
- Improve Customer Understanding with Analytics – customer behavior, segmentation
- Enhance Top-Line Growth with digital products like smart Phone, iPads, real time predictive marketing
- Digitized Customer Touch Points – social media analytics to answer complaints, self service via Apps, increased multi-channel usage
Transform Operational Processes:
- Process Digitization with automation, adding new features
- Staff Enablement with virtualization of work space working anytime, anywhere
- Performance Management decision making based on data with deeper insights into Customers, Products, Regions
Transform Business Models:
- Digitally Modified Businesses – augment physical with digital offerings, share contents across organization
- Introduce New Digital Businesses – Nike introduced fuel bands
- Digital Globalization – use of Global shared services to promote efficiency, from multi-national to global presence
Adapting quickly to this change is becoming a make-or-break proposition for many companies worldwide. The reality is that most companies are OPTIMIZED for the environment where they already operate. When anything in that environment changes, be it quickly or over time, they are not equipped to ADAPT and change.
All of these factors put together is causing a greater inertia in driving disruption – customer expectations, employee expectations, new technology, new business models and new, rapidly growing startups. Suddenly, the established ways of working may no longer be delivering the same results. As the impetus for change increases, caused by falling revenues and other negative pressures, the leadership of the organization needs to formulate a strategic response. Some choose to tweak the existing ways to increase efficiency; but this is rarely enough to tilt the organization back on to a long term, sustainable path. The need for revolutionary approach, one that revitalizes the organization and returns it to viability becomes an obvious one and an URGENT one for those on a REACTIVE footing and a much more REWARDING one for those ona PROACTIVE footing.
DIGITAL TRANSFORMATION will definitely help ORGANIZATIONS to steer itself back onto a path that propels the business forward, not backwards where ever they may be at any given time. We must COMPREHEND the reality which is, it’s not the LARGEST nor the most currently SUCCESSFUL companies those will survive and succeed, but rather the ones those are most ADAPTABLE.
DIGITAL is the new NORMAL! Don’t FIGHT it, EMBRACE it!!