Technological change now dominates business thinking in all types of industries. This is because it’s about the survival of the fittest – customer expectations have evolved so much that businesses need every edge to secure growth, improve products and services, and increase efficiency.
Virtually every business in every industry is feeling the effects of digital transformation. Even if a business doesn’t have its own initiative, its competition may well be. Digital transformation is a complete reimagining of how businesses work, enabled by the transformative technology of today – such as the cloud, mobile, and big data.
According to a 2017 study from Forrester, 38% of the business and IT decision makers believe that technological change such as digital transformation would have the greatest effect on their business decisions over the next 12 months. It’s digital transformation which can provide the edge, an opportunity to rewrite the rules of business.
Digital transformation is happening. Businesses are already making back-office technology investments – last year’s BT Software Survey said that 83% of companies were making back-office technology investments a high or moderate priority.
Digital allows your business to shorten the distance between what your company wants, and what they get.
Business should invest in systems of insight
Many businesses are drowning in data and starving for insight. Leaders need to make sure their businesses are:
- Discovering the insights that matter most
- Embedding them into the software customers and employees use to engage
- Continuously learning and measuring through results.
Forrester calls what’s needed to power digital businesses ‘systems of insight’.
This is equal parts people, process, and technology. Businesses need:
- Small cross-functional insights teams. These will need to be sponsored by a leader with accountability for a business income. They will combine business domain expertise, data science skills, engineering insights and software development know-how, all with the aim of finding, testing and implementing insights.
- Repeatable insight-to-execution processes. This means an integration of data science, collaboration, governance, and agile implementation methods. Without a repeatable process, it’s not a system, but rather a time-consuming search for minimal insights.
- A digital insights architecture. Big data management and agile business intelligence systems include insight delivery engines and data feed management capabilities, providing insight discovery, collaboration, and governance tools
It’s predictive analytics which will power the insights to drive businesses forward. According to last year’s PwC’s Global Data and Analytics survey, 81% of businesses are using or building predictive systems today (59%) or planned to in the next 12 months (22%)
Benefits for businesses could include:
- Improved customer experience
- Increased revenue
- Reduced operational costs
- Increased business agility
- Better informed business decisions
- Deeper insights from existing data
- An ability to drive new revenue streams with data and intelligence services
Artificial intelligence in the enterprise
Demand by businesses for productivity-boosting technology is pushing enterprise software vendors to introduce AI into their products – by 2020, Gartner analysts believe that by 2020, AI technology will be pervasive in every new product and service.
Artificial intelligence will ignite the insights and actions of the future – PwC said last year that 71% of businesses are using AI today (51%) or plan to in the next 12 months (20%). Businesses said they were currently using AI to:
- Mitigate security risks
- Improve business automation
- Gain better customer insight
- Improve efficiency in business operations
- Create and deliver better customer experiences
Digital transformation requires businesses to build ecosystems
One of the most important steps in the digital transformation strategy of any business is to establish a digital ecosystem, which will help them interact and share standardized digital platforms and benefit – with goals being commercial gain and innovation. They allow businesses to interact with customers, partners and even competition in different industries
Finding digital transformation leaders can be a great way for businesses to collaborate, find co-innovation partners and create a digital strategy that meets their needs. They might also find that customers want to partner as well as buy from them, bringing their own needs to the table and creating chances to speed the innovation process and create solutions for their industry.
The digital transformation challenges businesses will face
Businesses undergoing digital transformation will face certain challenges, which they’ll have to overcome to make their strategies succeed:
A lack of executive understanding
Digital transformation requires a top-down approach – leadership that has created a framework for success. This needs commitment and an understanding of how technology can improve the business. Whether this is data, artificial intelligence or automation, businesses must seek out training or new technical blood to fill the knowledge gap.
With the old rulebook, the organizational structure of a business means that it’s separated into departments with their own respective objectives. In today’s world though, this is a dynamic that causes problems. Digital transformation requires collaboration between departments, and if they’re siloed that’s a problem that must be overcome.
Businesses may regard legacy applications as a barrier to digital transformation, as they are dependent on this technology for their day-to-day business. However, what they should aim for is to build new transformational systems in parallel with these legacy systems, taking advantage of historic data which could be extremely valuable going forward.
Data without context
Data without context is just noise. Businesses generate huge amounts of data, and if employees are bogged down in it without context, it all becomes meaningless. There need to be concerted efforts in making sure there are people with the right training in data use and interpretation within an organization.
A lack of ownership for customer outcomes
The C-Suite must have in place a vision and strategic plan, where results are achievable and continuous improvement is possible. Without this, you create a circle of pain – the leadership doesn’t take ownership, there is no forward progress, and the rest of the business isn’t inspired towards the continuous improvement digital transformation is supposed to inspire.
Successful digital transformation requires alignment on key metrics such as customer satisfaction and value delivery. For example, if one part of the business is working well with product development, but not achieving sales leads, then there’s a problem. There needs to be metrics where every part of the business can see the role in the value chain.
A multi-pronged approach for digital transformation
For successful digital transformation, businesses must take a multi-pronged approach.
Assess digital maturity and identify the gaps
Businesses must find ways to plot their organizational maturity, which will provide guidance on where they need to elevate their digital capabilities. This will mean an analysis on how they can drive a digital culture, how they organize and resource to do this, how they invest and take advantage of customer-driven insight to steer where they need to go.
Build the relationship between business and IT to focus on customer outcomes
Successful digital transformation requires businesses to achieve improvement in customer experience across all departments. Technology isn’t one-size fits all – each business needs to find their own way to make sure their transformation results in positive customer outcomes – the key metric which can help light the way.
Plot a two-path roadmap – quick wins and platform investments
A digital transformation strategy could have two roadmaps – one which follows a path of quick wins, and one which focuses on the platform investments needed. Quick wins show improvements that are visible to the business, show benefits and can be delivered quickly. Businesses will also like to see what direction will be with a platform model approach – using large scalable networks of users and resources that can be accessed on demand.
Invest in core systems with a clear ROI
Digital transformation will come with significant expenses, so it’s necessary to make sure that investments made in hardware and software show ROI when it comes to the cost savings made when it comes to the productivity benefits and cutting down of inefficiencies from investment in new systems.