As the world becomes increasingly data-driven, it’s clear that digital transformation is essential for businesses to move with the times, whether you run an SME or a global corporation. What’s not so clear is what digital transformation actually means. Is it just a fancy way of saying you’re moving to the cloud? Does it involve reskilling? And how do you measure its success?

In this post, we aim to answer those questions (and more) to help give you clarity and the confidence to reshape your business model.

Digital transformation is the process of integrating digital technology into all areas of business operations to help drive change. You do this by identifying how you can use technologies like machine learning, artificial intelligence (AI) and big data to deliver new services or improve existing ones.

Say you have one business that has undergone a digital transformation and another that hasn’t. The traditional company carries on producing products according to what customers order. The modernized company, on the other hand, uses real-time data to determine which products bring in the most profit and who is buying them. Not only does this help maximize efficiency today but also predicts what people will want tomorrow.

Going digital means different things to different people, but examples of digital transformation in the workplace include:

• Going paperless across your entire business estate

• Automating your supply chain and workflows

• Using AI or machine learning to transform the customer journey

• Using predictive analytics to develop products customers will want in the future

• Automating employee performance management to identify skills shortages

• Introducing a remote-first policy to allow employees to work and collaborate in the cloud

Although everyone’s journey will be different, delivering any digital transformation project requires effective collaboration and business communication. It’s a chance for companies to be bold and shed outdated practices that can no longer keep pace with today’s interconnected world. It’s also an opportunity for all employees to learn exciting new technologies and eliminate some of the tedious, mundane tasks from their daily lives.

Done right, digital transformation can propel your business to a new level of growth. The goal is to work smarter and gain a competitive edge by deploying technology at scale.

Two words related to digital transformation are digitalization and digitization. While they may look very similar, they have different meanings.

This is the practice of moving existing processes to digital technology. Much more than scanning a document to store in the cloud, it allows you to collect data, predict trends and make better business decisions based on the results. But it can be less comprehensive than a full digital transformation, which changes your entire workplace culture.

Examples include:

• Moving parts of your business online

• Sharing documents on a cloud drive

• Adding a QR code to your products

• Analyzing data in real time to mitigate risk

• Upskilling employees to use new software platforms

This is the process of converting existing data and documents from analog to digital form.

Examples include:

• Scanning a photo to store in an online file

• Converting a paper report to a PDF

• Turning a physical presentation into an audio file

The data itself isn’t changed, it’s simply reproduced in a digital format. While digitization can help you to become more efficient by automating processes, it doesn’t optimize entire processes like digitalization does.

As technology evolves, digital transformation is necessary for companies to not only thrive but survive. That’s why most CEOs continue to prioritize digital opportunities, with 72% pursuing an aggressive digital investment strategy, according to KPMG.

Research from Accenture also stresses the importance of digital transformation. It found that leading companies in enterprise technology are growing five times faster than tech laggards – companies slower to adopt new technologies.

The benefits of digital transformation include:

• Staying competitive

  If your business doesn’t continually evolve, you risk being left behind by competitors or high-tech start-ups where everything is done online. Being able to access vast amounts of data gives you the ability to stay ahead of the curve and focus on delivering real value for money.

• Increasing efficiency

  Digital transformation can significantly improve efficiency. By automating manual processes such as data entry and tracking stock levels, jobs get done quicker and the prospect of human error is eradicated. It also gives employees more time to focus on the more enjoyable aspects of the job.

• Saving money

  Going digital can help you save costs by reducing manual labor, optimizing processes and improving productivity. For example, by adopting cloud storage and modernizing your IT infrastructure, you can save on hardware costs and reduce the need for physical storage space.

• Better customer experience

  With the rise of the digital age, customers now expect businesses to provide seamless experiences across multiple channels. So much so that a third say they’d ditch a company after just one poor experience.

  There are many ways that digital transformation can enhance the customer journey. These include using chatbots to provide round-the-clock customer service and integrating your website and mobile apps to deliver a smooth shopping experience.

• Better insights

  Digitalization makes it possible to gather and analyze valuable data related to various business functions, from sales and marketing to logistics, finance and customer behavior. This allows you to gain valuable insights into how they influence your profit and cost margins to better inform your decision-making.

• Increased agility

  A flexible, agile business that can respond quickly to changing market conditions and customer needs is better equipped to outperform organizations that are slower to adapt.

Going fully digital isn’t without its challenges – it’s a complex and multi-layered process that takes a lot of planning and collaboration. But taking these six steps can help you on the road to a successful digital transformation:

First, identify specific goals and objectives you hope to achieve through digital transformation. Think about what could generate the most revenue for your business. For example, is your main aim to boost efficiency? Improve the customer experience? Or tap into new revenue streams?

Asking yourself these questions can help you create better processes across the board, whether that’s moving key services to the cloud or building a multichannel platform for your customers. Indeed, for most companies, the top goal is improved customer experience, according to TEKsystem’s 2023 State of Digital Transformation report. Whatever your aim, it’s a good idea to create a road map detailing the solutions and a timeframe to deliver change.

Simply implementing new technology isn't enough – it needs to be tied to KPIs to track progress. You’ll need to measure the impact of your digital transformation efforts to know whether they’re working or not.

Digital transformation can give you a few quick wins, but allow for the fact that it could take at least two years before you really start to see clear cut returns on your investment. In the meantime, if you’re not seeing the results you want, make changes to your strategy.

For your digital transformation to succeed, you’ll need to take people with you. It’s important that all employees have an understanding of what you’re hoping to achieve so the entire organization is aligned with your digital goals. Be transparent – don’t confine valuable knowledge to the boardroom. Keeping the information flowing at every level is a vital ingredient in digital transformation.

Invest in the technology solutions you really need to support your transformation efforts, whether that’s AI, cloud-based solutions or automation tools.

Choose software that’s highly rated and trusted by your peers within the industry. And, ideally, go for a technology that your employees are already familiar with or capable of picking up quickly. Making processes too complicated will undoubtedly leave you with a long and difficult implementation period.

Put together a team that will be responsible for delivering your digital transformation. It should include individuals with expertise in digital technologies, as well as those with knowledge of your specific industry.

Team leaders will need to communicate effectively throughout the digital transformation so all employees understand what’s going on. Upskill staff on the latest software, and hold regular training sessions to facilitate a smooth transition. With the right training and support, new technologies can quickly become ingrained in the culture of your organization and help build a more resilient workforce.

Change starts from the top. Don’t let poor leadership derail your transformation. Understanding what digital means to your organization is essential so you can drive forward your digitalization processes. Leaders must be passionate about change and provide a unifying link between departments as the tech is rolled out across the business.

As a McKinsey report says: “An inconvenient truth for businesses undertaking digital transformations is that without focused and active CEO commitment, there is almost no chance of success.”

Implementing a digital transformation strategy is undoubtedly a big undertaking for any business. Upgrading or replacing existing systems is expensive, but try to stay focused on the opportunities it could bring. If you’re able to cut everyday costs or find a new market that could expand your customer base, it’ll be worth it.

But remember, digital transformation is an ever-evolving process. The journey never ends. You always need to be looking ahead to the next step to improve the lives of both your employees and customers.

Keep reading

• The future of work
• Upskill your employees for the future of work
• How we’ll work in the metaverse