Rapidly evolving technologies in the last decade have brought about a paradigm shift in the way businesses are conducted. Companies are going digital by adopting these new technologies to enhance process, engage with customers in new ways and reimage the way they do business. Digital transformation has enabled business transformation. In a nutshell, digital transformation can be described as integration of digital technologies in every aspect of the business – people, process, culture, competencies, models, and customers. Globally, digital transformation is well under way. IDC’s FutureScape has estimated that spending on digital transformation projects was USD1.07 trillion in 2018 and is expected to grow to USD1.25 trillion in 2019 and to USD1.97 trillion in 2022.
Companies are increasingly launching initiatives to enhance digital capabilities to deliver business efficiency, enhance customer experience, develop new revenue streams and improve overall top-line revenue growth. IDG’s 2018 Digital Business Survey has indicated that about 32% of IT decision-makers say that digital business has already helped their organizations achieve revenue growth.
Digital transformation is a long term investment and not simple at all. It is perhaps one of the greatest challenges for businesses in the next few years. Yet, it means different things across different organizations. It’s a complex process, but imperative for sustained growth and innovation. Here are a few misconceptions regarding digital transformation that companies need to be cognizant of –
1. digital transformation is the CEO/CIO’s priority
Nothing can be further from the truth. While the leadership plays a key role in digital transformation initiatives, change has to permeate across the organization. The CEO, CIO or business owner – anyone must own the process and articulate a clear vision of what they want to do. However, if this vision is not communicated adequately across all stakeholders, the transformation is not likely to be truly successful. McKinsey Global Survey reports that in organizations that reported successful transformation initiatives, respondents were 3.7 times more likely to report a shared sense of accountability for meeting their transformations’ objectives.
2. the key element of digital transformation is technology
While it’s true that adopting new technologies to enhance business efficiency and effectiveness are imperative, there are other key elements to a successful digital transformation. The ability to innovate depends on the organization’s culture – its openness and willingness to adapt. Resources, organizational structure and creation of new skills for new roles are some of the other critical elements in the transformation journey.
3. digital transformation is not meant for our company
The exponential growth in technological development has left no industry or business, however big or small, local or international, untouched. There is no mantra to success and no perfect roadmap. Manufacturing giants such as General Motors, retail companies such as Amazon and hospitality software companies such as Airbnb are only a few examples of successful digital transformation. Companies such as General Electric have even failed at their digital transformation while Toys R Us is set to rise from the ashes with its re-branding and innovative business outlook.
4. this is not the right time for digital transformation
Consider this - The installed base of Internet of Things (IoT) connected devices is estimated to be close to 27 billion globally in 2019 and expected to increase to over 75 billion in 2025. Global internet penetration is now estimated to be 57.3% of the total world population. IDC predicts that between 2018 and 2023, 500 new logical apps will be created. Given these mind boggling statistics, any delayed transformation initiatives will only pose more challenges with further delays. A competitor may already be going down this road. Plus a further delay will only mean more costs. No company today can afford to wait before embarking on digital transformation initiatives.
While digital transformation is inevitable, a clear vision and strategy towards this transformation are imperative. Here are a few key considerations to note in crafting a digital roadmap towards successful transformation.
1. creating a dynamic plan, not a rigid one
A well thought out and carefully crafted digital road map is imperative. However, the roadmap should be a dynamic document – one that evolves with the business and provides a reference point to the digital strategy. While it should be aligned to the goals, the goals themselves can evolve and the roadmap needs to be improvised accordingly.
2. collaborating with all relevant stakeholders
While there will be one stakeholder or a throat to choke, the digital transformation is a collaborative initiative. Rather than isolated digital initiatives, companies must focus on an integrated strategy with shared business goals that all relevant stakeholders have signed up for.
3. outlining clearly-defined business objectives
The digital road map must have clearly articulated goals. However, key performance indicators at each toll gate, analysis of shortcomings and assessment of capabilities must be built all the way into the roadmap.
4. benchmarking your success against external parameters and competition
External benchmarking and competitor analysis can help businesses further refine the digital roadmap. The organization’s ability to derive value from the digital transformation will depend on how the roadmap stacks against competition and the overall market in general.
New technologies are proliferating at a rapid pace and organizations are trying to keep pace in order to stay competitive. Many organizations have set the ball rolling and are actively adopting newer technologies and going digital. However, successful digital transformation will also require equal attention to change management, people management and cultural adaption across the entire organization.