While digital transformation is an increasingly popular effort for many businesses and IT teams, it is much more than simply updating legacy technology. Shifting from legacy architectures and on-premise systems to agile, cloud-based solutions is just one key part of digital transformation. Reaping the benefits of digital transformation, however, requires top-down, cross-departmental buy-in and collaboration to ensure new initiatives and solutions align with business philosophies, budgets, application development models, and more.
Digital Transformation Defined
Digital transformation can be defined as “the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.” Put more simply, it is a foundational change in how an organization uses people, process and technology to deliver value to its customers.
It requires breaking down departmental silos, changing stakeholder perceptions when it comes to customer data, and basing decisions on consumer sentiment. It demands making the most of technologies on hand and making strategic updates in order to maximize resources.
Digital transformation focuses on the customer – and must include personalized campaigns that improve the customer experience at every touch point. Optimizing websites and applications around customer insights is key. No longer can companies simply focus on product, price, and advertising. Today they must shift the customer experience in order to establish a competitive edge.
Digital transformation will look different for each organization. Efforts must uniquely fit a companies’ culture, business goals, department teams, and customer base. When it is done right it will optimize the digital customer experience, boost customer retention and loyalty, strengthen brand reputation, and grow and improve the bottom line.
What Drives Digital Transformation?
While many different factors can drive digital transformation for organizations across industries, there are some common drivers, such as:
- Keeping ahead of incumbent and startup organizations — New, faster, cheaper providers pop up every day. Businesses must ensure their products and services constantly stay ahead of the ever-changing needs and desires of customers.
- Staying ahead of the competition when it comes to new technology offerings — AI is today enabling customers to ask Google to order donuts on the way to Dunkin. Advanced POS systems can measure and manage supply levels up to the minute in real-time. Businesses can take advantage of the latest solutions to anticipate, meet and even stay ahead of customer demand.
- Transforming products into services — Companies that can expand from simply selling a product to also offering a vital service are finding new revenue streams. Today’s businesses can examine ways to digitize products or processes into web-based or mobile services
How and Why?
Business agility and top-down buy-in of key stakeholders is key to successful digital transformation. Senior leadership must champion change plans. The C-suite or other senior managers must actively ensure every department understands what risks or challenges may arise during the change process, prepare a way to navigate these issues, and highlight what specific value transformation will bring.
If a business’s financials are not in order, digital transformation efforts will fail. Making smart investment decisions requires an understanding of legacy investments and technologies — and where money can shift to new innovations. More importantly though, companies must balance the maintenance of legacy systems with the introduction of new, customer-first alternatives and solutions. Using data and analytics to reengineer business processes will help to ensure new initiatives truly create value.
The relentless development of new digital solutions that serve customer interests and desires is not expected to wane any time soon. While it does come with risks, digital transformation done right will enable an organization to stay ahead of the competition – and fluctuating customer demand. An agile business that strategically invests in the right digital technologies at the right time will protect its market share over the long-term.
Think Business First
Successfully managing digital transformation can be overwhelming. However, it all boils down to this… digital transformation is a business strategy enabled by technology. Are you certain your technology investment is aligned with your business strategy? If not, consider leveraging the strategic and operational expertise of PSI’s business technology consultants to find out.
Schedule a no cost, no obligation JAaM Session to whiteboard your goals and develop a preliminary strategy to achieve them.