What Is Digital Transformation?
Although the benefits are clear, there is still confusion as to what a digital transformation is. It’s this misunderstanding that ultimately leads to digital transformation failure.
A digital transformation can revolutionize the way an organization does business. It unlocks productivity and efficiency gains, provides access to the latest technologies and brings the organization closer to their customers and further away from its competitors. However, these benefits are only achieved if the organization understands what a digital transformation really is and what it really entails.
What Is Digital Transformation?
Digital transformation, or digital business transformation, is the adoption of digital technologies across an organization to create new process and to improve existing operations in a way that will add value to the business while aligning customer success to business strategy. However, the digital transformation process is not an IT project. Rather, a digital transformation is as much about transforming business culture and traditional ways of working as it is about technology integration. In other words, the digital transformation impact on organizations is total, touching every part of the business.
Why Digital Transformation Is Important
Digital transformation is important because it gives established organizations the tools and capabilities they need to remain competitive in their marketplace. It also enables them to remain relevant to customers in the face of evolving consumer trends and continued disruption from digital-first brands. By executing the digital transformation process, businesses can level the playing field and remain agile and proactive in the face of change.
What Are the Business Benefits of Digital Transformation?
The first business benefit of a digital transformation is better efficiency and increased productivity. With new technology and tools, paper processes are eliminated where automation can be applied to manual, monotonous activities, such as data entry and back-office tasks. This, in turn, enables organizations to better manage and deploy resources where they can make a genuine difference to the business in terms of adding value.
Business transformation can provide a greater understanding of customers and of how to serve them. For any consumer-facing brand, the customer experience is now the greatest point of differentiation. A business transformation allows an organization to better collect and analyze data and use that data to engage with customers and improve the customer relationship.
When correctly executed, a business transformation can foster a culture of innovation throughout the organization. This may lead to better products and services as well as the ability to explore new markets.
Digital Transformation Challenges
In addition to benefits, there are a number of barriers to digital transformation. The first barrier is misunderstanding. Believing a digital transformation is an IT project and solely about technology will only lead to a business transformation failure. Although there is no real evidence to support the often-quoted claim that 70% of IT projects fail outright, recent research suggests that 73% of enterprises struggle to realize sustained returns on digital investments focused on transformation.
This is because the digital transformation process is about cultural change. Indeed, 28% of executives say their existing organizational culture has proven to be a barrier to the execution of a digital transformation.
However, fostering a new business culture requires sponsorship at the very top of an organization. The C-Suite needs to become the embodiment of the digital transformation. A digital transformation is about changing the way people work and the way they think about their roles within an organization; executives have to lead by example. One in four organizations say the primary reason for a failed project is inadequate executive sponsor support.
The third barrier to success is failing to realize that digital transformation technologies are new to an organization. This means that employees require upskilling and cross skilling to understand how these tools will revolutionize how they work. For example, 55% of businesses recognize that at least half of their workforce will need to revise their skills and capabilities by 2025 because of the transformative nature of digital technology.
However, there is a genuine need to find the right balance in terms of employee training and digital adoption. In the post-COVID-19 business environment where transformation is top of most organizations’ agendas, 48% of businesses admit they’re pushing their employees too much too quickly to adopt new technology – and there’s a fear it could lead to burnout.
Yet, it doesn’t matter how quickly or slowly changes are implemented unless the project is focused on clear goals rather than relying on existing metrics. When it comes to digital transformation, 60% of organizations fail to create a truly integrated strategy.
Digital Transformation Process
The digital transformation process is a gradual process and, crucially, it’s not a one-and-done operation. A digital transformation never officially ends. Therefore, it takes time and investment. Indeed, the potential fanatical expense to achieve a digital transformation may seem like a barrier for many organizations. However, with a clear objective, patience, a digital transformation roadmap, greater efficiencies and productivity, a move closer to customers and a business resiliency that enables an organization to remain competitive, relevant and agile is a real possibility for any organization.
What Is a Digital Transformation Roadmap?
A digital transformation roadmap looks different for each organization in every business sector. However, it exists for the same purpose. A digital transformation roadmap is the North Star for which the organization as a whole will support and work towards. As well as stating clear goals, the roadmap should break down the digital transformation process into steps that achieve both short-term and long-term gains. The best digital transformation roadmap is also tied back to financial investment. This ensures that value and return on initial investments are enjoyed before the next injection of money is required to take a step further to the goal.
10 Steps to Create a Digital Transformation Roadmap
Just as every digital transformation roadmap is different, every organization’s definition of what their ultimate target is also unique. Nevertheless, there are several clear steps to take that remain constant, regardless of an organization’s ultimate digital transformation goals.
1. Make an Organization-Wide Commitment
Even before deciding the parameters of a digital transformation, it’s crucial that leadership is fully behind and clearly sponsoring the project. It is the C-suite’s responsibility to take ultimate ownership of a digital transformation. They must understand the full impact it will have across the organization as it will fall to senior executives and departmental managers to articulate the project to employees and obtain their support.
2. Decide and Define the Long-Term Goal
The second step towards a business transformation is to decide the scope of the project. Examine the current organization, identify where the most impactful changes can be made and decide what the future state looks like. Ideally, changes that occur through a digital transformation should be focused on adding value and in realizing a clear return on investment.
3. Identify and Address Skills Gaps
Introducing new technologies, tools and processes will make little to no difference to how an organization operates unless employees understand and feel comfortable in using them. Ensure staff training is in place and make certain that people know the changes are about making how they work more effective and engaging. It’s about automating tasks, not automating jobs.
4. Build Cross-Functional Teams
As already mentioned, a digital transformation touches every part of the business. Therefore, the best team to lead the change must be representative of the business as a whole. What’s more, that team needs to be able to report and escalate potential issues easily in order to stay on track.
5. Agree on Digital Transformation Milestones
The reality is that there is no such thing as a rapid digital transformation. Its all-encompassing nature means that following the roadmap to completion takes time. To stay on course and to ensure that the efforts of the transformation team are not wasted, the project should be delivered in stages. Furthermore, each major change needs to be tested and verified to ensure it is meeting its objective before moving on to the next stage of the roadmap. That means connecting a change or implementation to data points or metrics specific to the project and its desired outcomes, not to existing metrics or KPIS.
6. Start with Quick Wins
Because a digital transformation takes such a long time, begin with low-hanging fruit. Identify and prioritize projects that are comparatively simple to complete and that have the potential to demonstrate an improvement or return on investment quickly. Seeing the fruits of their labors will not only motivate the digital transformation team, it will help to motivate the rest of the organization and strengthen support for undertaking the digital transformation.
7. Establish Metrics to Measure Progress
Quick wins, by nature, will result in a noticeable return. But as a digital transformation progresses into more complex areas of a business, being able to easily and independently measure impact – whether positive or negative – is crucial. So, establish KPIs that truly reflect the project’s aims and objectives and use them to steer the project.
8. Build in Flexibility
Even with a clear route to digital transformation success, elements of the transformation may prove problematic. Likewise, due to the rate of change regarding technology, marketplaces and disruption, what can be delivered through a digital transformation could also evolve while a project is still being undertaken. Therefore, the team and leadership need to remain agile and keep one eye on what’s happening beyond the business.
9. Celebrate the Conclusion
A digital transformation can be a massive undertaking in terms of resources and investment. Recognize the efforts made and use this initial conclusion as a motivating factor for moving to a new operating model backed by a new approach to leadership supported by the newly positioned culture of innovation
10. Begin Again
A digital transformation never officially ends. New tools and processes are being developed all of the time. Likewise, with a culture of innovation, new ideas and ways of working – never mind access to new markets – will be feeding into the business from across the organization. Decide on ideas that can add further value and that could build on the bottom line and create a new digital transformation roadmap.
A successful digital transformation can represent a huge challenge for many organizations. Leadership teams must keep in mind that a digital transformation is about cultural and leadership change plus retraining staff for the future of work. Digital transformation is not simply an IT implementation project; however, the digital transformation benefits will outweigh the effort.
A digital transformation can present challenges for any organization but overcoming those challenges is now a business priority. To learn more about identifying and removing the barriers to digital transformation success, contact Sitel Group.