What is digital transformation and how can it benefit your business?

Nowadays, digital transformation is something every modern company is thinking about. Rapid technological development impels organizations to adapt to the ever-changing environment to stay relevant in a highly competitive market. At the forefront are the companies that collect data from market interactions and produce digitally enabled products or services. Those who failed to embrace the digital transformation are risking being left in the dust.

In broad terms, digital transformation is the implementation of digital technologies in every area of business. But it isn’t only about technology. It’s also a cultural change that spurs companies towards a culture that promotes experimentation, questions the status quo, accepts failure as part of the process.

Digital transformation also induces a change in leadership styles and brings about the reinvention of the business models to satisfy customer needs better.

Adopting digital processes requires a multifaceted approach to planning, choosing the right methods and tools, and execution. Many businesses have already embarked on a path towards digital innovation, however, some companies are hesitant about investments that might not pay off. Some surveys reveal challenges business leaders grapple with on their digital transformation quest:

  • 70% of digital transformations endeavours fail – mostly due to the opposition from internal staff.
  • In one McKinsey survey, only 16% of employees said that digital transformation initiatives had improved their company’s performance and could be sustainable in the long run.
  • The Harvard Business Review interviewed managing directors at 1,350 businesses – they proclaimed they invested over $100 billion in digital transformation programs between 2016 and 2018 programs and yet were disappointed in the results.
  • Accenture states 90% of organizations contract third-party solution providers to take care of one or more components of their digital transformation strategy.

Nevertheless, there are lots of examples of brands that have remarkably ameliorated their businesses by digitally transforming their operations. Microsoft, for instance, began shifting towards cloud systems because of lagging stock prices and increased competition from corporations such as Apple and Amazon. The company opted for a more flexible cloud system for personal as well as enterprise use. It no longer abstained from partnerships like before and started to foster relationships with other software and technology companies. Its public image has also changed: a stagnant, outdated company turned into an ambitious cloud solution. In early 2014, before Microsoft’s digital transformation journey began, its revenue was $93.5 billion but in 2019 this figure grew to $122 billion. Its stocks also rocketed during this period from $38 per share to $136. 

The key benefits of digital transformation

But increased revenue and stock prices aren’t the only reason digital transformation is worth investing into. According to a 2018 IDC Spending Guide, the global spending on technologies and services that propel digital transformation is expected to reach $1.97 trillion by 2022. This is an indication of business executives recognizing the many benefits of digital transformation. Let’s look at some of the crucial ones.

Elevated customer experience

Consumers these days are incessantly looking for solutions that bring notable value. These solutions must be convenient, expeditious, personalized. Because of this, the primary motivation behind digital transformation is improving customer experience. One research indicates that an astonishing 92% of executives who are now preoccupied with developing digital transformation strategies do that precisely to enhance the consumer experience.

Digital transformation programs allow businesses to:

  • Design and digitize buyer journeys,
  • Speed up the process of collecting and leveraging actionable customer insights,
  • Reach a higher adoption rate,
  • Personalize customer experience and increase conversion rates and brand loyalty.

Relevant data-driven insights

One of the major advantages of digital transformation is that it equips businesses with lots of tools to implement true data-driven management. With insights obtained from the data, the companies can optimize their strategies and processes so that they deliver even greater results.

Businesses that accumulate and process customer data can understand the customer’s behavior better and tweak their strategy accordingly. That leads to hyper-personalization, real-time feedback, higher relevance, and increased operational agility.

If you successfully adopt data-driven decision-making throughout your organization, you’ll secure higher ROI and resource optimization. From this point onwards, you can be sure that each decision you’ll make will be in line with what your customers want.

Heightened agility and innovation

The need for greater agility is prevalent in nearly every industry today. The constantly evolving technological landscape leaves no time for businesses to stop innovating and become complacent. They need to keep pace with their competitors – and the only way to do that is to become flexible and more responsive to change.

Even the companies at top of their game must be ready to adapt and innovate. New trends, tools, and competitors will keep coming, challenging the status quo, and offering a brand-new customer value. However, this is the core benefit of digital transformation – it compels businesses to respond to all of these changes.

New skills and knowledge

The emergence of new technologies entails a growing demand for specialized skills. Experts estimate that in the near future, organizations are going to be heavily dependent on skill sets in areas like Artificial Intelligence (AI), Augmented Reality (AR), cloud computing, growth hacking, and data exploration/analytics.

But now companies have a hard time finding qualified specialists. One report revealed that 31% of organizations suffer from a shortage of digital talent and experience among their personnel and leadership.

Business leaders are hesitant to invest in the development of digital skills largely due to the fear of change. Many companies see digital transformation as a huge expenditure rather than a smart investment.

But only by embracing the challenge of change can companies help their employees develop necessary skills and equip their business with the knowledge required to sustain their growth.

Creating a productive digital workplace

Digital transformation brings value not only to customers but to employees as well. Adequate digital transformation programs boost your workforce productivity and engage your staff in the business processes without overwhelming or disconnecting them.

Apart from bringing your workforce together, investment in digital tools can streamline the connections between various points in your company’s architecture. This may include areas like social media, analytics dashboards, and project management interfaces. Digital transformation makes it easier to consolidate the company’s processes and operations.

Fostering a new digital culture

As we mentioned earlier, it’s not enough to have the right technology in place. If you want your business to be successful in the future, you must build a solid foundation for it, that is adopt a culture that embraces change, immerses your employees in digital environments, and helps them to acquire essential skills and become truly digital-savvy experts.

Digital transformation enables companies to achieve this objective because it impacts the leadership and drives the new culture all the way through.

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