Digital technology has drastically impacted companies around the world. It has created a major strategic issue for companies that want to become efficient and who wish to maintain a competitive edge. So, what are the roles of technological innovation and digital tools? How to do they impact the growth and profitability of companies?
What is digital transformation?
Digital transformation refers to a process that helps a company integrate digital technologies throughout its operations to simplify employees’ work and improve overall performance.
The difference between digitalization and digital transformation
- Digitization is the shift from analog to digital
Not so long ago, businesses stored all their documents physically on paper. Whether handwritten or typed, business’ data was kept in analog form: collected or shared using physical documents like papers and binders. Then computers became widespread and most businesses began converting their paper documents into digital computer files. This is called digitization. It is the process of converting information from analog to digital.
- Digitalization is about using digital data to simplify and streamline the way in which you work
The process of using digitized information to make work methods easier and more efficient is called digitalization.
It should be noted that digitalization is not about changing the way people work, nor is it about creating new types of businesses. It is about working faster and more efficiently.
A great example of digitalization is customer service; whether in retail or in a call center, digitization has changed this service. Digitally stored data means that customer records easily and quickly accessible on a computer. The basic methodology of customer service has not changed, but the process of responding to a request, searching for relevant data, and providing a solution has become much more efficient.
As digital technology has evolved, people have started to generate ideas for using business technology in different ways. This is how the idea of digital transformation began to emerge.
- Digital transformation adds value to every customer interaction
Digital transformation is changing the way businesses operate and, in some cases, creating entirely new categories of businesses. With digital transformation, companies are stepping back and re-examining everything they do, from internal systems to customer interactions, both online and offline.
The benefits of digital transformation for your business:
- More internal transparency: The implementation of a digital process management tool makes information accessible and available to all departments and therefore provides better visibility to employees, allowing them to pinpoint challenges and set clearer objectives.
- Synchronized company processes: By creating a common software repository, the company will not only be able to secure procedures but also help new employees become familiar with the company’s operations and processes faster.
- Reduced costs: The use of digital technologies allows companies to quickly visualize malfunctions and consequently anticipate potential risks. Businesses can thus accelerate decision making to increase profitability.
- Improves productivity: These tools help to streamline companies’ workflow and improve productivity. Automating many manual and repetitive tasks and integrating databases across an organization allows employees to work more efficiently and to save time.
- Improved customer satisfaction with data: Data has made it possible to understand and analyze customer behavior. By better understanding your customer and their needs, you can create a business strategy based on their interests and expectations. By using both structured data (for example, personal information collected from customers) and unstructured data (for example, KPIs from social networks) you can personalize your offers and increase your sales. Data allows you to create more relevant, personalized and agile content.
The driving force behind digital transformation
Mobile technology, artificial intelligence, cloud computing and social networks (amongst other aspects of the digital revolution) have radically changed the way in which customers exchange information with companies. As a result, the type and quality of products and services have also transformed to meet the new consumer expectations and needs.
Customers, be it B2C or B2B, expect organizations to be responsive, to offer them a personalized experience and to provide products that meet their demands. They expect to navigate on intuitive and easy-to-use digital platforms as well as be able to interact digitally at any time from any device.
Internally, employees expect the same from the organizations they work for. They increasingly want applications that allow them to work from any device, at any time and from anywhere.
Challenges to overcome
Despite the ubiquitous mention of digital transformation in the corporate discourse, the majority of companies have not properly implemented it. A McKinsey report states that “70% of large-scale, complex change programs fail to achieve their goals.”
Furthermore, in this report, McKinsey highlights that “the most common factors for failure are lack of employee involvement, poor management support, poor or non-existent cross-functional collaboration, and lack of clarity about who is responsible for what.”
McKinsey also underline that “sustaining the impact of a transformation over the long term usually requires a reset of mindsets and behaviors, which few leaders know how to do.”
The main challenges that can prevent a company’s digital transformation from being successful include:
- Concerns about data privacy and security: The success of digital transformation can only be guaranteed if security issues are integrated from the very first stages of design and throughout the digital transformation project. To benefit from optimal security, companies should also evaluate the reliability of their systems and current networks by conducting penetration tests.
- Budgetary constraints: A digital transformation requires the implementation of expensive technological tools. Many organizations are unable or unwilling to allocate the necessary budget to transform IT and replace the current software being used by the company.
- Limited internal skills and expertise: Many organizations also struggle to find qualified leaders for digital transformation, both in terms of operational leadership and on the board of directors.
- Compliance: Regulatory and legislative changes related to customer data security.
- Immature digital culture: Leaders must create an organizational culture that is open to continuous improvement where all stakeholders are on board with this ongoing transformation. Everyone must be willing to identify and abandon outdated and inefficient processes and replace them with better, up to date solutions.
The pillars of digital transformation
- The buying experience: This is the most visible pillar and the one that directly impacts sales. The buying experience is the sum of the emotions, feelings and stimuli felt by a customer when conducting a purchase.
- The customer relationship: It is not only a question of optimizing all communication platforms, but also of having a truly digital approach with a multi-channel vision to ensure the best possible customer journey, build brand loyalty and guarantee 100% customer satisfaction.
- The information system: This is the key aspect of digital transformation. It is at the heart of the whole process. For this, it is important to collect and store customer, product and order information, so as to enrich the system.
How to implement your digital transformation?
- Step 1: Assess your company’s current digital situation
Before taking any action, you need to ask yourself the following questions:
- What is your key objective?
- Who is your target audience?
- What is the level of digitalization of your current processes?
- To what level are your employees informed about digital transformation?
These questions will help you to assess how best to approach the digital transformation of your business in the long term. It is important to have a transversal overview of the entire ecosystem of your company. Even if digital offers many opportunities, you must adopt the right methodology that is best suited to your business.
- Step 2: Implement an effective strategy
Once your level of digital maturity has been evaluated, you can start building your digitalization strategy. For this strategy, you will have to identify which processes to optimize and what actions need to be implemented.
To do this, start by identifying your company’s problems, ask yourself the following:
- Is there a lack of cost control?
- Can productivity and efficiency be improved?
- Is there a lack of visibility on performance indicators and production monitoring?
- Can the anticipation of needs be improved?
- Can data exploitation and the interaction with customers be improved?
- Is the current corporate image aging and outdated?
For each aspect, indicate the current process and to what extent it is digitalized at present (not at all, moderately or completely). From this you can then prioritize and establish a process to address each question.
Once your strategy is defined, we recommend that you find the right partner, ideally an expert in digital transformation, to help you.
- Step 3: Ensure success with support
Good support is the key to a successful digital transformation strategy.
Choose a digital transformation agency capable of transforming your projects into a reality. Not only will they be experts in the field of digital transformation, they will also have a deep understanding of how these complicated technological tools work.
At Eminence, we will provide you with the right digital tools and processes for this. We are here to help you and guide you through your digital transformation.
- Step 4: Integrate the entire company into the process
The digital transformation can be quite the adventure. To ensure a smooth transition, try to do the following:
- Prepare your employees for the digital transformation of the company
- Involve your employees in the digitalization of their job (trainings, workshops, etc.).
Indeed, it is essential for a successful implementation to encourage all the departments to collaborate. All employees must be aware of the digital challenges and be involved in the digitalization of the company. The process by which this can be done must be engaging and inclusive so that your team members all move in the same direction together.
A successful change in management allows you to avoid any forms of resistance that may arise from employees and that could slow down your digitalization process.
Tips for a successful digital transformation
- Align your business objectives with your corporate business objectives
Identify the problem you are trying to solve with digitalization and align your goals to the outcome you wish to achieve.
- Technology and business must co-exist
Traditionally, IT departments were responsible for fixing technical problems and failing systems. Today, IT teams must work in harmony with businesses to solve problems and to ensure customers’ needs are met.
- Embrace Responsive Design
Responsive design allows businesses to make monthly or even weekly adjustments to their transformation strategies.
To be effective, digital transformation must be led by digital experts who can accompany you both in the technical implementation over the long term and in the management of the change internally. If you are looking for a partner to execute your digital transformation, our experts would be delighted to help you.
Click here to get in touch with us today: https://eminence.ch/en/contact/