Creating a digital transformation strategy isn’t optional for enterprises anymore; it’s required. Indeed, with the proliferation of SaaS apps, from collaboration to document management to online marketing tools and more, digital transformation is something you’re probably already undertaking, whether deliberately or not.
And the reasons for that are clear. Digital transformation (DT) creates new possibilities and ways of working for enterprises. It transforms your enterprise into an agile, nimble organisation your customers love to do business with. Companies have seen significant improvements in their product and service offerings, and have seen increased operational efficiencies.
Despite the promises, however, rushing into a digital transformation process without an adequately formulated plan is a recipe for disaster. Often, organisations mistake digital transformation for pure technological transformation and fail to understand the human and process change elements involved.
Clear targets and management buy-in are just some of the elements required in a successful digital transformation project. Embracing new technologies and habits is the way to succeed.
First, we’ll define what a digital transformation strategy is, and then we’ll outline six key pillars that will ensure your digital transformation project’s success.
What is a digital transformation strategy?
There is a common misconception among business leaders that digital transformation starts with technology. The problem with this approach is that it fails to consider the human and economic factors that drive business transformation. So it may be less of a misnomer to call it digital business transformation.
Whatever approach you choose, you need to create appropriate levels of digital technology synergy, brand integration, investment coordination, skill development, vendor management, and innovation over the long term. (George Westerman, MIT Sloan)
In fact, a digital transformation strategy is a detailed plan for how an organisation intends to reposition itself in an increasingly digitised economy. Customers and stakeholders are changing the way they work and shop, and business models need to adapt.
The challenge with digital transformation is it means different things to different people, even within the same organisation. Some people may think of digital as going paperless. Others may think of it as data analytics. Yet others may think it’s about moving to the cloud.
For this very reason, it’s vital to be crystal clear what digital actually means to your organisation. It’s equally essential that all stakeholders be clear of what that means.
An excellent place to start is your company’s 5 and 10-year goals. This forces you to draw a compelling business case for investing in a business transformation plan. It also invites the C-suite into the conversation right from the beginning. They’ll be instrumental in driving the cultural change digital transformation requires.
When considering the huge operational and cost benefits of digital technologies such as Artificial Intelligence (AI) or Internet of Things (IoT), there’s a tendency to jump right in without a proper assessment of the organisation’s strategic requirements. Rolling out new technologies without assessing or tracking their impact across the organisation could turn your project into a costly disaster.
Start by analysing your own needs from a cultural and business perspective. Set your business objectives and document the risks. Run frequent tests with the new technologies, ask for feedback from stakeholders, and monitor their effectiveness.
Start with your company culture
Your digital transformation strategy starts with your company culture. After all, it’s your employees, stakeholders and customers that will ultimately determine whether your digital transformation project is a success or not.
Your company culture is made up of people (shared values), attributes (products and services) and characteristics (geography etc…). These elements determine how well new technology is embraced and utilised. Artificial Intelligence, for example, may be received differently in some types of organisations than others. As mentioned earlier, the C-suite has a critical role to play in driving enthusiasm for digital transformation.
Resistance to change is normal. It’s only natural human behaviour. Beyond the C-Suite, every department needs to be on board. Transparency and communication are key. Employees need to understand why changes are happening within the company and what’s expected of them. This ensures everyone is working towards the same goals.
Set clear goals
To the person who does not know where he wants to go, there is no favourable wind. (Seneca)
Digital transformation is a journey, not an event. It’s essential to identify key milestones and targets to aim for, low hanging fruit so to speak. The first digital transformation project is crucial in proving the concept and building up momentum. Key stakeholders should be kept updated on progress through newsletters and other internal communication channels. This may seem like stating the obvious, but the Harvard Business Review reports that 70% of all digital transformation initiatives did not reach their goals in 2019.
Build internal skills
Companies traditionally hire people around specific industry and functional skills. Often this means there will be gaps in their digital skillsets. They’ll therefore need to acquire these new skill sets as the digital transformation programs roll out.
Agile working, for example, models itself on agile software development. It emphasises speed and autonomy, working in short bursts (sprints) of 2-3 weeks, with frequent reassessment and adaptation.
A digital unit independent of the organisation can champion new working methods, such as agile product development. This can speed up the digital transformation process without jeopardising existing processes.
Find technology partners
Technology and implementation go hand in hand. However revolutionary the technology, if your team lacks the experience in implementing it, it’s just an expensive new way of doing old things. Strengthen your competencies with partners who have experience in your industry and a track record in applying the technology.
Some of the questions you may have are:
- Does the vendor share my vision for digital transformation?
- Can the vendor support this vision?
- Does the technology support operational scaling?
- Will the technology work across the business, not just one department?
- Will the new technology integrate with my existing technology?
Roll out the technology
If you’ve carefully laid out your digital transformation plan, the next step is to put it into practice. You should now have a vision, broad support and a technology roadmap. You should have completed your pilots and should now be confident about rolling out the technology. Technologies you could be rolling out as part of your digital transformation plan include:
- Artificial Intelligence (AI) and Machine Learning
- Augmented Reality (AR)
- Internet of Things (IoT)
You may choose to limit the rollout to one department only, which is fine. But do not treat this as a pilot project. At this stage, you should be fully committed to your project and embrace the new technology.
Monitor and scale
By definition, digital transformation implies openness to change and feedback. You have to be ready to change your approach as customer and stakeholder needs evolve. It’s easy to assume everyone is satisfied with the new technology, so it’s essential to keep monitoring.
Often this reveals changes to be made and further work to be done. For example, you may have rolled out AI technology to support the sales process. You then realise after feedback you could also extend this technology to your support team. Data analytics will help you track and measure your progress, allowing you to adjust your course as your rollout progresses.
As you start seeing results from your digital transformation efforts, build on them to formulate a long term strategy. As your transformation roadmap evolves, new ways will emerge of improving connections between people, products and processes. Use opportunities to scale horizontally by applying the same approach to other business units, or vertically by applying complementary technologies.
A digital transformation strategy is a long term plan that seeks to deliver long term business value by improving the connections between people, products and processes.
Correct planning is critical, or enterprises risk expensive failures. It’s essential to separate the business goals from the technology. Technology simply enables business goals. A transformation project affects more than technology and involves company culture, customers and stakeholders as well.
With a solid digital transformation strategy in place, your enterprise has a far greater chance of success.