Why Digital Transformation Must be a Strategic Priority

Why Digital Transformation Must be a Strategic Priority

Over the last decade, the term “digital transformation” has become less of a buzzword and more of a business optimization strategy. And while the demands of the connected society have made the need for digital adoption an apparent no-brainer for companies and decision makers, there is little doubt that brands must take a proactive attitude to the shift in how customers engage daily. This means that digital transformation must be done right from day one.

That requirement was thrown into sharp focus by the events of early 2020. The global pandemic highlighted just how many holes still existed in the fabric of digital transformation, with many companies scrambling to adjust to a world that had seemingly changed overnight.

There was daily evidence of supply chain failures, overwhelmed hospitals and empty streets, with the shortage of paper goods quickly becoming the public face of this novel coronavirus. Remote working became the norm, lockdowns were commonplace, and we all got used to talking to friends or relatives via Zoom.

Digital Change as a Priority

Fast forward to now and there is an argument that COVID-19 was exactly the sort of catalyst that companies needed to not only accelerate their plans for digital transformation but also ensure that they were able to think digitally. In addition, it made brands more aware of where the customer experience or touchpoints should be, with the pandemic driving change across all channels or portals.

According to a recent report by Gartner, the number of business leaders who are now focused on digital change as a priority for their organizations has increased exponentially. VentureBeat reported that respondents to the analyst’s 2021 CEO Survey said that digital capabilities would receive more investment this year, with 20 percent of people citing digitization as a strategic path that they wanted to follow – for context, the same survey in 2012 recorded a response rate of 2 percent for the same question.

Digital transformation was associated with business growth, the report said, with AI, quantum computing, blockchain and 5G all listed as “significant technologies” to watch. Data and analytics also featured, although it is interesting to note that many CEOs polled for the annual survey did not have a designated data officer, with 83 percent of respondents leveraging chief information officers for that purpose (for the record, the top ask of CEOs of their company CIOs is digitization). In the post-pandemic world, this was often felt to be the best way to achieve business goals and defined brand objectives, the report said.

Understanding the Landscape 

CEOs and business leaders may be on board with the idea of digital transformation, but there is no guarantee that acknowledging the need for change will bring the results that you want. The digital landscape has (and continues to) changed dramatically in the last few years, albeit that there is always some confusion over what an optimal strategy is.

For instance, there are three concepts which companies need to consider before they can make the necessary adjustment to business strategies and customer engagement. To muddy the waters even further, all three are often used interchangeably; digitization, digitalization, and digital transformation.

However, there are subtle differences and nuances to each.

Digitization is the process of moving from an analog to a digital format – Gartner defines this as digital enablement (cited by ITProPortal). This is usually the first step and, often, requires the company to understand the value of the data that it controls. Digitalization, on the other hand, is the integration of digital technologies to change an existing business model, thereby generating new revenue streams and customer engagement opportunities. This step is usually associated with cloud migration, providing the requisite KPIs and ROI in a (relatively) short space of time.

The third concept is actual digital transformation. According to Gartner (again), this can be directly linked to the unlocking of potential opportunities and the leverage gained from new digital business models. This can require a significant investment for both the company and its workforce, mainly because full-blown transformation to a digital first attitude brings its own set of challenges and pain points.

Importantly, the informed decisions that need to be made are likely to require a company to understand the entire digital lifecycle and what that methodology will bring to the table. This makes a proactive attitude vitally important, even more so when you consider that there is evidence that most digital initiatives either fail to get off the ground or are introduced as reactions to fluctuations in customer demand, market pressure and evolving technologies.

Removing Digital Assumptions

It should be noted that the discussions around digital transformation started long before the pandemic impacted our lives. Digital first had been pivoting towards digital only, but there were assumptions based around what the process should be that were blown away by the global health event.

According to a recent MIT Sloan Management Review webinar, COVID-19 forced companies to not only look at the plans they had in place but also the technology that they were expecting to invest in. The problem was that most business leaders were often unprepared for the challenges that the pandemic flagged up, with organizations forced to change on the run.

“Unless organizations change, the technology really does nothing for the business,” said George Westerman, principal research scientist for workforce learning in MIT’s Abdul Latif Jameel World Education Lab. “Digital transformation is less of a digital problem than it is a transformation problem. It’s a leadership problem for envisioning and driving change.”

These problems ranged from an assumption that customers always prefer the human touch in their engagements to the fact that being a “fast follower” of your competition’s innovations is a prudent path to take (spoiler alert, it isn’t).

What needs to happen, Westerman said, is that companies must focus their initiatives on four areas; customer experience, employee experience, operations and business model transformation. All these initiatives naturally require strong leadership and the right tools for the job, with Westerman noting that companies need to “create a digital-ready culture to compete” in a world where employees AND customers both benefit from digital transformation.

Customer experiences have already become more personalized, he said, and companies are leveraging the data to take these experiences to a new level. On the workforce side, there is a defined need to integrate automation and machine learning to mundane tasks, freeing up employees to become involved in other tasks that make both them and the company work better.

Digital Transformation is Complex

One of the questions that is constantly asked by companies at the beginning of their digital journey is whether the process can not only be sped up but also if the outcomes of that investment can be more predictable. This becomes especially important for small to mid-size companies, many of whom must be more pragmatic in terms of what they integrate and when.

A recent research report published in the Harvard Business Review attempted to provide an answer to this conundrum as part of a two-year study at a leading financial institution. The full report can be read here, but the key findings included the revelation some teams in a chosen business unit found it easier to cope with the digital transformation – which was a top-down initiative – than others.

By analyzing the struggles and successes of various stakeholders in the BU, the researchers were able to get a clearer picture of where the choke points were in the process and, importantly, the reasons why accelerated digital transformation can stall. The latter, which the authors of the report called “awareness of complexity-in-use” had implications for processes, people and projects, with the researchers concluding that a one-size-fits-all approach to digital integration is not always the best path to take.

In fact, there was evidence that companies need to tailor their transformation to consider the varying levels of complexity within that organization, albeit that “quick wins” at the start of the process will allow a company to get a better understanding of where they are on the journey and where they need to be. Once these parameters are established, then stakeholders and decision makers can focus “their digitalization efforts and deliver more effective transformations.”

Buzzword to Business Priority

Digital transformation may have morphed from being a tech-centric buzzword to a business priority in recent years, but there are still challenges to be faced and pain points to solve. Companies that understand why digital matters and why it needs to be a part of their culture will naturally gain from the channels it opens and the insights provided, irrespective of how far along their journey they are.

To transform successfully, you need to have not only the right tools and mindset but also the right partners. Most digital initiatives that fail are down to a lack of understanding as to what the digital experience should be for the end user, with companies rushing to integrate projects before they are ready.

By the same chalk, those organizations that are lagging behind run the risk of losing both customers and brand awareness. The simple truth is that the connected society has pushed the digital world to the forefront of our work and personal lives, and the companies that don’t adapt now will become less relevant.

For many people, the recent pandemic accelerated their own digital transformation and fast-tracked them into adopting practices that they may not have been prepared for. That willingness to adapt is what makes us human, and the companies that mirror that capacity are the ones that will successfully complete their own transformation, both now and in our digital future.

Infostretch’s digital engineers are adept at solving the toughest digital transformation problems that our customers present. Thanks to our Go-Be-Evolve methodology, our solutions are designed to help move digital initiatives faster, while reducing risk.

To find out how we can accelerate you along your digital journey, contact us today. Alternatively, fill out the form below and let us know what you need.

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