What does digital transformation mean for business?

You likely know that digitization is essential for any modern business. You also likely use databases and software to manage the bulk of your documents. Even better if you’re using “digital optimization” and taking advantage of easily searchable digitized records and videoconferencing to boost your operations. Digital transformation is different and can take your company to a whole new level. Here’s what you need to know.

What is digital transformation?

The digital transformation impact on companies can be huge. According to a 2019 Forbes piece, the market is filled with corporations that took a risk on digital transformation and saw their businesses soar, from Best Buy to Home Depot. In fact, many experts thought Best Buy was dead in the water thanks to the rise of Amazon, only to watch the company transform into a digital expert on all things technology. Even the banking sector, notorious for its conservatism, is starting to recognize the benefits of digital transformation.

Digital transformation is far more than digitization, digitalization and digital optimization. It is a sweeping, global set of changes that fundamentally impacts how you do business. Digital transformation means putting people first. It means shifting focus from top-down hierarchies to a more collaborative, cross-departmental approach that’s highly driven by the quest to improve the customer experience.

Digital transformation also means creating a supportive company culture in which it’s OK to fail. Rapid iteration, throwing out what doesn’t work and improving upon what does becomes the company’s backbone.

Of course, digital transformation is also digital. It means embracing technology across all parts of your company. You might start selling products on your website, marketing on social media, updating your IT systems to incorporate cloud computing and/or utilizing technology platforms such as Slack to increase your remote-work opportunities. Taking advantage of powerful data analysis, you’ll quickly see which modifications make the most sense for your company.

Why is digital transformation important?

When done well, digital transformation offers many benefits for companies of all sizes. These include:

Boosting the customer experience

At its heart, digital transformation is about developing innovative ways for your company to interact with customers while making their experiences easier and more enjoyable. Live chat, social media and mobile apps are just a few ways you can drive a stronger customer experience. Pairing this enhanced customer experience with shareable content makes it easier to not only boost loyalty but to turn a segment of your customer base into brand ambassadors.

Maximizing productivity and efficiency while lowering costs

It is true that digital transformation requires an up-front investment in technology. But over time, you will be able to use these powerful new tools to streamline operations, predict shifts in the market and increase efficiency. Making data-driven decisions helps minimize waste, staff locations based on predicted demand and prepare for upcoming downturns.

Improving your competitiveness

Depending on your industry, you might now be competing on a regional, national or global scale. Businesses of all sizes across all sectors are starting to embrace digital transformation. This means it’s time to act or risk being left behind. And who knows? It’s always possible that you’ll become the next disruptor in your industry.

Of course, like any sweeping changes, digital transformation also comes with its own set of challenges. Digital transformation challenges can include:

Buy-in

Digital transformation tears down hierarchies and silos, replacing them with cross-departmental collaborations that empower employees at all levels. From the C-suite to the frontline workers, everyone needs to be informed of what you’re doing, why you’re doing it, how things will change for them and what to expect. The more traditional your existing corporate culture is, the more time and education it may take to achieve strong buy-in. But if you don’t have buy-in at all levels of your organization, digital transformation can quickly fail.

Lack of direction

It’s not enough to decide you want to undertake digital transformation. You need to turn your ideas into a specific action plan with concrete goals and milestones. You need to present your plan companywide and help managers and team members brainstorm how best to put it into action. Be sure to keep the lines of communication open throughout the process. And remember, rapid iteration is the name of the game. Be ready to change plans nimbly as you and your team assess what works and what doesn’t.

Poor metrics

Tracking and data analytics are the only ways to know whether specific measures are working. But what does success look like? How do you define it? And what new key performance indicators (KPIs) do you need to put in place? How will you track and report on those KPIs, and what are the signs you need to change course? Answering these questions in advance can go a long way toward ensuring your success.

How does digital transformation impact business?

Now you know what digital transformation means. But what day-to-day impacts can you expect? Every company is different, but in general, digital transformation:

• Aligns objectives with business goals. You’ll be able to track your business initiatives more clearly, allowing your entire organization to see how goals and objectives are aligned.
• Redesigns core products, services and operations around customer outcomes. The customer experience is key to digital transformation, driving changes to support this core mission.
• Is data-driven. You’ll no longer rely on outdated KPIs and guesswork to make business decisions. Through advanced analytics, you can base your choices on real-world data.

Final thoughts

Digital transformation is far more than simply moving your records into the digital space. It is a complete reimagining of your company, driven by the customer experience and built on rapid collaborative iteration that takes advantage of the latest technology and data analytics.