Digital transformation is the strategic adoption of digital technologies, such as a digital workspace, to improve processes and productivity, manage business risk and improve customer service. Modern digital transformation strategies leverage increasingly sophisticated solutions to replace simpler digital technologies. Today, businesses implement these strategies to improve productivity, control costs and increase an organization's value.
Importantly, digital transformation represents a universe of solutions and processes; an effective transformation strategy is a tailored fit for each unique organization. To remain competitive in the modern business landscape, digital transformation is a necessity. Few organizations can stand the test of time without a plan to strategically adopt beneficial technologies.
At the end of the 20th century, digital transformation was a much more literal term. Businesses digitized processes that were once analog in nature. Over the years, a number of common business solutions were updated to fit in an increasingly technology-driven world. With every new innovation, the pace of change became more rapid. The rate companies are able to adopt new technologies directly impacts its ability to compete within the global marketplace. The fact that the global economy has become more tightly knit in recent decades is also a result of digital transformation.
After the turn of the millennium, businesses began to look at digital transformation not as a one-time event, but as an ongoing strategy. The rate of change is simply too fast to allow for periods of rest. Like a shark in the water, companies must keep moving forward to survive. Stakeholders must be vigilant about their adoption of new technologies. Keeping up with the global market requires not only a strategic mindset, but also a deep understanding of economic realities. Investments in the wrong technologies could be disastrous for an organization. Therefore, stakeholders must find a balance between a desire for bleeding edge technology and the stability of known systems.
One of the most well-known examples of a digital transformation success story is the battle for in-home movie rentals. When Netflix was founded in 1997, it was up against a behemoth of a competitor: Blockbuster. Founded in 1985, the Blockbuster organization was not prepared to compete with a digital rival. When Netflix's DVD-by-mail service launched, Blockbuster had no way to compete in that space. In fact, it took the company seven years to establish its own DVD-by-mail service offerings.
Netflix proved to be the more agile of the two companies, offering digital streaming while its competitor was still struggling to monetize its rental-by-mail service. The speed with which Netflix was able to offer new digital solutions to its customers was a key ingredient in the company's lasting success.
In the retail space, national brands like Walmart and Target have adopted digital transformation strategies to extend their online reach and compete with another giant of the digital revolution: Amazon. Walmart and Target were able to leverage their existing brick-and-mortar stores as convenient pickup and shipping points for customers who prefer to shop online. These brands now operate massive ecommerce operations that not only supplement revenue from in-store shoppers, but also extend each brand's reach into areas with less competition.
Company stakeholders understand that digital transformation is critical to their organizations' continued success; however, the implementation phase is never without a few roadblocks. The first challenge is to identify which existing technology investments are in need of replacement, the second is to determine which new solutions will generate the most value. Finally, stakeholders deploy the solutions. This critical stage may take several weeks or months to complete, depending on the scale of the transformation.
The most common barrier to working toward an improved digital strategy is money. If an organization does not properly research and budget for new technologies, it could run into problems during the implementation phase. For example, a business that wants to move its internal data center to a cloud may not realize that a hybrid solution is a better fit, compared to a strictly public cloud. Failing to understand this reality before the budget becomes finalized could slow down the entire project at a crucial juncture.
Businesses in the digital age depend on a complex structure of technologies to maintain productivity and operational efficiency. Often, legacy technology cannot be replaced until an underlying technology has been updated. For example, deploying a new application to global branches could take weeks if the organization's network management relies on traditional hardware-defined protocols. Companies at scale may see better results if they first deploy an SD-WAN solution before attempting to deploy a new application across the globe.
To overcome this challenge, business decision makers require a deep understanding of their organization's existing technology infrastructure. Failure to grasp the current system's limitations could make future technology implementations slow or impossible.
Any business transformation, digital or otherwise, is more likely to succeed when leadership is engaged. Engagement should not be limited to simply signing off on the project, but rather should extend to active participation. Stakeholders must take on active roles in the deployment of new digital solutions to ensure the investment is a success.
For instance, imagine a company has partnered with a financial institution to deploy a virtual credit card solution. If the goal of the solution is to encourage spending that adheres to the company's established policies and procedures, everyone needs to participate. C-suite leadership needs to understand why the company is moving to a virtual payment system, and then take steps to follow the new protocols. When everyone is on the same page and invested in the success of the transformation program, tangible results are more likely.
When leaders implement a new piece of technology without engaging the people who actually use the solution on a daily basis, they risk investing in a tool that does not actually meet the company's needs. Leaders require insight into end-user experiences to ensure that the solution works properly and does not introduce new challenges.
During the early stages of a new investment, decision makers should ask employees about their experiences with the existing system and get insights into how the process could be improved. Then, during the implementation of the new solution, stakeholders should continue to solicit feedback from the people who actively use the technology. Over time, the insights gained from this feedback loop will aid additional transformations, contributing to a cycle of continued improvement.
Companies that partner with a technology consultant will be better prepared to overcome any unforeseen hurdles during a digital transformation project. The more insights and data that can be collected ahead of time, the better prepared everyone will be to implement new solutions on schedule and within budget.
Users also are confronted with having a fragmented experience. For example, users may need to access their files from multiple repositories some of which are stored on-prem while other data might reside in public or private clouds. Additionally, with a distributed app environment, many users find themselves having to remember more logins and passwords. Also, with more SaaS apps, slow Internet connections result in poor user experiences particularly for users in remote branch offices.
Traditional approaches to security and management are no longer sufficient as users are more mobile, and applications as well ad data is distributed in a digital world. One of the first challenges faced by IT is enabling common access controls regardless of where applications are hosted. Cloud-hosted SaaS services in particular introduce security challenges as SaaS apps are often no longer within IT’s control. A heterogeneous environment of endpoints combined with frequency of OS and application updates break legacy client management processes and tools.
Today, digital transformation strategies look at existing technologies and seek to introduce increasingly complex solutions. Rather than switching from the analog to the digital, companies today are constantly on the lookout for more sophisticated ways to achieve their business objectives. Leading organizations find that they can gain control of their digital transformation journey with a few key strategies that is centered on the user.
As society becomes increasingly digitized, mobility grows in importance. Not only do consumers spend several hours a day on mobile devices, but also individuals in the business world are tied to smartphones, tablets and laptops. Agile companies need mobile solutions that do not diminish the user experience when compared to desktop applications. Modern users expect comparable experiences across channels.
Many digital transformation projects take mobility as a central theme. Broadening end-user experiences to include mobile platforms is essential for the modern enterprise. Across industries, companies take advantage of mobile capabilities to increase productivity, enhance operational efficiencies and improve satisfaction rates.
Effective digital transformation projects can support an organization's commitment to data security. Stakeholders must understand, however, that a new solution is not more secure by default. Instead, leaders must take into consideration the various security concerns that come with each new project.
For instance, any transformation projects that leverage the Internet of Things (IoT) will necessarily introduce more potential for a security breach - but this is not to say that IoT is inherently less secure than traditional implementations. IoT projects involve a number of entry points, like connected sensors. These assets could create productivity improvements for the organization, but they also require a new security policy to ensure that the risk of a breach is kept to a minimum.
Security should also be a top concern for any transformation project involving big data analytics. Taking into consideration any relevant data sovereignty responsibilities, stakeholders must be vigilant about protecting user information, especially when entrusted with large quantities of sensitive information. Globally, companies may be subject to a number of international privacy laws. These should be reflected in any transformation strategy.
Technology leaders have discovered that user experience is an integral part of a solution's success. Business decision makers are beginning to adopt new technologies not only for their functionality, but also for their ability to enhance worker productivity through simpler interfaces and more intuitive interactions.
Enterprise applications with cumbersome user interfaces can make work more difficult for employees, even if the backend is efficient. For example, when Deloitte audited one of its enterprise resource planning applicants, stakeholders discovered it took 36 steps for an employee to request a purchase. The organization streamlined the process by overhauling the user interface. As a result, worker productivity increased by 300 percent and training time was reduced by 55 percent. Digital transformation is possible at every level, not only with backend functionality.
In most organizations, the responsibility of digital transformation falls upon the chief information officer. Some global organizations have created a new title, chief digital officer, to exclusively handle transformation projects. However, there's little distinction between these two roles and in most cases the two positions work in tandem to identify opportunities for new technology.
Experienced CIOs will have an understanding of their organizations' current suite of technology, which helps them to pinpoint which new solutions will best help their enterprise succeed. Most large digital transformation projects will require input from several stakeholders, including the chief financial officer and chief operations officer. Projects involving user data will likely need the input of the legal department to ensure necessary compliance measures are met and risk is kept to a minimum.
Today, many digital transformation projects revolve around emerging artificial intelligence and machine learning technologies. These solutions enhance the abilities of human workers, often reducing the amount of menial work humans have to do, allowing them to focus on complex problem solving.
AI/ML solutions encompass a large number of unique solutions. At a basic level, chatbots represent a simple AI technology that can make teams more productive. At the other end of the spectrum, a big data analytics solution can sift through massive amounts of data to spot patterns and suggest future improvements. Data sets that would take a human years to comb through can be processed by an algorithm in a short period of time, significantly speeding up the organization's ability to act on emerging insights.
Digital transformation is a concept that will only grow more complex over time. As old technologies get replaced with more sophisticated solutions, future breakthroughs will be ever more complicated. Stakeholders must understand that complex functionality must be paired with a streamlined user experience to be maximally effective.
As technologies such as artificial intelligence, machine learning and blockchain become more commonplace, the pace of transformation is likely to speed up rather than to slow down. Digital transformation is no longer a one-off project, but rather a continual process, which must be managed in a strategic manner. At the enterprise level, transformation activities should be systematic and measured.
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