Why is digital transformation important?
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.
What are examples of successful digital transformation strategies?
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.
What are the common challenges of digital transformation?
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.
Inflexible legacy infrastructure
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.
Lack of buy-in from leadership
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.
Poor visibility into end-user experiences
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.
IT security and management complexity
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.
What are examples of modern digital transformation strategies?
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.