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Digital Transformation: What is it really?
There are companies out there that have embraced it, some have been forced into it as a result of the Covid-19 pandemic, and some are a bit slow on the update. When I speak to my friends about where I work and what we do, the question often comes up, and (apology to some of my friends) I get a myriad of reactions; glazed over stares, utter fear, and just plain confusion.
When I was talking to Tom about it, we agreed that a blog post should be written. So here it is, I’m going to try and demystify it all for you.
It’s a people thing!
“What?” I hear you ask. “How does that help?” Okay, well I’m getting ahead of myself, but you’ll see what I mean.
Literally, digital transformation is the integration of digital technology in all areas of the business, changing how the business operates and delivers value to its customers. It encompasses the holistic approach to the technology, people and processes of the business.
The days of IT operations being focused on cost saving is gone, and the shift has seen IT teams and staff become ‘digital leaders’; the key drivers of business innovation, and the developers of new products for a business. IT definitely plays an important part in driving the strategy, but embracing the change means that everyone in the business needs to rethink the role and impact of IT or technology in their own day to day activities and experience.
At the base level it’s got to be a culture shift, the work of implementing and adapting to the changes that are made with a digital transformation is everyone’s responsibility.
Digital transformation is not monolithic
Here at Skypoynt, this may be what we do; but I dived into the research anyway; reading papers, articles and generally scrapping around the internet so I could write this article to clarify it all.
I’ve discovered that most experts agree it’s a multi-dimensional concept, and there are 4 pillars or types of digital transformation.
Business Processes (aka optimising your operations)
The transformation of business processes is the entry point that most companies adopt technology; implementation is usually simple, and it can create significant value with minimal disruption and cost effectiveness.
It’s table-stakes for business across the board as data and analytics, APIs, machine learning and other tech offers businesses new ways to transform processes while lowering costs, optimising cycle times and increasing quality. These transformations usually focus on one area of the business such as customer experience, finance and revenue or operations. We see many businesses of every size now using automation to streamline back office processes like invoicing and accounting.
One of the highest achieving examples of changing up the customer experience process would be Domino’s Pizza AnyWare, investing in the relatively inexpensive technologies to give customers the ability to order from ANY device. It completely flipped the food ordering process, and it finally enabled Domino’s to overtake Pizza Hut in sales in 2018. Talk about optimisation!
Business Model (diversifying your service offerings and disrupting the norm)
New technologies can help redefine products and services, create blurred industry boundaries and bring about new clutches of avant-garde competition.
Think Uber’s reinvention of the taxi industry or Netflix's distribution of movies and television; that's the disruption of an established business model. Focus of new consumer behaviours is forcing the reinvention of services and products to change the game. Together with digital marketing technologies businesses that undertake the reinvention of their business model can benefit from alternative revenue streams. Digital technologies can enable businesses to unlock new opportunities beyond their current markets.
Insurance companies are using data and analytics to un-bundle products and make them more tailored to their customers behaviour (consider Youi) and re-bundle based on more individual requirements and more extensive parameters. These types of transformations are more complex across the business than just switching up a single business process, but they can be implemented alongside the existing model to enhance the business. New products and services can change the fundamental value of the business and open opportunities for growth of the business. It’s about differentiation; different products and services = new clients!
Engage Your Customers (aka the customer experience)
Customer experience is THE digital buzz-phrase, as it should be. But, one of the biggest myths of digital transformation is that it’s solely about the customer experience. The internet is flooded with articles and blogs about it, but although it’s important, it works better when undertaken as part of the bigger picture.
Never has it been simpler with the right tools to offer your customers exceptional value for money with their service, and to keep the conversation going. In another blog I delved into retention versus attraction for dental patients, and discovered the cost of retaining customers across the board in any industry is undeniably more cost effective than attracting new clients.
Digital offers the benefit of a 360 degree view of your customer; we can track, measure and report on every action and activity, then harness that intelligence and data to deliver direct and personal engagements at every touchpoint of a transaction. Building better and stronger relationships with your customers offers more value to the business and to them.
On the flip side, digital technology has transformed consumer habits, allowing customers to get what they want when they want it. Mobiles, apps and automation have caused a shift in consumer behaviour and expectations. Digital transformation enables businesses to engage these modern consumers, and deliver on their expectations and create a seamless customer experience across multiple channels and/or devices.
I’m going to be blunt; if you don't have a digital presence, you have a near zero chance of engaging your customers or gaining new ones, because modern consumers just won’t find you.
Empower Your Team (team buy-in enables change)
I’ve covered off much of this pillar in the intro, but I can add a few things.
Change, or in this case digital transformation, has to come from within. Organisations that champion collaboration, incite productivity and promote mobility will attract and keep the best talent. Digitisation alone can not transform your business; but people will.
The cost of collaborative tools and technology has decreased with the adoption of cloud subscription based software and the capabilities of the tools have grown stupendously. Think tools for communication, CRM/CMS, Cloud storage, project management, recruitment management, accounting and payroll, and collaboration suites.
Holistically it has to be a cultural change; it requires businesses and their staff to challenge the normal, experiment with the new, and even get familiar and comfortable with failure. Staff buy-in is an essential part of digital transformation from the ground up.
These days all of the decisions and changes that business leaders live with are driven by digital technologies. Digital transformation is about innovation and disruption, offence and defence, and technology and people; all are equally important as the drivers of transformation.
AirBnB might be a great platform and product, but it wouldn’t be worth $385 billion (2019) if we didn’t mind sleeping in other people’s beds.
So yeah, it’s a people thing!