The 4 Main Areas of The Digital Transformation Process
— November 30th, 2022
What is Digital Transformation Process?
Digital transformation can be defined as the process of utilizing modern technology to create new - or modify existing - business processes, culture, and customer experiences.
This re-imagining of business in the digital age equips organizations with the tools necessary to keep up with competitors and to meet changing market requirements.
This type of transformation transcends traditional roles like sales, marketing, and customer service, and is primarily concerned with how organizations think about, and engage with, customers. With the incorporation of new technology, organizations have the opportunity to re-examine how they carry out business.
This will open doors for significant growth and can allow them to greatly increase their customer experience and branch out into industries that were never before possible.
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The 4 Areas of Digital Transformation
If an organization planning to embark on a digital transformation project, then there are four main areas they should consider:
1. Process Transformation
Business process transformation is a strategic initiative aimed at improving the efficiency and effectiveness of a company's operations. It involves a thorough review of existing processes and systems, with the goal of identifying areas for improvement and making changes to better achieve the company's goals.
Process transformation entails modifying the elements of a business’s processes in order to achieve new goals. Most companies engage in a business process transformation when they require a radical update. Undergoing such a transformation will modernize an organization’s processes, integrate new technology, save money, and better incorporate core systems.
Important steps in Business Process Transformation
Business process transformation follows similar steps to business process management but attempts to make bigger and more drastic changes. Some steps to take when it comes to process transformation include:
Identifying the goals of the digital transformation
Is the company primarily trying to upgrade systems? Incorporate new technology? Adapt processes to a new organizational structure? What has caused the need? The first step is to understand the reasons for the transformation. This could be due to the need to upgrade systems, incorporate new technology, adapt to a new organizational structure, or other reasons. It is important to have a clear understanding of the objectives of the transformation in order to ensure that the right changes are made.
Establishing baseline metrics
In order to measure the success of the transformation, it is important to have a clear set of metrics to track. Organizations should collect the data needed to show that the business process transformation will be a success. This should include cost, time, number of errors, and other metrics that can be measured.
Bringing in all stakeholders
Business process transformation is not just about changing processes, it is also about involving all stakeholders in the change process. This includes seeking feedback from employees, customers, and other stakeholders on what has worked well in the past and what they expect from the new process.
Mapping out the best scenario
Using a diagramming tool, create a visual representation of the ideal workflow path, including all the human and system tasks that need to be performed. This will help the company understand the full scope of the transformation and identify any potential obstacles or challenges.
Going Live and Monitoring
The process should then be introduced gradually, using small teams being trained on the new process. The progress of the transformation should be closely monitored, and any changes that need to be made should be made quickly in order to ensure success.
2. Business Model Transformation
Many companies are pursuing digital technologies in order to transform their traditional business models. In today’s business world, there are numerous examples of this kind of innovation, from Netflix's reinvention of video distribution to Apple's reinvention of music delivery (I-Tunes), to Uber's reinvention of the taxi industry.
These well-known names are not the only companies to incorporate such big changes into their business model. Insurancecompanies like Allstate and Metromile are using data and analytics to un-bundle insurance contracts and charge customers by-the-mile—a wholesale change to the auto insurance business model.
By reinventing and adding to their current model for success, corporations can achieve a renovation that leads to significant new opportunities for growth. This is why more companies should be trying to follow a similar path.
3. Domain Transformation
An area that doesn’t receive a large amount of attention, but which has proven itself to have enormous potential, is domain transformation. New technologies have the ability to redefine products and services, blur industry boundaries, and foster opportunities for non-traditional competitors. This form of wholesale transformation offers incredible opportunities for businesses to create new value.
An excellent example of how domain transformation works is the case of the online retailer, Amazon, which expanded into a new market domain with the launch of Amazon Web Services (AWS). Currently, AWS is the largest cloud computing/infrastructure service provider in the world, in a sector that was previously dominated by high-profile behemoths Microsoft and IBM.
While it may not have appeared to be an obvious play by Amazon, its move into providing cloud services saw the online retailer leveraging capabilities and services it was already using. For example, it had already developed massive storage capabilities as it sought to underpin its global business while at the same time it provided key computing services to start-ups and other growing businesses that were part of the Amazon family. So all the capability was there, it just required the vision and confidence to make the move into the cloud space.
All businesses undergoing a digital transformation should be mindful of the new opportunities for domain transformation that present themselves with the incorporation of new technology.
4. Cultural/Organisational Digital Transformation
A successful digital transformation demands more than just updating technology or redesigning products. If an organization fails to align its digital transformation efforts with its internal values and behaviors it can have a knock-on effect on an organization’s culture.
Negative repercussions range from slow adoption of digital technologies to loss of market competitiveness and inevitable failure of the initiative and lost productivity and revenue. On the other hand, a comprehensive and collaborative effort can help shift the culture to understand, embrace, and advance digital transformation.
Leaders should formulate a clear vision of the transformation and effectively communicate it throughout the organization on an ongoing basis. They need to be clear about what the smart risks are and why they’re worth taking.
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Core elements of digital culture:
- Promotes an external, rather than an internal, orientation
- Prizes delegation over control
- Encourages boldness over caution
- Emphasizes more action and less planning
- Values collaboration more than individual effort
Developing Your Digital Transformation Strategy
Start by assessing your companies current state. What processes, technologies and business models do you currently use? Identify the areas that need improvement and start defining your goals and identifying your target audience. Map out the customer journeys and all the different touch points along the way. Evaluate the technology landscape and note any gaps or inefficiencies.
Create a Digital Transformation Team
Build a cross functional team that will be responsible for driving the change transformation across the wider company. Get the change and transformation team to develop a road map. Continuously monitor and improve as the change transformation unfolds.
Key Takeaway on Digital Transformation
Through the use of modern technology, businesses are constantly evolving and undergoing digital transformations that better their efficiency and competitiveness in the marketplace. But digital transformation does not end with the implementation of new technology. Organizations should think beyond technology to embrace true digital transformation. It is only with a complete overhaul of an organization that businesses can realize the benefits of digitization: enhance operations, create collaboration opportunities, expand their service offerings, and revolutionize their approach to the customer experience.