101 on Digital Transformation: What is it & How it’s Reshaping Businesses

The Disruption No one can argue that new technologies and digital innovation have disrupted the way we live in many ways. That’s especially true for…

August 21, 2019
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The Disruption

No one can argue that new technologies and digital innovation have disrupted the way we live in many ways. That’s especially true for businesses across all industries. Big, medium and small companies have found new allies in digital tools, applications, services and platforms that serve all kinds of purposes.

Long-standing issues have been resolved, processes have been improved, and the overall capabilities of companies have greatly increased with software. Best of all – those changes are far from being over. Given the dynamic in digital evolution, new emerging trends keep transforming businesses to their very core.

That digital transformation subverted business models, offered new growth paths, and completely reshaped workflows and workforces. Of course, that process isn’t without its challenges. From the way it impacts customer relations to the cultural changes it brings, digital transformation is one of the most defining actions a company can take for its future.


What is Digital Transformation?

This term refers to the process of embracing digital tools to adapt a company for a modern landscape where processes, culture and customer experiences have changed. In other words, digital transformation is about reshaping business in the light of the new digital-centric era with the aid of software of variable complexity.

Such process implies a dramatic change of the business that’s being digitally transformed. Everything from the way it sells, markets, and tends to its customers to the brand’s workflow, perception, and experience is affected by the introduction of digital tools throughout the different areas. Digital transformation is about planning, communications, marketing, accounting, lead generation, sales, customer and workforce management, and anything related to the way a company goes about its business.


Digital transformation as a solution to businesses’ pain points

A process as big as digital transformation necessarily starts with one question – why would anyone want to go through with it? Saying that everyone else is doing it isn’t a proper answer. All businesses have to take a deep look at themselves and the industry they are in to assess the potential benefits and challenges of digital transformation.

There are, however, certain general aspects to digital transformation that can be applied to almost all companies, regardless of their industry. There are 4 main issues that affect most modern brands and that can find a powerful ally in digital transformation. These include:

  • Audience engagement and communication
  • Business revenue
  • Internal business optimization
  • Worker productivity

These 4 pain points are more or less present in all companies working today. Getting them right is crucial for business success, which is the reason why brands of all sizes are betting on digital transformation to do so. Let’s see how this process can help with each pain point, reducing the friction and providing notorious advantages.


Improving audience engagement and communication

The modern marketing landscape has put an emphasis on how brands connect with their target audiences. For that to happen, companies need to engage in a meaningful way with its customers, since a closer relationship with them makes it easier to make business. In that way, engagement is less about the number of followers and more about establishing a conversation where both business and customers provide and get something of value out of it.

Doing so isn’t easy. A recent Salesforce report says that 84% of customers say that experience is as important as the product or service. Creating seamless experiences and addressing their audiences’ issues is the main challenge. In a hyperconnected world, where adults spend 11 hours a day on average connected to digital media, it’s logical to think that the customer experience has to focus on a digital strategy.

Enter digital transformation. Current digital solutions can help in every step of the way in the relationship with customers. From getting to know the target audience through data collection, and personalizing the communications through automation, to working on tailor-made software that offers superior value to customers, digital tools offer enough potential to address the modern customer’s expectations while providing a differentiating factor from the competition.

The rise of chatbots and automated voice responders is a perfect example of this. It’s not just about providing a quicker response to a customer but also about providing a personalized experience. Pizza Hut’s chatbot can greatly illustrate this. After being prompted by the chatbot, the customer can send a message, repeat his latest order, check out the offers, or ask questions. The chatbot is powered by machine learning which means that it offers a quick response that feels tailor-made for every specific customer.

Thus, digital transformation can give a unique solution to engagement issues for any company. The vast array of possibilities brought by digital tools makes sure all businesses can fit several digital solutions to better tend to their customers and their growing expectations on how a modern brand should operate and respond. Digital tools provide a satisfying experience through personalization that can bring customers closer to the company, thus resulting in more engagement and customer loyalty.


Boosting business revenue

One of the biggest factors at play when it comes to decision-making, revenue is always at the heart of the actions taken by a company. Thus, it’s impossible to think about a decision as big as embracing digital transformation without discussing it. Fortunately, the advent of new technologies can also benefit a company’s revenue, even when some people think of digital tools in terms of cost rather than as investments.

It’s not a matter of opinion. 32% of IT decision-makers say they already observed how digital transformation has impacted their revenue with a 23% increase. Additionally, companies with above-average levels of digital revenue have grown on average 1.5% faster than the mean, an impressive number that also meant higher capital productivity and lower costs.

How does that happen? New trends brought by digital transformation provide a competitive edge for companies using them. Technologies such as big data analytics, mobile technologies, and cloud computing are big contributors to that growth, according to IDG’s 2018 State of Digital Business Transformation

It makes sense. Data availability allows for deeper analysis that provides meaningful insights on which a company can act on. Combined with AI-powered software, brands can identify patterns and detect consumer trends and this enables a more informed decision-making process about products, services, and the overall direction of the company. 

But digital transformation brings more than just an improved way to get to the customer. It also offers possibilities for augmenting the sales capacity, the delivery speed, and opens the door for new business opportunities that might fly under the radar without the aid of digital solutions. 

An example that can make this clearer comes from LEGO, an incumbent company that reinvented itself under the light of digital transformation. Keeping its highly popular toys at the very core of its business, LEGO embraced digital tools to find new revenue sources that compensated its decreasing earnings. Thus, the company venture into movies, mobile games, and apps fueled by the knowledge of its audience through digitally collected data. 

In that context, LEGO developed an online platform to crowdsource design in which the community votes for the best designs, a kit with sensors, motors and an app to teach users to code and program their creations, and a series of video games for Playstation, Wii, and Xbox. 

This example comes to show that a planned digital transformation doesn’t just bring companies closer to people but also better interprets their needs and identifies new revenue sources to expand a business.


Optimizing internal workflows

IDG’s report also says that 64% of companies analyzing digital transformation want it because they need to improve their efficiency. Digital transformation is understood as a bridge to optimize internal tasks, especially through automation. But though this is a real benefit brought by digital tools, there are other things the digital applications can do for internal organization.

On an internal level, digital transformation implies the analysis and adaptation of business models and processes to bring more agility in the context of a fast-paced market. As such, the process can lead to a complete redefinition of what the company is and how it does things. In other words, digital transformation can mean a complete change in how the company is comprised, its areas, staff, and everyday tasks.

Moving to digital solutions for internal tasks can imply different things depending on the task at hand. For instance, it can mean that all paperwork is centralized in a digital platform capable of managing all accounting information. It can also mean the use of a management system to keep track of responsibilities and deadlines, as well as the introduction of new ways of communication to improve reporting of all kinds of data.

What happened with DHL can work here as a perfect example. The logistics company developed smart glasses with augmented reality to provide its employees with data about the items they are transporting, the instructions related to them, and their final destinations. The goal was to get rid of paper instructions, which proved to be unreliable and somewhat unruly. As added bonuses, the glasses meant a reduction in paper costs and a spike in the delivery efficiency.

The DHL example shows that wherever there’s an internal procedure, there’s a potential opportunity for the implementation of a digital tool that can make things more efficient. Digital transformation processes are able to uncover those opportunities while also providing creative solutions to make the most out of them.


Worker productivity

The improved internal efficiency brought by digital transformation can also mean enhanced worker productivity. The new digital workplace shouldn’t just be a pile of digital tools developed for processes but rather a place where new technologies entice workers to be more productive. How so? By limiting the amount of time and effort the workers spend on menial tasks that can be automated or left to digital solutions.

The basic idea of digitally transforming with the workforce in mind is to boost the workplace’s comfort and to let employees focus on tasks of importance rather than in minuscule details. This can be done through a number of digital-related things from centralizing communications through a platform and automating the HVAC settings, to using AI to analyze data sets to improve the use of resources. 

This might all seem like mumbo jumbo but recent research backs up the idea that digital tools improve the employees’ productivity and engagement with the company. In fact, companies with high engagement and communication levels with their employees have 22% more productivity and are 50% more likely to have lower employee turnovers. 

Digital transformation can change the motivation of a company’s workforce, that’s why companies as big as BP are using it. Being one of the world’s leading energy companies, BP saw a strategic ally in digital tools and started using artificial intelligence to analyze data to enhance the safety of oil and gas production.

By looking at certain parameters (flow rates, pressure, equipment vibration) from different locations and coupling it with environmental data (ocean wave height, seismic information), BP’s digital tools can prevent potential risky situations without putting its own employees at peril (while also letting them focus on decision-making rather than monitoring data).

Again, the key to reap the benefits of digital transformation for this and all of these pain points is to be creative. In other words, it’s essential to understand the need at hand and the vast amount of digital solutions possible to aid with what need’s fulfillment. 


A path to growth filled with challenges

These 4 big benefits illustrate how digital transformation is a path that can totally change any business regardless of the industry to provide more revenue, improved worker satisfaction, a better customer experience, and optimized workflows. Yet, getting there isn’t easy. 

That’s because any company willing to embrace digital solutions and reshape itself under its light needs to be prepared to make a colossal shift. A digital transformation can change the very core of a business, redefine its values, and even transform what the company actually is. For that to happen, there has to be a solid preparation process, with the proper people leading the way, thorough planning, clear goals for the transformation, and understanding the value of the transformation itself.

That’s because digital transformation isn’t just using new technologies – it’s about embedding digital innovations in a creative manner to serve the company’s unique purposes. Using cloud computing, big data analytics, machine learning, or augmented reality doesn’t guarantee results in and by itself. It’s how all of these solutions are integrated with the company, the workforce, the workflow, and the overall strategy that makes it work.

Digital transformation is such a complex process that it can only be carried out once a business has understood the complexity of the change and has a detailed plan on how to do it. If done the right way, betting on digital innovation can drive numerous benefits for the business and everyone involved, and make the future shine brighter for the company.

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