Digital transformation is changing business strategies in every industry, from agriculture to tech and fitness. But what does it really mean and what are the real-life implications of a digital transformation strategy? These are just some of the questions we’ve set out to answer below.
What is digital transformation?
Digital transformation is the process of changing how an organization operates to meet the needs of the digital era. It is a shift from traditional ways of doing business to new, more digital ways.
Digital technologies initiate and support this shift, creating or modifying existing business processes, culture, and customer experiences, thus influencing the digital transformation strategy.
However, do not let the term mislead you; digital transformation does not revolve around digital technologies but around how businesses think about and engage with customers through new technologies. It is all about new business processes, culture, and customer interactions. It’s a cultural change focused on continually challenging the status quo and finding new ways of doing things.
Digital transformation can be achieved in many ways. One way is by using technology to improve customer experience and make it more efficient for employees to do their jobs. Another way is by introducing changes in business processes and procedures that are no longer effective because of technological advancements.
Before we explore the how, it is vital for us to explore the why. Why is digital transformation important?
Why does digital transformation matter?
As of 2020, 90% of companies have adopted cloud computing as the primary location to do business and embraced the multi-cloud strategy.
Cloud computing refers to the delivery of computing services over the internet, delivering faster innovation, flexible resources, and data storage without the need for direct user involvement. Cloud computing includes:
- Analytics and Intelligence
Systems can sometimes crash, hence implementing a multi-cloud strategy and relying on various cloud service providers to reduce the dependency on a particular cloud host is a wise business move. The multi-cloud approach includes:
- Amazon Web Services (AWS)
- Google Cloud Platform (GCP)
- Microsoft (Azure)
Good digital transformation strategies migrate data and processes to the cloud, replicating the existing services in the digital format.
The digital transformation strategy that will persevere will go beyond data migration. The new business operations will help physical companies enter the digital sphere by using the Internet of Things—everyday items connected to the internet— to digitalize their products.
Within the digital sphere, businesses can leverage customer data and turn it into actionable insights, improving every aspect of the organization.
Digital transformation initiatives tap into every aspect of an organization, from systems and processes to workflow and culture. Businesses that have already begun their digital transformation journey make the most of workflow automation, artificial intelligence, the Internet of Things, and machine learning to enhance customer journeys.
As we already mentioned, it is all about enhancing the customer experience to gain a competitive advantage.
Benefits of digital transformation initiatives
It’s obvious digital transformation is here to stay, but to help you fully understand the positive impact of introducing digital transformation efforts in your business, we’ve identified the key benefits below.
Customer data analysis
Businesses, especially those that operate online, are digital data mines. However, without the right tools, this data is just left sitting there.
Digital transformation enables organizations to fully utilize customer data by supplying them with the right tools to analyze raw data into actionable insights and business intelligence.
Enhanced customer experience
Customer expectations are growing, 71% of customers expect a personalized experience, and a further 76% feel frustrated when businesses do not meet their customer expectations.
The digital transformation leaders are the ones who use digital technologies to not only improve team efficiency but also deliver a more seamless and intuitive customer experience.
Gartner Customer Experience in Marketing Survey reports that 81% of companies compete ‘mostly or completely based on CX (customer experience)’.
Make your business stand out by using digital transformation to deliver an exceptional customer experience.
Moves businesses into digital culture
As much as digital transformation is about enhancing the customer journey, digital tools and competencies are needed to make this happen. Digital transformation promotes digital culture, where digital tools are used to improve both our day-to-day and work lives.
As digital transformation strategies take businesses online, they create a digital skills gap, leading to a real need for employees to reskill or upskill to keep up.
The digital skills gap, if you have not heard the term yet, refers to a growing integration of digital innovations and a disproportionately slower-growing number of employees who can use them.
What are the 4 main pillars of digital transformation?
Digital transformation does not have one set outline, it varies from industry to industry and even business to business. However, there are certain core elements that are prevalent in every digital transformation strategy.
- Operational basics – refer to modernizing legacy systems and software, and shifting towards digital tools like cloud computing. As a business owner thinking long term, this will help save money and time.
- Digital experiences – refer to the interaction between the customer or employee and an organization made possible through digital technologies. Digitalizing customer experience will keep your customers coming back, securing recurring revenue.
- Workforce enablement – not every worker will be versed in the new digital technology business will introduce, especially as 33% of working Americans fall in the 55+ age bracket, meaning they are not as tech-savvy as younger generations. It is also worth keeping in mind that 43% of the US workforce is blue-collar. These statistics demonstrate the need for employers to focus on ensuring their employees are ready for the digital disruption ahead.
- Digital technology integration – refers to the shift from legacy technology to modern technologies. It’s about moving business operations to cloud-native observability, introducing multi-cloud approaches, and encouraging employees to make the most of the digital technologies available to simplify their working day
What are the top 3 trends of digital transformation strategy?
As of 2022 digital transformation made its way into most, if not all industries. We now know this is not a fad but the real deal.
We have looked at the research done and identified the top 3 trends everyone is talking about:
- Artificial Intelligence, Machine Learning & Automation
- Cloud Technology
- Hybrid Work Model
Artificial Intelligence and Machine Learning
The artificial intelligence market is projected to grow by 20.1% CAGR, becoming a $1,394.30 billion market by 2029. As the market grows, artificial intelligence and machine learning become mainstream, making their way into more and more industries.
Adapting artificial intelligence and machine learning as part of a digital transformation strategy enables employers to create more efficient processes and improve productivity through automation.
The pandemic transformed the way businesses operate. It showed the world that businesses could not only operate but also prosper within a fully digital sphere.
Shifting business processes to cloud computing enabled employers to create a more inclusive work environment. Within this new environment, employees can work together without the need to travel or for businesses to spend money on physical infrastructure. Cloud computing enables employees and businesses to access large amounts of data when needed.
Hybrid Business Model
Following up on the cloud computing digital transformation trend are the new business models we are seeing come up as a direct result of the pandemic. Although the number of employees working remotely has fallen by 8% (from 22% to 14%), the number of employees working hybrid saw an 11% increase from February to May.
As employees begin to recognize the benefits of hybrid work, businesses need to adapt and introduce new business models that reflect these shifts in the paradigm.
Organizations that have already embarked on their digital transformation journeys have nothing to fear, as they should have a digital transformation process in place that makes adapting the hybrid business model easy.
What does digital transformation mean for an employer and employee?
Digital transformation is about enhancing the customer experience using emerging technologies and improving internal processes through automation.
Introducing the right technology strategy in your organization will add to the business value through:
- Encouraging better collaboration and improved team communication by introducing new digital channels within the workplace.
- Improving efficiency by aligning the systems used to reflect the strategic objectives of the company.
- Strengthening employee engagement by shifting towards an organizational culture that promotes knowledge sharing and open communication.
- Leveraging customer data to surpass customer expectations and better customer relationships.
- Enabling innovation with digital transformation projects like the digitalization of all business operations and business functions.
- Leveraging digital data to create new business processes and improve business strategies.
However, to achieve the above, there is a need to create an environment where digital transformation projects are communicated, and employees have a safe space to discuss the changes. Employees must understand the benefits of digital transformation efforts and not feel threatened by the changes that come with it.
Apart from open communication, employers should help their employees navigate the challenges brought by digital transformation. The two main challenges are:
- New technologies
What we mean here is that not every employee will be able to grasp the digital tools and new digital skills businesses are introducing. Organizations that want to prosper will create opportunities for their employees to upskill, learn to use new digital tools, and become comfortable with new technologies.
As more processes become automated, the nature of certain roles will change. A great employer will facilitate space for their employees to reskill, learn new skills and continue adding value to the company.
How to brace your business for digital transformation
As you can see, digital transformation is the driving force behind technological advancement. The digital transformation strategies that will give businesses a competitive edge are holistic, meaning they center around customer experience and utilize digital technology to meet customer expectations. However, without the employees, digital transformation will not be possible.
As an employer, you can brace your business and employees for digital transformation through effective skills management.
This can be achieved with our digital skills management solution TalentBoost.
TalentBoost can help employers in a number of ways:
- Identify which employees have the prerequisites to upskill and progress within a specific role. Instead of wasting money and resources on training the wrong employees or hiring from outside of the organization, put your trust in hard data that will help you put the right people on the right projects.
- Quickly and easily identify individual employees’ strong points and create tailored development and career paths. Enabling employees to reskill in the area that is their strength will keep them more engaged and perform better.
- Reskill employees with soon-to-be-obsolete skills to help them become more efficient in new roles
Digital transformation is here to stay. It is introducing new technologies into all areas of businesses, streamlining processes, and automating tasks. Digital transformation is changing how companies operate, enabling them to deliver higher-value services and customer experience.
As existing processes are being improved and new business processes are being created, the employer must think about the employee and the role they play within the digital transformation framework.
Not all employees will be tech-savvy, therefore they may need support with upskilling or reskilling to stay relevant. Instead of wasting money and resources, DevSkiller’s TalentBoost can help employers easily identify individual employees’ strong skills and get the most from them.