What Is Digital Transformation?
To put it simply, digital transformation is a rethinking of digital strategy that allows businesses to improve their performance, radically. Digital transformation involves a pan-organization view in order to refine business models, identify new ways of doing business, meeting the ever-changing customer expectations, and even identifying new revenue streams.
Amazon is a good case study in this regard. The online retail giant uses algorithms to predict demand in order to ensure availability of products and faster deliveries. By leveraging data, Amazon has been able to disrupt the traditional retail model, forcing giants such as Walmart to rethink their strategy.
What Is Digital Maturity?
In order to reap the benefits of digital transformation, it is important to first assess where your business is on the digital road map. More digitally mature organizations have integrated digital strategy into the company’s broader strategy. Their use of digital is aimed at improving performance across departments instead of just shifting to a new technology. Furthermore, digitally mature organizations are always moving forward in the digital spectrum, identifying new opportunities and adopting new strategies.
In order to asses a company’s digital maturity, it is important to measure its readiness to combat any sort of disruption. This disruption could be in the form of a new trend, new technology, new entrant or a combination of the three. While several factors go into measuring this readiness, a few key parameters can help organizations get started. These include:
- The efficacy of your digital marketing campaigns in driving tangible business growth
- The alignment of your digital strategies to deliver a strategic advantage over competitors
- The readiness to adjust strategy based on new data
- The integration of digital technologies with important key performance indicators (KPIs)
Building Digital Maturity And Capability
While 87% of executives believe digital technologies are set to disrupt their industry, only 44% are actually prepared for such a disruption. Building digital maturity involves patience and careful planning that accounts for different kinds of assets and capabilities.
Each company will have a different roadmap for building digital capability, depending on where they are in the journey and their end goals. However, there are three key areas upon which a digital transformation roadmap can be built:
1. Secure, On-Demand Infrastructure
Companies need to find a balance between security and flexibility. As data and the importance of it grows, there are concerns over data ownership and infringement of privacy. Last year’s Facebook-Cambridge Analytica scandal is a good example of that. Businesses need to identify how they can leverage the cloud for flexibility without compromising on security.
2. Data Optimization
In order to become more digitally mature, businesses need to hone data such that they can identify new opportunities and trends, and utilize them more effectively. Data optimization involves taking into account structured as well as unstructured data to gather micro insights in order to directly gain an edge over the competition.
3. Talent
According to research, finding and retaining the right talent is the top-most challenge companies face on their road to digital transformation. Likewise, almost 90% of people report having to update their skills almost every year.
In order to be on the path to digital maturity, it is important that companies cultivate more flexible training programs that allow them to build in-demand skill sets. A more flexible workforce that leverages the capabilities of digital technology can also help build a more productive, satisfied workforce. This could be done with the help of telecommuting, having a ready database of freelancers, and using collaborative platforms such as Trello to enhance communication and productivity.
Start With One Function
For businesses that are just starting their digital transformation journey, it is important to focus on just one function to begin with. Build a solid foundation using key areas for digital transformation before moving to the next function.
For instance, to make the finance function of an organization more digitally mature, transactional processes could be automated to cut costs and increase productivity, chatbots could be used for inter-departmental access to financial data, and training programs could be reimagined to focus on more digital skill sets.
Once the chosen function starts to show tangible results, it becomes easier to convince other departments to follow suit. It is important to keep in mind, though, that digital maturity isn’t a destination. It is a continuously iterative process that relies on agile processes, risk-taking and careful analysis of wins and losses.
With budget spends on digital transformation expected to rise sharply, it is important for businesses to adopt a digital maturity model that suits their current state and end-goals.
