WHAT IS MEANT BY DIGITAL TRANSFORMATION?

Digital transformation is the process an organization applies to integrate digital technology into all areas of business. This process fundamentally changes the way an organization delivers value to customers. Companies are adopting innovative digital technologies to drive cultural and operational transformations that better align with changing customer demands. Examples of digital transformation include:

Businesses start building digital solutions, such as a mobile app or e-commerce platformMigrate companies from on-premises infrastructure to cloud computingEnterprise adoption of smart sensors to reduce operating costs

What is the importance of digital transformation?The term “digital transformation” describes how to implement new procedures, skills, and technologies to stay competitive in the ever-changing world of technology. During the post-pandemic period, any organization must have the ability to quickly adapt to changes such as:

market entry pressuresSudden disruptions to supply chainsRapid changes in customer expectationsCompanies must adopt digital transformation strategies if they want to keep pace with technological developments.

Here are some of the benefits of digital transformation initiatives.

Improve productivity

Emerging technologies such as cloud services can save time and improve efficiency in all types of business processes. For example, the use of digital technology such as artificial intelligence creates space for employees to focus on tasks that require creativity and problem-solving. Similarly, performing data analytics using machine learning can give you new insights to achieve your business goals faster.

Improving customer experience

During the post-pandemic period, customers will expect continued availability of service across multiple channels. They also want to provide easy-to-use, mobile-friendly websites and communication systems. Here are some of the digital transformations that have a direct impact on the customer experience:

Develop mobile applications and workflowsAdopting smart sensing technology for faster order tracking and executionAdopting artificial intelligence to interact with customers in real timeImprove customer support and service with automationReduce operational costs

Investing in digital technology can greatly reduce running operating costs. It is also possible to improve existing work procedures and reduce costs such as these:

Equipment maintenanceLogistics and delivery servicesenergy expendituresHuman resources expensescustomer support expensesTypically, you can achieve cost savings because digital transformation helps you do the following:

Cancel or replace certain resource-intensive workflowsReduce spending on expensive infrastructure and equipment with managed services and cloud computingAutomate tasks using a combination of smart sensors, smart devices, and machine learning

What is the difference between digitization and digital transformation?Digitization is the process of transforming the physical aspects of business processes and workflows into digital aspects. Representing non-digital or physical objects in a digital format is intended so that a computer system can use this information.

For example, paper forms customers fill out are converted into digital forms that they complete online. Then, this digital data can be used for analytics and business intelligence. In business, digitization initiatives may include projects such as:

Updating old systemsAutomate existing paper or manual processesTransfer the system to be available onlineBeing satisfied with digitization alone is not considered a digital transformation, but it is an important first step in the digital transformation journey. Digital transformation has a much broader scope leading to a dominant cultural shift in the organization.

What are the pillars of digital transformation?For any digital transformation strategy to be truly effective, it is not enough just to adopt new technologies. Rather, the transformation must occur in all aspects of the organization for maximum impact. In order to achieve digital transformation, we propose the following as the six basic pillars of digital transformation.

customer experience

Customer-centric business innovation is one of the main pillars driving digital transformation. An emerging technology is best adopted only after it has been fully explored in the context of your customer's journey, behavior, and expectations.

individuals

Employees should feel supported, not threatened, by embracing transformational technology. New digital business models can only succeed if employees wholeheartedly embrace them. This can be achieved through training, attracting suitable talent, and retaining existing talent by creating growth opportunities for them.

Change

Efforts in digital transformation are transforming all aspects of business. Planning is crucial to avoid confusion and burnout due to unexpected changes. You must provide the tools and environment needed to achieve successful digital transformation.

innovation

Despite the close connection between digital transformation and innovation, they are not identical. Innovation is the generation of ideas that drive and direct transformation. And you'll need to provide a space of open communication, collaboration, and creative freedom that encourages employees to experiment. After testing the idea, you can go ahead with the digital transformation to implement it at scale.

Leadership

Business leaders must be proactive and take charge of all digital transformations. Think about the future, explore any technology from many different angles, and inspire others to do the same.

the culture

When digital transformation leaders implement the above five pillars, a culture of innovation will emerge. With passionate employees eager to provide the best possible customer experience, digital transformation initiatives will expand and quickly become successful.

What are the types of digital transformation?There are four main types of digital transformation that any organization can adopt:

business processbusiness modelBusiness jobinstitution or cultureLet's explore these types in more detail with some examples of digital transformation.

business process

Process Transformation looks at innovative ways to improve existing internal and external workflows. New technologies often radically change and improve processes to achieve better business outcomes.

For example, Origin Energy Ltd (Origin) is one of Australia's leading integrated energy companies. By moving to AWS services, Origin has given its customers the self-service ability to manage their energy and utility bills. It completely transformed its customer-facing digital operations with the following benefits:

Cloud computing resources to handle peak demand30% reduction in invoice processing timeHigh-performance cloud storage to handle multiple customer interactions across the website and appThese digital transformation efforts have reduced call center workload and operations costs, while improving customer satisfaction at the same time.

business model

Paradigm shift looks to reinvent the existing business model using the latest technology. It aims to provide core business services in new ways or through different channels to increase revenue growth and reach customers.

For example, Tourism Union International (TUI) is one of the largest travel and tourism companies in the world. TUI owns and operates many travel agencies, hotels, airlines, cruise ships and retail stores, all of which are operated by TUI. During the pandemic, TUI has had to reinvent itself to deal with mass cancellations and the changing travel landscape. It created new business models focused on repatriating stranded travelers while also cutting internal IT operating costs by 70%.

Business job

Industry transformation occurs when a company succeeds in capturing a new sector or field in the market. This can be achieved by focusing on digital transformation projects that expand the scope of offerings rather than just improving existing offerings.

For example, Amazon was initially a retail e-commerce platform. And then, we added our streaming platform, Amazon Prime, and we're also aggressively foraying into cloud services. Today, Amazon Web Services (AWS) is the world's largest provider of computing services and cloud infrastructure. And we used business transformation to establish ourselves in two entirely new areas.

Enterprise

Organizational transformation looks at rediscovering the entire organization or its internal culture with a focus on delivering the highest value to customers. This is the best way to outperform competitors and achieve business goals faster.

For example, Thomson Reuters is a leading provider of business information services. The company has decided to separate its financials and business operations to create a separate entity called Refinitiv. As part of this move, the company migrated hundreds of client-facing applications to Amazon Elastic Cloud Compute (Amazon EC2), completely revamping its legacy systems. It achieved this on an accelerated schedule by transforming the way its internal IT teams worked.