Digital Transformation
Digital transformation (DX) is the reworking of the
products, processes and strategies within an organization
by leveraging current technologies.
Digital transformation is simply a wholesale move to
thinking about how to digitize every part of the business,
as every part of the business now needs technology to
operate. We are moving through an era where everything
will be digital and everything needs to connect.
Digital Transformation Framework
To transform a business, there are three different
elements that act as pillars:
Customer Experience
Operational Processes
Business Models
Each of these three pillars having different
elements acts as building blocks for digital
transformation.
Pillar #1: Transform Customer Experience
One of the most important aspects of digital transformation is
altering customer experience. It includes understanding
customers, top-line growth, and customer touch points.
Understanding Customers
Companies are investing its resources to understanding specific
market segments, and specific geographies, in details. One of the
common ways is to explore social media to know what makes a
customer happy and what makes a customer dissatisfied.
Building Customer Loyalty: Companies are building new online
communities to build loyalty with customers for their services and
products. While others are working on products to build their brands.
Top-Line Growth
Companies are using innovation and technology to enhance in-person sales
conversations. For instance, digital marketing for financial companies include
tablet-based presentations instead of paper-based slide to make sale pitches.
Customer Touch Points
Undoubtedly, customer services can be enhanced significantly via digital
innovations. For instance, ICICI Bank’s Twitter account answers client
complaints quickly, helping customers avoid going physically to a brand.
Many companies are offering self-service with the help of digital tools which
allow the clients to save time and company’s money. Many companies are,
therefore, offering customer apps to enhance customer touch points. The
smartphones are linked to the customer’s profile which helps integration
across apps, SMS, and social media platforms.
Pillar #2: Operational Processes Transformation
Most of the companies extend digital transformation only
to the customer experience, however, companies
nowadays, are also realizing the strong benefits from
transforming internal processes via performance
management, worker enablement, and digitization.
Digitization
With the help of automation, companies are able to
refocus their people on more strategic tasks. Automation
allows researchers to focus on creativity and innovation
while cutting down repetitive efforts.
Worker Enablement
The tools that virtualize individual work for instance, ‘work from
home’, and ‘allow employees to talk to anyone in the
organization’ have become powerful enablers for knowledge sharing.
For example, people benefit from collaborative and networking tools.
Here people, say for instance, salespeople, can identify experts and
get questions answered in real time.
Performance Management
Transactional systems help management better understand
customers, regions, and products helping them make decisions based
on real data rather than assumptions.
Pillar #3: Transforming Business Models
Companies are redefining how functions interact and
evolve the boundaries of the firm. The major blocks of
the digital transformation of a business are digital
globalization, creation of new digital businesses and
digital modifications to the business.
Digital Globalization
Companies are increasingly transforming from
multinational to truly global operations. Digital
technology along with information is helping businesses
to gain global teamwork. This increases efficiency.
Creation of New Digital Business
Companies are now introducing digital products that go
with traditional products. For instance, sports wear
manufacturer started selling GPS to help track and report
on user’s workout.
Digitally Modified Businesses
Digital Transformation is not about changing the way we
do technology but changing the way we do business. If we
want to survive the market, it is important to transform the
way we do business.
Key Areas to Make Digital Transformation Strategy
Transforming your business is a complex process for
companies to accomplish. They must look at how the
digital age is impacting their business process and will
have to make decisions out of comfort zone.
If you are on the digital transformation process, these
points will help you make the digital transformation
strategy a success.
Leadership
Going forward companies must take active decisions to stimulate
cultural changes throughout their enterprise so they can better
respond to digital changes. Departments should work together to
create joint efforts that smooth the workflow process instead of
hindering them.
Pathfinders
The inclination towards digitalization has been ongoing for few
years now and it will continue to accelerate. There is scope for
improving the performance of the businesses. However, there is no
one way that must be done to digitally transform your business, but a
series of processes.
Digital Culture
There should be a shift in the culture of a company
that involves recognizing the value in the
transformation. It won’t be a problem for digitally-
born companies as they would be looking for
getting the most out of their digitalization
processes rather than questioning its intrinsic
value. Whereas, old and larger companies will
have to begin to look at their business in a
different way to develop a digital approach.
Digitization is the move from analog to digital
Difference between digitization, Digitalization, and digital transformation
Not so long ago, businesses kept records on paper. Whether
handwritten in ledgers or typed into documents, business data
was analog. If you wanted to gather or share information, you
dealt with physical documents — papers and binders, xeroxes,
and faxes.
Then computers went mainstream, and most businesses
started converting all of those ink-on-paper records to digital
computer files. This is called digitization: the process of
converting information from analog to digital.
Digitalization is using digital data to simplify how you work.
The process of using digitized information to make
established ways of working simpler and more efficient is
called digitalization. Note the word established in that
definition: Digitalization isn’t about changing how you
do business, or creating new types of businesses. It’s
about keeping on keeping on, but faster and better now
that your data is instantly accessible and not trapped in a
file cabinet somewhere in a dusty archive.
Digital transformation adds value to every customer interaction.
Digital transformation is changing the way business
gets done and, in some cases, creating entirely new
classes of businesses. With digital transformation,
companies are taking a step back and revisiting
everything they do, from internal systems to customer
interactions both online and in person.
Digital Transformation Examples
McDonald’s
There has been a massive shift in consumer behavior
and they are in the process of adapting digital way of
working and company processes. For instance, in 2015,
McD began installing kiosks where customers can
quickly customize their hamburgers. Also, they were
the first company to adopt Apple Pay Mobile pay and
are continuing to look for new innovative solutions
McCormick & Company
A 125-year old spice company, McCormick & Company recently realized the need
to digitally transform with an aim to remain a market leader in the modern world.
McCormick launched FlavorPrint, an online flavor recommendation tool that
visually represents the tastes of consumers. The visitor starts with a 20 question
quiz about food likes, dislikes, and eating habits. FlavorPrint takes this data and
generates personalized suggestions about recipes via algorithms.
“We are just now becoming aware of what all the digital expertise can do if we are
smart enough to take advantage of it” – Jerry Wolfe, Former Chief Information
Officer, McCormick.
FlavorPrint has been such a success that McCormick spun off into its own
technology company called Vivanda.
Disney
There is a lot going on at Disney World and Digital
Transformation makes this world successful. In 2011, Disney
World was faced with a declining rate of customer
satisfaction. That time, Walt Disney Co.’s CEO, Bob Iger
pitched his plan for MyMagic+.
This was a billion dollar investment aimed at improved the
customer experience. MyMagic+ consists of a wristband,
mobile app, and website. This allows the company to track
and analyze customer behavior so they can create a seamless
and personalized Disney World experience for its clients.
Digital Transformation Benefits
According to Digital Evolution 2015, 39% say their digital
transformation efforts have helped them make strong progress in
initiating real-time transactions while 32% say it has helped
them make strong progress in improving the efficiency of
operations. Also, 28% say digital transformation strategy has
helped them gain new users.
71% of digitally maturing companies say they attract new talent
on the basis of their digital vision.
By 2018, a minimum of 20% of all workers will use automated
assistance technologies to make decisions and get work done.
Digital Transformation Challenges
The biggest challenge of digital transformation is
developing new business strategies and models to
increase engagement and connectivity and recruiting
employees with the right digital skills .
