Digital transformation is integral to running a business in a technology-driven global economy. The Influence of digital transformation is evident globally, with spending projected to hit $1.8 trillion in 2022 and a further projected increase to $2.8 trillion by 2025. These indications reiterate the crucial role of digital transformation for businesses to attain substantial growth and adeptly provide top-notch products and services to consumers.
For in-depth insights into the nitty-gritty of digital transformation, keep reading.
What Is Digital Transformation?
Digital transformation is a strategy of blending technological aids into an organization’s overall process. This leads to a change in the organization’s operation, thereby improving employees working conditions and creating value for the customers. It requires reinventing and evaluating every business component, including employee proficiency, inventory and management, service delivery, customer relationship management, and unique value proposition to shareholders. With 65% of global GDP anticipated to be digitalized by 2022, organizations with lofty growth aspirations to align with international standards must initiate digital transformation.
What Are the Main Areas of Digital Transformation?
Digital transformation entails four main areas of business operations:
1. Process Transformation
Process transformation deals with modifying the components of an organization’s operations by utilizing technology to attain unique goals.This transformation encompasses automating and expanding organizational strategies through digital technology. Many organizations initiate a digital transformation program when they want a revolutionary revamp.
When organizations undergo modernization transformation, it helps to upscale the operations, reduce wastage, increase efficiency, and incorporate modern technology. For instance, introducing automation technology may transform manual procedures in different parts of an organization, such as the supply chain, administration, and procurement. As such, the digital transformation of a company should prioritize process transformation.
2. Business Model Transformation
Business model transformation entails introducing technology to modernize the conventional business operation model.
Advancement in technology has paved the way for the massive overhaul of several business models globally across different sectors, such as Amazon in E-commerce, Apple (I-Tunes) in music, Netflix in content streaming, and Uber in transportation, among others.
These organizations, through technology, transformed their business models, creating value for employees and customers, increasing growth, and offering top-notch quality services and products globally, which otherwise might not be achievable without the initiation of business model transformation.
Companies that digitize their business through technology are better positioned to thrive. Recent reports suggest that organizations that initiate digital transformation will account for over 50% of the world’s GDP in 2023. New opportunities for significant growth abound in every sector if organizations are willing to reinvent and transform their business models.
3. Domain Transformation
Domain transformation entails the process of organizations exploring potential business opportunities in another sector. Introducing digital technology to expand or venture into another industry helps give a new outlook to the organization, defy industry bounds, and transform product and service delivery.
Amazon and Apple are great examples of firms that initiated domain transformation and reaped enormous benefits. Despite its exploit in consumer electronics, Apple ventured into music streaming service through I-Tunes, which was successful. And iTunes compliment other Apple products like iPhone. In Amazon’s case, despite its prominence in E-Commerce, the company extended its territory to a new sector through AWB (Amazon Web Services), which increased Amazon’s worth and overtook the significant players in the cloud service provision industry globally.
4. Organization Or Cultural Transformation
Organizational or cultural transformation involves updating the ethics and values within an organization in alignment with its digital transformation program. The success of a digital transformation plan in the short and long term transcends reinvention and integration of digital technology. The ethics and attitudes of the organization must conform to the transformation plan.
If an organization’s culture fails to align with its digital transformation program, consequences such as low productivity, inefficiency, a decline in revenue, inability to compete, and in the long run, imminent failure of the digital transformation program. Organizations must not only correctly communicate the plan but, through their leadership work collectively, understand, implement, and perpetuate the digital transformation program.
How To Implement Digital Transformation
1. Objective Identification
The first step in implementing your digital transformation is identifying and defining the objective of your plan. Use models for the analysis and description of your projects. Clearly define the goals, strategies, and the outcome of the transformation has to be known and realistic.
2. Data Source Management
Managing available data to implement digital transformation successfully and adequately is essential. Reliance is on managing internal and external data sources for your plan implementation.
3. Revise Operations And Business Models
Patiently review your organization’s operations and the model for digital transformation. All details of the processes at this stage are essential. Make necessary adjustments to any part of operations not aligned with the expected outcome of the shift.
4. Employ Technology For Implementation
As the term implies “digital transformation,” your organization has to employ digital technology like artificial intelligence to ensure the predicted implementation processes are successful.
5. Comply With Industry Guidelines
Do not disregard industry rules and guidelines to implement your digital transformation plan. Different regulatory bodies oversee business sectors and ensure your model complies with the industry regulations from the start of your digital transformation plan till the end.
Digital transformation through digital technology, if effectively implemented, expedites organizational goals like employee proficiency, targets within the environment, and revenue growth by 22%, according to reports. Digital transformation leads to changes in corporate operations. Still, compliance with the objectives of all hierarchies of the organization will ensure successful implementation.