The race toward digital transformation for businesses began years ago. Companies in nearly every industry—including finance, insurance, retail, and others—began to pursue the bright future offered up by the worldwide web.
Then the COVID-19 outbreak came along. The crisis pushed even more companies to re-examine their digital strategies. New paradigms forced businesses to incorporate digital transformation solutions faster and at larger scale.
What Does Your Business Need in Order to Better Participate in the Digital Age?
Digital transformation is a comparatively new concept. The fact is, many organizations are still trying to figure out what it actually means.
Digital transformation is larger than merely adopting new technologies. It is more than simply modifying existing processes or creating new business models. It is a journey wherein an organization embraces a new culture and changes its business processes and structure completely to better meet the needs of the future.
Digital transformation is not an easy process. It takes months and sometimes years to execute solutions. Therefore, a comprehensive roadmap is the key to driving change in a coordinated and effective way.
Follow This Roadmap Toward a Successful Digital Transformation in Your Business
What follows are ten key steps that are essential to planning for a successful digital transformation in your business.
1. Assess Your Organization’s Current State
Start by assessing the current state of your organization and business. This means identifying the internal and external factors such as customers’ and other stakeholders’ needs. Take a look at your current business and operating model as well as the current organizational culture and its potential to adjust to such a major shift.
You can make use of frameworks such as SWOT (Strengths, Weaknesses, Opportunities, and Threats) and STEEP (Social, Technological, Economic, Environmental, and Political) to analyze the various factors.
2. Plan the Strategy for Your Company’s Digital Transformation
Now that you understand your company’s current state and have discovered the gaps to be filled, the next step involves building a digital transformation strategy. As part of your strategy, define different business scenarios and audience segments.
Then, identify the digital technologies you could use and develop an “as-is and to-be” business model. In other words, describe processes in your business as they currently are being done (the as-is situation) and then describe them as you visualize them being done in the future (the to-be situation).
With a comprehensive transformation strategy, you should be able to answer questions such as:
- How much time will our digital transformation require?
- Do we have clarity on the level of changes that we must do?
- What are the key areas of transformation that can lead to overall success in our business?
3. Set Targets
Next, set clear targets for each source of value creation. Consider revenue, employee and customer satisfaction, cost savings, and more. You can set targets, for instance, for the number of processes that will be automated, the level of personalization you want to achieve, the number of campaigns you plan to run every month, and so on.
Setting targets helps in three ways. First, you will have a clear idea of the magnitude of what digital technology can deliver. Second, it prevents backsliding if work does not happen according to plan. Finally, it keeps the focus on the process of deciding what actions to take to ensure maximum effect.
4. Secure the Investments Necessary for a Digital Transformation
The digital transformation of a business includes a series of projects that the enterprise plans to undertake. This requires significant investment.
Therefore, allocate budgets for each department and discuss the effect on business resources to keep everyone in check. Also define a process for communicating changes in the allocated budgets with your team and external personnel who might be affected by the project.
5. Partner with a Reliable Technology Firm
A skilled team is crucial to your business’s success with digital transformation. Rather than building the team in-house, it is best to hire a reliable technology partner that can implement innovative digital transformation solutions for your business.
While examining options for technology partners, focus on getting satisfactory answers to key questions such as:
- Does the company understand your vision for digital transformation?
- Will the company be able to support you in your long-term strategy?
- Does the company have the right technical expertise and experience for your industry-specific use cases?
- What results has the company achieved with similar digital transformation projects?
6. Deploy in Phases
Rather than deploying the digital transformation solution at one go, which is usually not possible, it is wise to execute the transformation in different phases.
Let’s take an example of an online retail business that needs to enhance its customers’ experience. It can either execute the whole digital transformation as a single, massive project, or it can segment it into executable phases.
For example, the retailer could start by optimizing current processes (Phase 1). Next, they could move on to digitizing new processes (Phase 2). Finally, the company might focus on integrating all digitized channels and processes together (Phase 3).
7. Start with Rewarding Projects
Start your company’s digital transformation journey with projects that are less complex and financially more viable. The objective is to start receiving a return on investments as early as possible.
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Moreover, don’t wait for all existing projects to be complete before you measure the final success of your transformation initiative. Each of your smaller digital transformation projects should have a beginning, a middle, and an end.
Moreover, each smaller project should have a goal of its own that you measure at predetermined intervals. Then, if things go out of control, you can make changes and take the necessary actions without hampering the growth of the overall initiative.
8. Build Capabilities
Modernizing core operating infrastructure is important for your organization. This will be critical for enhancing digital experiences for both customers and employees.
Additionally, focus on creating cohesive training programs to train your existing employees. Also hire new talent with the latest technological skills.
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9. Prepare Your Organization for a Digital Culture
There is a common misconception that if a company upgrades its technology, digital transformation is complete. The reality, however, is that more than technology, digital transformation is about organizational adaptability.
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According to research from McKinsey, 46% of financial services executives feel that cultural change is the biggest challenge they face in pursuing their digital transformation strategies.
There is so much that changes in an organization with the execution of new digital strategies, and these changes have a big effect on the daily work lives of employees. Therefore, it is not surprising that employees feel skeptical about adopting new ways of working. After all, human beings have a natural tendency to resist change.
But as a business leader you need to be ready to address these challenges and prepare your organization for the coming cultural shift.
10. Adopt Agile Ways of Working
For digital transformation to succeed, your organization should move away from the traditional matrix structure with its rigid functional boundaries. All the departments within your organization should adopt an agile approach to working. This will lead to greater efficiency.
The Age of Digital Transformation Has Arrived
Digital transformation is a fundamental change that companies across all industries will have to adopt sooner or later. While the journey is complex, establishing and implementing a roadmap as a digital transformation guide will help you reach your destination securely and effectively.