Unlocking Success – How to Develop an Effective Digital Transformation Strategy
March 2023
Digital transformation is no longer just a trendy term in today's quickly evolving world.
For businesses and organizations to succeed in the digital age and remain competitive and relevant, it has become essential to have an effective digital transformation strategy.
Without a defined strategy in place, starting a digital transformation journey might result in resource waste, inconsistent efforts, and even failure. This is why it is vital to design a well thought out digital transformation strategy that is in line with your business goals, and one that enables you to use the appropriate digital tools and technology to get an advantage over your competitors.
We're going to provide you with an overview of how you can develop a successful digital transformation strategy so that your business has a competitive advantage in a world that is going digital.
Challenges of Implementing Digital Transformation
Now, it takes more than just digitizing certain processes or using certain digital tools to say your businesses is fully on the digital transformation train.
While digital transformation has numerous advantages for companies, there are also some challenges you may face.
Resistance to change from employees
Ensuring data privacy and security
Dealing with legacy systems
Inadequate resources
Lack of expertise
Poor planning
While these indeed may pose challenges to implementing digital transformation for some businesses, it is relatively easy to reduce their impact if a business follows an effective strategy for going digital.
Crafting a Digital Transformation Strategy
Companies already spend $1.2T on digital transformation (DX), and are projected to spend a whopping $3.4T by 2026. This should not be surprising given that a majority of businesses report a very quick rise in revenue after they adopted a digital strategy.
With a little help and guidance, you can avoid the pitfalls businesses make while leveraging the advantages. Here's what you will need to do if you want to develop a digital transformation strategy that will end up being a net positive for your company:
Audit the Current State of Your Business
A thorough assessment of where your company is right now when it comes to digital transformation is the first important step to take.
Decide on the Scope
Identify the areas that require an audit for digital transformation. These are usually:
Customer experience
Internal operations
Supply chain management
Data management
Staff engagement
Asses the Current State
Analyze your business's current digital infrastructure, applications, and tools. This analysis can be used to find holes, overlaps, and potential improvement locations.
Identify Areas for Improvement
Examine the workflows and business processes to find opportunities for automation and the use of digital tools to boost productivity and efficiency.
Evaluate Data Management
Assess the efficacy and precision of the systems and procedures used by your business for data management. This can help in identifying opportunities for improvement in data gathering, storage, and analysis.
Understand Customer Needs
Analyze customer involvement and feedback to better comprehend the demands of your customers and both their preferences and expectations for digitized features, processes, and experiences. This should show you where there are opportunities to enhance user experience on digital channels.
Consider Industry Trends
“Innovation needs to be part of your culture. Consumers are transforming faster than we are, and if we don't catch up, we're in trouble."
- Ian Schafer, co-founder and CEO of Kindred
Keep up with latest market trends and cutting-edge emerging technologies in order to spot opportunities for innovation and gaining a competitive advantage. Technology is evolving rapidly and it necessitates staying on top of its progress.
Post-Audit Steps
After you are done with your audit, it is time to move onto several post-audit steps that will further assist you in developing an effective digital transformation strategy.
Develop Goals and a Roadmap
Based on the results of your audit, create a roadmap and timeline for implementation that specifies the goals, timeframe, and resources required for putting digital initiatives into action in your business. Create your vision and set goals, developing a clear and concise vision for how you will go digital. Set specific, measurable, achievable, relevant, and time-bound (SMART) goals.
Implementation of the right digital technologies in your business will provide numerous benefits, but they need to make sense for your business. Avoid the temptation of adopting this or that technology just for the sake of it. Make sure you actually can leverage it effectively and that it is in alignment with your overall business strategy.
Define Your Strategy
You will have to get down to brass tax at some point, meaning identifying the specific digital technologies and tools you will need to achieve your goals. This will likely require some research on your part, especially because a tool that was the go-to a few months ago may now have been replaced with something better.
Outline the implementation process so your team is clear on how the specific tools will become integrated into your business. After that, you can also define metrics for measuring success, such as key performance indicators (KPIs).
In short:
Identify the digital tools and technologies.
Select the right digital tools and technologies.
Understand the features of these tools and technologies and learn how to use them.
Engage Stakeholders
Include important stakeholders in the digital transformation process to ensure you have their support and backing. This includes:
executive leadership & decision-makers
employee representatives
customer-facing teams
external consultants
IT department
suppliers
partners
clients
Conduct a Gap Analysis
Identifying where gaps exist between the current state and the desired outcome across your business. Your audit should provide data for this part of the gap analysis, and where it does not then you should conduct further inspection
Next, prioritize the areas that need improvement and modernizing within a digital framework, in both the frontend and backend of your business. One effective method of organizing your priorities can be done by looking at what is costing your business the most in terms of expenses and opportunity costs.
You Have a Digital Transformation Strategy! Now What?
Congratulations! You're successfully developed and adopted your digital transformation strategy. You can now rest easy knowing everything is going to be smooth sailing into new horizons of success, right? Not exactly.
While your digital transformation strategy, if applied well, will certainly improve efficiency, reduce costs, and automate processes, it still requires maintenance and management to ensure it continues to work for you and not against you. Remember, technology is an ever-evolving industry and it does require some attention or else you'll get left behind using obsolete digital tools and processes.
Monitor Progress
To make sure your digital transformation efforts are in line with business objectives and producing desired results, it is vital to regularly monitor and assess their progress. Is something not working the way you had hoped? Identify why that is and then decide whether it needs to be tweaked or simply discarded.
Make Adjustments & Continuously Improve
"Digital transformation is a journey, not a destination. It requires constant adaptation and iteration."
- Charles Araujo, Principal Analyst at Intellyx
Regularly review and analyze the progress you are making within the areas of your business that you implemented digital tools, processes, and functions. Establish processes for continuous improvement.
Make sure you are paying attention to where the market is heading so that you can anticipate where there is a high degree of possibility for digital disruption. You want to be the disrupter, not be the disrupted.
You will inevitable identify what is is a value-add and what is not. Make adjustments to your strategy based on your review and analysis and always be flexible and adaptable. That is how you stay ahead of the curve in this digital age.
Get Your Team On Board
Digital transformation is not an overnight process. It takes time, resources, and most importantly, commitment from the entire organization."
- Altimeter Group
The single most important task for firms undergoing its transformational change is commonly cited as being the development of a digital transformation culture.
Leaders must foster an organizational culture where stakeholders (including employees) are receptive to ongoing change and where improvements are made consistently. Everyone must be willing to recognize outdated procedures, get rid of them, and replace them with more effective ones. This is how progress is made and indeed has always been the case. Build a culture of innovation. You can even go as far as establishing an innovation team.
Unfortunately, most businesses find it difficult to create an internal culture that can accommodate change, especially the larger they become. While 87% of companies believe digital transformation is a competitive opportunity that can help them disrupt their industry, 70% of digital transformations fail due to lack of employee adoption and resistance to change. That's a jarring amount. Thankfully, there are steps you can take, such as hiring a Chief Digital Officer, which one in five of the 2,500 largest companies in the world have already done.
Without paying attention to such important cultural requirements, an organization may adopt emerging digital technologies that allow for more effective or efficient processes, such as ordering raw materials, taking inventory, or handling payments, without actually changing how the organization functions, what it has to offer its stakeholders, or the value it generates for everyone involved. When you get your team on board, everything else will fall into place.
Conclusion
“Digital transformation is not just a buzzword. It's a necessity for businesses to survive and thrive in today's digital age."
- Naveen Jain, entrepreneur and founder of InfoSpace
Developing an effective digital transformation strategy is crucial for businesses to stay competitive in the rapidly-evolving digital landscape.
When you have a solid working plan, your business can better customer experiences, process improvements, and revenue growth. However, simply putting a plan into action is insufficient. The strategy must be continuously monitored and improved to make sure it is accomplishing its objectives and changing with the market. This iterative process enables will enable you to optimize your efforts in digital transformation and maintain agility in a constantly evolving digital landscape.
It is high time to embrace digital transformation as a way of staying competitive and meeting customer needs and demands. You may even find yourself finding relief from doing so due to how your business will transform thanks to the incredibly efficient, streamlined, and optimized digital tools available today. After all, as CEO of Microsoft Satya Nadella emphasizes, "Every company is a technology company."
This was an overview of how your business can develop an effective digital transformation strategy, but if you are looking for a bespoke and more detailed strategy, Pacific Advisory can help. Contact us today and start a conversation so we can help you leverage the massive benefits going digital can have for your company.
About the Author
Paul Lenda is a Digital Advisor at Pacific Advisory. He has a decade of experience working and operating within the blockchain industry, and advises on the responsible use of emerging & digital technologies, as well as adoption of regenerative systems, in a way that leverages benefits, reduces risks, and optimizes processes, resulting in improved socio-economic models.