Digital Transformation is two words that we are hearing a lot nowadays. But, what does it mean? Well, it is The incorporation of computer-based technologies into an organization’s products, processes, and strategies. Organizations invest in digital transformation to better engage and serve their workforce and customers and thus improve their competitiveness.
Hence, organisations and businesses are using the digital transformation strategy to survive and thrive in a future where technology is the key economic driver. So, let’s dive into the specifics of Digital Transformation and each aspect of it.
BCG and Digital Transformation:
The Boston Consulting Group is a global management consulting firm that offers strategic advice to leaders in business and society. The Group’s consultants are united by a spirit of deep collaboration and a global community of diverse individuals committed to making the world and each other better every day.
Founded in 1963, the Boston Consulting Group serves clients around the world from more than 20 offices on six continents. A pioneer in business strategy, BCG offers a distinctive combination of deep industry and functional expertise, creative thinking and effective execution. With its corporate and digital ventures, BCG helps clients build capabilities that transform their organizations. BCG is a partner to leaders at every level of their organizations. Its collaborative model brings together a diverse global team of thousands of top business thinkers from multiple disciplines who are committed to working closely with clients to solve complex issues and drive change with lasting results.
And, this is what Digital Transformation is, it is all about evolving your business by experimenting with new tech and rethinking your approach to common issues. A transformation does not always have a clear endpoint because it is an evolution. According to the MIT Sloan Management Review, which focuses on how management transforms in the digital age, “digital transformation is better thought of as continuous adaptation to a constantly changing environment.”
Importance of Digital Transformation:
Every digital transformation initiative has unique goals, but there is one main objective: to improve existing operations. While the process can be difficult and lengthy, digital transformations are important to help companies stay competitive in their niche. Although only 8% of global businesses have been able to achieve their business goals through digital transformation, leaders in the industry have set themselves apart through the digital transformation process.
The 2 rewards of Digital Transformation:
A recent study by Bain, involving more than 850 companies worldwide, has demonstrated that successful digital transformations have the power to significantly increase a company’s EBIT in the near term. In addition, our research shows that in the medium term successful digital transformations can make it easier for companies to seamlessly scale new digital solutions, enabling them to move beyond digital reengineering and set new agendas for innovation and growth.
While 65% of companies are having some success with digital transformation, a majority of businesses are falling behind in creating the full range of capabilities that can support competitive advantage today. The relevance of the six digital transformation success factors we identified in last year’s study is more important than ever. In our 2021 survey, we looked at how leaders are shifting their priorities to even more ambitious goals and examined the persistent gulf in success rates between companies that have been successful with digital transformation, and those that have lagged.
Benefits and Challenges of Digital Transformation:
Benefits
Although the ultimate benefit of digital transformation is future survival and strength, transformation initiatives provide many other benefits to organisations. Among them are the following:
Increased productivity and reduced labour costs are two advantages of using technology to improve efficiency in the workplace. For example, enterprise businesses, such as those that employ hundreds or thousands of workers, can provide their employees with the training and resources they need, at a lower cost, by using technology.
This improves customer satisfaction as customers may reach out to an enterprise on any available channel including mobile apps, social media sites, email and live chat options.
Businesses that use digital transformation to improve their customer experience see increased profits and innovation from using technology to broaden their communications with customers.
Challenges:
According to Gartner, although nearly all organizations—91 per cent—are engaged in some form of digital transformation, less than half of those initiatives are being scaled.
Additionally, the Everest Group found that 78 per cent of enterprises fail in their digital transformation initiatives. The firm attributed the failure rate to four key reasons: unsustainable returns, limited user adoption, abandoned projects and lack of executive sponsorship.
Legacy systems and applications – older technologies that don’t support digital initiatives but can’t be easily replaced – are one of the most difficult challenges for companies that were not “born digital.” Digital transformation is unlikely to occur if the leadership group refuses to pay to replace old technologies or fails to garner the necessary executive- and board-level support for investing in a technology overhaul.
The following are the most common reasons given by experts for digital transformation failures:
1. Low employee engagement
2. inadequate management support
3.Poor or nonexistent cross-functional collaboration
4. Lack of accountability
5. Concerns about data privacy and security
6. Financial constraints
7. Inadequate in-house skills and expertise
8. Changes in regulation and legislation
9. Adolescent digital culture
Six Success Factors for Digital Transformation:
Our initial 2020 research included internal data from BCG’s work with 70 leading companies around the world on digital transformations, as well as external data provided by 825 senior executives in a detailed survey. The study discovered six success factors that, when combined, increase the chances of successful transformation from 30% to 80%. These are the factors:
As part of an Integrated Strategy with Clear Transformation Goals, CEOs and other company leaders have agreed upon business outcomes, which are tied to specific, quantified transformation goals.
These goals call for a high level of commitment from middle-management leadership, as they often overlook and drive the transformation program.
Managers in turn identify and free up the most capable resources to adopt a driving role in this program.
Achieving a culture of agility depends on leaders actively dealing with roadblocks, adapting to changing contexts and driving mission-oriented cross-functional behavioural change into the wider organization.
Effective monitoring strategies are critical to the success of any agile organization.
A business-led technology platform is crucial to enabling organizations’ transformation toward achieving continuous improvement.
Impact of COVID19 Pandemic on Digital Transformation:
The COVID-19 pandemic prompted many organizations to limit or abandon in-person interactions with customers, employees, partners and suppliers, and to virtualize as many interactions as possible. A survey released by management consulting firm McKinsey & Co. in October 2020 reported that increased use of remote work and collaboration, advanced technologies in operations and cloud computing resulted from the pandemic.
Paul Kirvan, a technology expert, says that changes in the digital landscape due to the pandemic have led to the following occurrences:
More customer-friendly apps are being used in place of traditional software to enable self-service data collection
Advanced e-commerce platforms are being used more frequently to enable companies to modify supply chains while changing demand patterns
Artificial intelligence is being increasingly used to analyze large amounts of data from sophisticated e-commerce systems
The role of CIOs is evolving into a position where they are directly involved in achieving business goals.
How to Initiate Digital Transformation:
A digital transformation strategy is a plan of action for introducing, analyzing, and driving a digital transformation initiative forward. Your strategy will define what business goals you aim to achieve through digital transformation. For example, if you are migrating users from Salesforce Classic to Lightning, your high-level metrics for measuring adoption would be log-in rates, usage, data quality, and business performance.
Each transformation will be unique, but all transformations must address how the transformation will affect your customers and employees. By generating momentum and soliciting feedback from anyone affected by the change, change leaders can ensure that the transformation is successful. Don’t forget to include any team achievements as part of your progress tracking. For example, you may celebrate a 10% increase in user log-in rates or a new Slack group created by Beth to answer questions about the transformation. However, you do it, celebrating milestones throughout the process is important. Customers and employees alike will turn to you and your team members for guidance on the transformation. You must provide the necessary tools. Those tools may take many forms, but if you’re making a digital transformation, chances are there are digital resources that could support your transition. You may choose to use e-learning tools for training or videos that allow users to learn at their own pace. Keep in mind that transformations are an evolution, so leveraging tools that can adapt quickly, like social adoption platforms, could save you time and effort down the line.
Trends Related to Digital Transformation:
Keeping up with trends is a great way to see how you can improve your digital transformations and prepare for inevitable changes in your industry. Right now, the hottest trends in digital transformation all tie back to one thing: creating a better customer and employee experience. Although many people, employees, in particular, fear that some technology is designed to replace humans, great digital transformations involve technology that complements human work. Artificial Intelligence (AI), Robotic Process Automation (RPA), 5G mobile development, and personalized user experiences are all examples of digital transformation trends that aim to work alongside humans to do everything from improving communication to limiting repetitive work.
Conclusion:
Hence, many major corporations are transforming their business models from analogue to digital. Driven by a heightened awareness of the ever-changing marketplace, these companies are racing at an increasingly rapid pace to keep up with the latest technology trends. An effective embrace of digital capabilities is vital for these businesses, as this will allow them to cultivate sustainable business growth and remain competitive with future technological disruption alike. By 2021, it is predicted that 35% of these companies will have successfully become digital transformers, while the others will be struggling to find their footing in the rapidly evolving environment.
Ultimately, digital transformation is all about transformation in the organization’s bone structure. And you and your organization will have to decide what that means on a practical level. Like any other strategy, digital transformation involves tradeoffs. Some will inevitably seem more appealing than others and some will be more valuable to the success of your business in the long run. What’s important is to take the time to consider these tradeoffs before they are presented on a deadline, when there may not be time for debate and potential revisions. Come up with an overarching vision for transformation, and make sure everyone in your organization can understand it.
References:
- https://web-assets.bcg.com/16/00/d02d273a4021b2c6e7f1a259a1b4/bcg-performance-and-innovation-are-the-rewards-of-digital-transformation-nov-2021.pdf
- https://www.bcg.com/en-in
- https://www.bcg.com/en-in/capabilities/digital-technology-data/digital-transformation/overview
- https://whatfix.com/digital-transformation/
- https://www.i-scoop.eu/digital-transformation/
- https://www.techtarget.com/searchcio/definition/digital-transformation
- https://hbr.org/2019/03/digital-transformation-is-not-about-technology
