What is Business Digital Transformation?
Digital transformation is a procedure undertaken by a business to adopt digital technologies to change its areas of operations to improve efficiency, enhance customer experiences, and create new business models. The cultural change involves automation processes, data analytics techniques, and the development of digital platforms to improve customer engagement.
Is digital transformation necessary?
In the business fraternity, this digital strategy has no boundaries. You can use it on any business, whether an SME or Large Enterprise. Statistics show that the global spending on digital transformation amounted to $1.18trn in 2019. In 2021, the value was at $1.31trn, rising by 11%. In the United States alone, the digital transformation market was valued at USD 285.15 billion in 2023. Forecast expectations suggest that by the time we get to 2032, the U.S. digital transformation market value will grow to USD 2,124.49 billion. Why are global brands investing so much money in this migration?
The investment proves that the returns and business gains from technology adoption are profitable and worthy. Several reasons are driving the need for digital transformation, and they are:
Customer Experience
During the COVID-19 pandemic, businesses needed to engage with customers while meeting their needs without a physical presence, forcing companies to seek digital innovations to solve this challenge. Of course, social media platforms were not the solution, so businesses had to develop digital platforms to satisfy customer needs. For many companies, these platforms created more opportunities from which companies tap into to this date. For instance, after applying these modern business solutions, it was clear to firms that their custom platforms improved customer experience, especially in real-time mass communication and seamless service delivery. Moreover, the ability to hold detailed information reduced the need for time-consuming customer consultations.
Through this digital strategy, the producer-consumer gap is narrower than before, enabling entrepreneurs smoother market access. Recent reports by Gartner’s survey indicate that 60% of CEOs globally feel that adopting technology is the new trend for increasing revenue and expanding market access. In other reports by Alida, more than 39% of top-performing business brands are well-equipped with digital environments. So, why don’t you make your business part of top-performing brands? Global Tech Trends conducted a survey in America stating that 85% of entrepreneurs agree digital transformation is their top priority. After engaging in similar conduct across Asia, 80% of entrepreneurs’ responses also agree on implementing this transformative technology.
Enhanced Efficiency
It is very convenient when a business produces quality goods and services without spending too much time and resources. It is impossible to achieve this with limited human labour since man is to error. Digital transformation innovations are proof that it is possible to enhance efficiency. Their adoption enables business process automation that replaces slow and inaccurate manual operations. You will be less worried about quality output once your production is digital and automatic, with the ability to detect errors at any point.
Scalability
Websites, cloud computing and mobile apps are digital tools that can broaden a business’s market reach. Moreover, they are easily adjustable depending on market changes. For instance, if a firm intends to expand, these digital tools can handle increased data volumes, user interactions, and operational complexity without compromising performance. It is because they have the agility to scale resources up or down in response to modern business solutions.
Initially, Netflix was a rental service but had to find a digital strategy due to consumer preferences. To maintain business efficiency and handle millions of simultaneous streams globally, they opted for technology adoption by investing in AWS cloud infrastructure. With this modern business solution, it was possible to adjust their server resources based on demand.
Informed Decisions
An informed business decision empowers an Organization to strategically implement transformative technologies that align with its goals and needs. General Electric invested in industrial Internet of Things technologies and data analytics to accelerate manufacturing processes and improve operations. Through the digital innovation of analyzing performance data from their machinery, they managed to predict maintenance needs, reduce downtime, and enhance product quality. The analytic approach became a habit that transformed their traditional manufacturing model into a more agile and technology-driven operation.
Accuracy
Business process automation transforms data from various sources into a single view, improving credibility and awareness. The approach helps in decision-making since shareholders clearly understand the current status of a company’s affairs or products. For instance, you have seen how the connection of trended financial accounts with automated supply chain applications means that planners can obtain real-time information concerning available stocks, future demand and its financial impacts on business.
Production cost
An implementation centred on automating several tasks and systems ensures that they are not manually operating, saving costs. For instance, completed and processed invoices and payments eliminate the need for extended paperwork and lessen the possibility of mistakes. Moreover, business process automation benefits the purchasing process by making it efficient by providing analysis of process management and detecting possible opportunities for cost savings.
Digital Transformation requirements
This technology adoption requires several needs and necessities for a successful conversion process. These needs and necessities are applied depending on the priority level and efficiency. Below are some of the requirements to consider before digitizing your business, and they are
Sufficient Technology infrastructure
A successful transformative technology process requires adequate technology infrastructure. Before anything else, ensuring your business has sufficient technology infrastructure is necessary. The technology infrastructure is the foundational component encompassing the hardware, software, and networks required to support and drive modern business solutions. The technology infrastructure you need includes cloud computing platforms or devices that offer scalable storage with processing power and advanced software solutions crucial for optimizing operations and gaining actionable insights. Furthermore, it should be robust enough to ensure reliable and secure connectivity across Organizational units and external partners.
For instance, Walmart needed to improve its technology infrastructure to support its vast supply chain and e-commerce operations. It invested in cloud technology, advanced data analytics, and artificial intelligence to compete more effectively with online retailers and improve its market position. Doug McMillon, the CEO of Walmart, stated, “We are investing in technology and infrastructure to provide customers with an omnichannel experience that seamlessly integrates online and in-store shopping. This technology infrastructure is critical to our success.”
A strategic vision
This vision represents a clear strategic perspective about fulfilling the business technology integration objectives in a mid-to-long-term perspective concerning the business objectives and growth. Ideally, it should act as a guide on how to incorporate technology adoption into the different functioning areas of the firm. Also, it should establish its perspective on the orchestration of the business technology integration to direct decisions and resources. It is the stage where one defines the relevant sectors that can benefit from technology, offer better solutions, and improve client satisfaction.
Before technology implementation, General Electric planned to establish itself as the industrial Internet market leader, combining current commercial tools with industrial devices. The idea was to have General Electric Digital, a segment that would establish software to use across industries for better efficiency and new profits.
Ideally, a visionary business integration plan should:
(i). demand uncomplicated changes for the staff to understand quickly.
(ii). be affordable and manageable.
(iii). This one will ensure that the site is not accessible to hackers.
(iv). are integrated and contain Integration Capabilities for successful connection with other tools.
Management and staff training
The employees, especially the management officials, should embrace guidance and support towards the digital strategy migration. Training is a systematic way through which you discuss the social part of change management, including emotions and difficulties encountered during this kind of transformation process. Further, it should explain the purpose of change, its advantages, and its effects on working processes. At the same time, very vigorous efforts exist to encourage all the staff to develop new competencies and learn new processes if the workflows change. However, the training personnel should foster a positive attitude toward change efforts, address resistance, and engage the stakeholders in change efforts.
Microsoft also embraced a remarkable culture change under Satya Nadella, who made Microsoft embrace change and have the right strategy for growth. It encompassed activities such as leadership training and revamping its culture by redesigning the company values to ensure priority to employee diversity and inclusion. Satya Nadella said, “Our industry does not respect tradition, it only respects innovation.” IBM upgraded from a hardware giant to an industry solution provider with changes in every process and business model. Furthermore, the company management offered extensive training opportunities, reinforcement, and interaction to assist the staff adjust changes.
Advantages of business digitalization
Business digitalization aims to make the management and running of businesses easier and cheaper. Let us go through the various advantages brought by business digitalization.
- It eliminates time and money-consuming operations to save time and resources.
- Automates business operations, reducing human error and losses.
- It improves quality production by optimizing workflows.
- Reduces the production cost by eliminating operations needed by human labour.
- Improves customer experience and engagement when accessing a business.
- Increases revenue through online presence and tools that market and sell business services and products.
- Enables data-driven decisions and provides data analysis insights.
Causes of digital transformation failure
Business automation process picked up from 2010 to date, recording mixed results across different brands. Unfortunately, only 30% of businesses recorded a successful transition. What could be going wrong? The foremost thing is understanding that digital transformation is not just about integrating technology into a business. Business digitalization is a process that requires research, engagement, and cooperation. Let us have a view of the causes of failure in business digitalization.
Lacking a well-outlined digitalization structure: A successful plan is not just any plan but a well-organized procedure of events. Digitalization is a gradual process over time, and every step taken should have a sufficient allocation of resources. The digitalization process should achieve expected targets at affordable costs.
Inadequate digital infrastructure: Digital infrastructure includes computer devices, software programs, applications, etc. They are digital tools that fulfil minor tasks contributing to digitalization processes. They automate resource-consuming tasks to achieve accuracy and speedy production. For instance, you cannot include Artificial Intelligence to improve customer engagement without Internet-connected devices and a social platform for engagement.
Lack of Teamwork and Employee Resistance: Successful digital transformation procedures require every party to play their role well. In a firm, the marketing and sales department cannot increase revenue when the manufacturing department is not using digitalization tools appropriately to produce quality products. In another example, analysts who do not use analytics tools appropriately to develop necessary insights will drive the company to wrong decision-making.
ICT illiteracy among staff/ lack of training programs: Employees engaging in digitalization tools without proper operation knowledge cannot produce the desired results. Before integrating a digitalization tool into your business, involve your staff in training.
Conclusion
The above article defines and explains business digitalization with suggested approaches. Business digitalization begins and ends with target clients. It aims at easing business operations and elaborates on the current procedures to sustain a business in diverse market conditions. You can comment and help us provide more accurate information in the comment section below.
