Today, most successful companies and organizations are undergoing a process of digital transformation — or they’ve already completed it to a certain extent. The International Data Corporation claims that spending on digital transformation processes will reach more than two trillion dollars.
It seems that a majority of executives are in agreement on one thing: the digitization of the world is going to change how their companies and organizations operate. According to McKinsey, upwards of 90% of all executives think that a digital transformation will be essential to the fulfillment of their long-term strategic goals.
Why do companies need digital transformation?
While the process of digitization in organizations has been going on since the dawn of personal computing, the current digital revolution is a relatively new phenomenon. The contemporary rate of technological progress is fast enough to leave outdated organizations to lag behind others even more — and it’s only getting faster.
Plenty of technologies and projects are making digital transformation more urgent than ever before. Some projects, like the building of a global intranet, are more directly tied to corporate functioning; while others are more far-fetched but equally important in the long run — artificial intelligence and automation, to name a few.
And these technologies are providing businesses and stakeholders with more and more areas for groundbreaking application by the day. This means that all corporations will have to perform a fundamental introspection regarding their organizational setup; in the future, digital will have to become embedded in corporate DNA to ensure competitive success.
What is a digital transformation strategy?
Seeing as the demand for systematic digital transformation has only grown in the past decade — creating an effective strategy for digital transformation has become a discipline unto itself. Indeed, digital transformation powered by agile methodologies is a great example of that; though there are other methodologies used by various organizations.
Unfortunately, a majority of companies have not yet taken the necessary steps towards developing a digital transformation strategy capable of seizing many of the new opportunities created by advanced tech and simultaneously dealing with the upcoming challenges.
Today, most CEOs wouldn’t say that their organizations are fully prepared for a digital transformation. While many companies are prepared to digitally enhance their services or products; few understand the organizational implications of technology when it comes to their own company.
Why is digital transformation so important?
If the long-term implications of digital transformation do not spark the right amount of urgency; there are some positive benefits to undergoing such a process that is more immediate as well. For instance, companies that adjust their organizational setup for the digital era may triple their shareholder returns over the span of the next five years, in contrast to those who do not strategize for these kinds of organizational changes.
How do you manage digital transformation?
One of the biggest challenges of managing digital transformation comes from the fact that this process is quite volatile and unpredictable. Most of this stems from the rapid pace of technological advancement; but as the COVID-19 pandemic has shown, there are completely uncontrollable events that can act as catalysts for digital transformation as well.
Overnight, the pandemic has left plenty of businesses worldwide scrambling to adjust to the newfound reality of virtual communication; obviously, those that were already in the midst of the process of digital transformation have fared better. And in an era where revenues have suddenly dried up across the board, remaining competitive with a technological edge has been a challenge.
All of this points towards one fact — digital transformation cannot be a superficial process. Instead, it needs to be specific and deeply revolutionary within your organization. Therefore, you need to ask all of the right questions before embarking on this long journey of reorganization.
Firstly, how has your business model been affected by technology up until now? Has it been disrupted, or is it at significant risk of disruption in the future? Also, how competitive is your company in terms of digital transformation; have your competitors moved along farther? Finally, how will this affect your overall customer experience — your end-users or clients?
All of these (and more) are valid points to consider while preparing your business for the process of digital transformation.