4 Key Questions to Ask When Your Business Embarks on Digital Transformation
Businesses have encountered several technology waves, starting with the mainframe revolution in the 1960s to the decentralized computing wave of the 1970s, and from the advent of PCs in the 1980s to the rise of client servers in the 90s. The cloud and mobility represent the latest evolution of technology.
Such digital disruption is now a fact of life for almost all businesses. Enterprises no longer confront a question of “if,” but rather concern themselves with the “when” and “how” of digital transformation. A recent KPMG and Harvey Nash survey reveals 62% of IT professionals opine their business was already being disrupted or would be disrupted within the next two years. However, only 27% of respondents confined the presence of an enterprise-wide digital strategy.
Digital disruption is much more than co-opting new technology to the business. Businesses need to create entirely new competencies and co-opt it to incumbent legacy cultures and operating models. Here are four major questions to ask, to smooth the transformation process. These four questions also constitute a basic checklist for the digital transformation process.
1. What are the objectives of the Digital Transformation?
Embarking on a digital transformation journey is doomed to fail unless the enterprise has the end in mind, and defines a coherent strategy upfront. Implementing new technologies for the sake of it, or just because everyone else is doing so, is an exercise in futility, and may end up counterproductive by disrupting the well-entrenched ecosystem with nothing to gain in return.
Have a clear idea of the processes where digital transformation is to set in, and how the transformation would improve the process, add value, and how the intervention would make the lives of the stakeholders, from employees to customers, and from managers to owner better.
Some of the processes where digital intervention can automate the process, or make the process seamless and more accurate include form modeling, document integration, report generation, role-based accessibility and user assignment and reassignment, email notifications, task prioritization, and more. However, the possibilities are endless, limited only by imagination.
2. How much Customization will be required?
Most businesses face an issue of integration when they indulge in digital transformation, especially when the transformation involves multiple pieces of commercial software. Off the shelf software, for any function, be it operations, HR, Finance, data analytics, CRM, or any other function, will never suit enterprises perfectly. Seamless workflows will require customization as a rule.
Successful digital transformation takes place when the enterprise knows the extent of customization required. They audit the existing state, have a clear-cut idea of the desired state, have a roadmap to transform from the existing to the desired state, and map the software to the journey, to make sure the software works for the business.
A related consideration is the time-frame for the migration. A Successful digital transformation process progresses as per a predefined time frame, making sure the change does not disrupt business operations. A related challenge is slow down of operations when the new digital systems set in, owing to the learning curve. A well thought out digital transformation process factors in the delays associated with the learning curve, and pre-empt contingencies which may cause the business to screech to a grinding halt when the new software goes down to a bug.
3. How to Quantify the Value of the Digital Transformation Initiative?
Today’s businesses are driven by profits or returns on investment. The top management or owners support all change initiatives, including digital transformation initiatives based on the value it creates to the enterprise.
At the internal front, digital transformation generally makes internal processes seamless, increasing productivity and efficiency. At the customer facing end, digital transformation makes things easier for the customer, unlocks new possibilities, enable customers to buy or contact support in a much better way, and offers flexibility. However, even when the value created by the digital transformation is obvious, it still has to be quantified and made explicit. The harbingers of change need to not only know about the technologies to implement but also how to measure the value created by such initiatives. The end goal of digital transformation is to boost revenue, profitability, and investor value. Some of the factors which can be measured to link the digital transformation to such ends include inventory, human capital productivity, asset utilization, and other Key Performance Indicators (KPIs). Tracking some intermediate indicators, such as sentiment and engagement is also handy.
Today, several tools make quantification easy. Nucleus Research estimates every dollar spent on Customer Relationship Management (CRM) system implementation returning a whopping $8.71. Forrester’s Total Economic Impact (TEI) tool enables enterprises to quantify the potential benefits enterprises gain by implementing a stack of technologies that communicate and work together, integrated by a framework of operational transformation methodologies.
4. How to Orchestrate the Change Initiative?
Regardless of whether the initiative is a digital upgrade or digital transformation, it is essentially a change process, and change requires strong leadership.
Implementing the digital transformation requires a well-defined team with a narrow scope and a cross-functional mandate. The harbingers of digital transformation need to make a tough call on the team.
Many of the team will resist change, accustomed as they are what they have always been doing. The digital transformation initiative requires clear cut consideration on how to implement change in the least disruptive way, and chalk out strategies on how to overcome resistance to change. Training the rank and file for familiarity to the new digital processes, and factoring in a learning curve are the basic requirements, but there is also a need for clear-cut communication on why the digital transformation initiative is being carried out, and the benefits it will bring about. Most often, the digital transformation initiative will be inevitable to keep pace in the highly digitally charged world, and for the firm to stay competitive. Today’s tech-savvy customers also demand heavy digital initiatives to be satisfied.
Estimates of digital transformation failures range from 66% to 84%. It requires a method to preempt the process from descending into madness. Roping in a sound tech development partner, competent in the digital technologies you want to adopt, and backed up by the resources and talent to implement a cutting edge digital solution, is the best way to embark on a digital transformation initiative.