IT Best Practices.
Digital Transformation: What it Really Means
Digital transformation is necessary for your company if you want it to stay on top of this ever-evolving industry. More than a trend, digital transformation is a catchall term used to describe foundational technological changes a company undergoes in order to deliver increased value to its customers.
A digital transformation strategy often includes implementing cloud services—an approach that can be vital to the process. But when considering a successful strategy, understanding the common misconceptions and mistakes to avoid is an important first step.
Digital Transformation in the Real World
In an organization, digital transformation is broadly known as the strategic inclusion of computer-based technologies with the goal of staying relevant and competitive in its industry. It provides more value to the company’s customers in a world where technological digitization has become paramount to functionality and access. In turn, benefiting the customer produces a benefit to the company.
Healthcare, telecommunication, finance, and technology industries have benefited the most from digital transformation. But, in the wake of the COVID-19 pandemic, many companies, regardless of the industry they belong to, are planning to hasten their digital transformation journey. One example is the need for infrastructure that supports work-from-home culture increasing dramatically over the past 18 months.
Common Misconceptions about Digital Transformation
Understanding digital transformation is not just a job for your organization's IT department. It is an all-encompassing task for your entire enterprise—from leadership to the rest of the organizational structure. There must be executive buy-in to build a strong foundation for these changes that will trickle down to the rest of the company.
Another very common misconception about digital transformation is that it functions with the goal of reducing the human workforce. Although in the past digital transformation has had this effect, that is not its purpose. Human personnel and their skills are needed for a multitude of tasks like writing algorithms and processing the data that drives digital transformation.
Types of Digital Transformation
Because of the multifaceted nature of digital transformation, it can be divided into four types. Each of these types has a different focus but is equally important for increasing value in the organization.
- Business process transformation: This involves reinventing company processes to increase quality and efficiency.
- Business model transformation: This aims to make changes to the basic foundation of how businesses in certain industries function to provide value. An excellent example of this is the way Netflix has reinvented its business model from DVD distribution to streaming services to meet the evolving needs of its consumer base.
- Domain transformation: This involves inventing a new domain or business for a company. A kind of start-up initiative strategy is used to drive business in an additional direction.
- Cultural or organizational transformation: This is possibly the most overlooked type of transformation. It involves ensuring the mindsets of the company talent are aligned with the journey to digital transformation. Since the task of digitization is a company-wide effort, cultivating a cultural shift is of the utmost importance.
Digital Transformation Mistakes to Avoid
Being cognizant of the mistakes that could dismantle digital transformation can make success more likely. A few of the pitfalls to avoid are listed here.
Treating digital transformation as a one-time task
Digital transformation is never a one-and-done undertaking. It requires planning continuous implementation that will span through time as changes in the industry, the market, and technology arise. An effective digital transformation strategy is able to evolve to meet new challenges.
Failing to apply digital transformation enterprise-wide
A common mistake is when organizations do not implement digital transformation across all business areas. This leads to fragmented processes and slow-developing innovation.
Restricting digital transformation with business as usual
With digital transformation, agility is favored over business as usual. Reproducing bureaucratic processes into the digital realm is a surefire way to destroy your strategy. Technological advances are meant to simplify and streamline processes, but these benefits are missed if the company holds on to outdated, restrictive methods.
Expecting digital transformation to resolve underlying issues
A key to successful digital transformation is identifying areas that will be improved by the transformation but not conflating them with unrelated issues. The changes made to advance digital transformation cannot fix underlying issues in your company.
Focusing entirely on technology as a starting point
Instead of focusing on technology, determine what the business and its users need first. Selecting technology that is a perfect fit for your organization requires initial fact-finding.
Failing to use data collection to inform strategy
Your digital transformation goals should be supported by quantifiable data-informed decisions. Use the feedback from data collection to plan your next steps and then course-correct when needed.