It’s a term that could mean anything from ‘going paperless’ to ‘changing the way your business operates’. It affects everything from intraorganizational communications to the way you work with suppliers and customers. It is digital transformation and it’s something many organizations are either late to the game on or struggling to catch up with.
Defining digital transformation
Business leaders expect and demand certainty, and any form of transformation is inherently uncertain. However, when it comes to planning the long-term goals of a company, knowing how, when, and why you need to take risks and dive into uncertainty is necessary for growth. The path to and through digital transformation is one of those risks, and in fact, it’s even more risky to ignore transformation than it is to embrace it. So… What is digital transformation?
What defines digital transformation?
There are many ways to define digital transformation, but nearly all of them revolve around doing more for your business by leveraging technology.
“Digital transformation is the changes associated with digital technology application and integration into all aspects of human life and society. […] Digital tools and technology are changing how people interact, and in turn this changes how people do business. […] In a more business-related aspect, digital transformation refers to how a company has or is transforming its core business processes using digital technology in order to gain competitive advantage and gain differentiation in its market segment.”
Wikipedia adds that “Digital Transformation (DX) is the novel use of digital technology to solve traditional problems. These digital solutions enable inherently new types of innovation and creativity, rather than simply enhance and support traditional methods.”
Challenges in defining the term
Like many terms dismissed as jargon, the reason companies fail to embrace digital transformation is because digital transformation journeys rarely follow the same path from company to company and have no clear endpoint.
Digital transformation isn’t a standard process
A digital transformation journey is going to look different for your company than it will for a competitor—even if you are in the same industry or have similar revenues or valuations. Some companies are much closer to digitizing processes and others are still much further away, making it hard to deliver exact steps. Knowing this, there are general focuses and goals present for all companies looking to transform their business, some of which we will discuss below.
Digital transformation has no endpoint
Added to the fact that there is no clear starting point, there also isn’t a clear endpoint. The thing about digital transformation is that it’s not a ‘caterpillar and butterfly’ metamorphosis. You’re not going to walk in one Monday and be transformed. Think of digital transformation more as a snowball rolling down a hill—it gets bigger and moves faster as it gains momentum.
In essence, digital transformation means that you are moving faster and embracing more digitalization than the status quo and are able to do more than your competitors. However, as businesses move faster, it becomes harder to catch and keep up if you don’t take steps in the right direction.
Two key components on the road to digital transformation
As mentioned, it’s hard to make a plan for something with no starting or ending point. However, recent MIT research found that companies that succeed in digital transformation have plotted their course along two dimensions—operational efficiency and customer experience.
“They knew they had to become great in operational efficiency: increasing automation, standardization, reuse and productivity. And at the same time, they were really ramping up on their customer experience,” said MIT research scientist Stephanie Woerner, who works on business transformation at MIT Sloan’s Center for Information Systems Research (CISR) with Chairman Peter Weill. In other words, digitally transformed companies are “ambidextrous,” she said — both efficient and big on customer delight.
Woerner goes on to explain the four quadrants of digital transformation and four pathways to success:
- Focus on a platform and make solution-based decisions.
- Encourage a minimum viable product approach and think like an early stage company looking for promoters, not just customers.
- Keep your team on the same page by providing the right information at the right time to the right people using dashboards.
- Focus on agility, making big changes with big ideas.
Many ways to the end goal, but the first step is the cloud
As you look to transform your business, the process may seem complex. However, one of the best steps toward a transformed business is to find a solution-based product that can deliver the platform you need, offer dashboards, allow your business to focus on customer experience, and ultimately get your business on the right path quickly.
In a recent whitepaper from Mint Jutras, this leading analyst firm explored the path to digital transformation and the value of acting now. This guide, “Digital Transformation: It’s Time to Develop a Sense of Urgency,” will discuss:
- Why technology adoption is like a hip replacement, not brain surgery.
- How technology is leveling the playing field for smaller companies.
- Why it’s dangerous not to be concerned about disruption.
- The surprising truth about spreadsheet-dependency in today’s companies.
- Shocking stats on how few companies have invested in digital.
Click here to download this free guide, courtesy of Acumatica.
At NexTec, we have spent decades helping businesses like yours to leverage the right technology to and through their digital transformation journeys. While one single solution may not be a cure-all for your entire business needs, one of the best places to start is to leverage ERP solutions that can deliver better results and more visibility. Get to know more about our work and contact us for a free consultation.