While digital transformation is one of today’s most frequently-used buzzwords, the concept itself is constantly transforming. This is because every digital transformation journey is different for every company, and it can be difficult to have a single definition that applies to all.
In general terms, we define digital transformation as the integration of digital technology into all areas of a business, resulting in fundamental changes to how businesses operate and how they deliver value to customers. Simply put, digital transformation should result in more efficient operations, optimized controls, and better customer service.
With every industry getting disrupted by the “digital wave,” organizations have no choice but to transform. Many companies who are leaders in their industries do it by choice to seize opportunities brought about by new technology, innovation and trends, allowing them to stay ahead in the game. Other companies however, embark on transformation because disruption is impacting their business and they have no choice but to transform or risk falling behind or even becoming extinct.
THE KEY PILLARS OF DIGITAL TRANSFORMATION
For digital transformation to be successful, companies need to focus on six pillars beyond technology: experiences, people, change, innovation, leadership, and culture.
Digital transformation is enabled by technology, but it is only possible if the organization embraces the possibilities that transformation offers. Over and over, it is reiterated that digital transformation is a business and cultural transformation rather than just a transformation driven by technology.
PITFALLS TO AVOID
Since digital transformation is an organizational transformation encompassing both business and cultural change aided by technology, each journey should be customized to the organization undergoing transformation for it to be successful. This is why it is so important for companies to have a digital transformation strategy.
As new technology emerges, companies can avoid pitfalls such as embracing advancements too quickly, rolling them out in a way that could cause too much or too little disruption, and not properly tracking the changes within the organization.
Outlined here are five pitfalls that any company undergoing digital transformation should address or manage:
Not having a transformation strategy. Basic concepts involved in a digital transformation strategy include analyzing a company’s own needs as well as its company culture. However, transformation cannot only be driven by IT; it must be fully aligned with the organization’s overall path, goals, mission and planned future. The digital strategy must therefore support the corporate, functional and business strategy to align with the overall vision of the company, which entails analyzing the market, customizing the customer experience, and assessing the current standing and adjustment of the company’s infrastructure.
Industry experts who can bring in industry-wide knowledge of the framework can be consulted to help build the overall strategy. In the agile digital world where everyone wants to fail fast and keep moving, it does not mean that failure is a necessity; there are learnings which can definitely be made available to minimize failures and increase the potential for success.
Not setting up practical steps for change. An organization’s current state is the starting point of all transformations and cannot be forgotten while trying to embrace the trend. It is important to have a digital road map keeping in mind the state of the company as is, while outlining well-defined milestones will be key to driving change in a coordinated and effective way. Careful planning and a methodical process can help ensure actualization of goals, avoiding excessive detours and unnecessary costs.
All projects, programs methods and framework (agile) should be aligned with that road map. This reduces the risk of misalignment, redundancies, or even projects that do not address a strategic objective. Costly projects that are at risk of being scrapped can be avoided.
Not having the right leadership. Whoever will take charge of the digital transformation needs to have the right mandate for change and the influence to make it happen. This space requires great leadership, collaborative skills, and support to help leaders develop the right digital skills. This can come in the form of advice from peers, or from outsourcing expertise.
Not investing in cultural change. If we address everything but culture, any progress made will eventually regress in time. Addressing culture will allow an organization’s investment into digital transformation to take care of itself automatically. However, culture is also the most difficult to change, and cannot be transformed by a simple memo from the top. Culture is omnipresent in any organization; it is what happens every single day, how leaders behave every single day, how decisions are made, how people work, and what is incentivized.
INEFFECTIVE INTERNAL COMMUNICATION
Digital transformation will inevitably involve continued change management and ensuring that people are aligned. Internal communication teams need to work hard on campaigns to motivate employees, celebrate successes and offer encouragement when going digital feels uncomfortable or difficult.
While the road to digital transformation entails change on several levels throughout an organization and is unique for every business, the potential pitfalls are a common ground that can be anticipated.
Several companies massively invest in developing new capabilities in Digital and Omni channel (a multichannel sales strategy used to provide a seamless customer experience across digital and brick-and-mortar locations) interfaces while building analytical capabilities, allowing them to upgrade and utilize technology to deliver a better customer experience. Many others run “business” or IT transformation programs that modernize their architecture and systems, while some have started simplifying their products and processes by reassessing their operating models.
Whatever way each company decides to initiate its digital transformation journey, the end goal is the same — to enhance the organization’s business, culture and level of innovation to maintain its competitive edge by seamlessly and effectively integrating technology into every aspect of its operations.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. Any tax advice contained herein may be insufficient for US penalty protection. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Piyali RoY is a Senior Director of SGV & Co.
