What’s the best way to effect a digital transformation (DX) in your business? There is no single answer, of course, because each business’s journey is unique. Each industry has its own distinct competitive dynamics and requirements for winning. However, it is still possible to identify the key success factors inherent in all DX scenarios. This article offers three steps to digital transformation, based on our experience with companies undertaking this ambitious program of change.
What is Digital Transformation?
When people ask, “What is digital transformation,” they often get a confusing or incomplete response like, “It means doing IoT” or “using big data.”
Well, those are partially correct—IoT devices can help you understand your facilities and machines. Big data just means that you have thousands of ways to look at something.
But those are just tools that you use. Digital transformation is a change in mentality—as well as a change in tools. It represents a new way of thinking and engaging with customers, co-workers, and machines.
For example, digital transformation could start with deploying your applications in the cloud—but it still needs to evolve with the company.
Defining the Term Digital Transformation
There are many ways to define digital transformation—many of which start to feel like run-on sentences packed full of jargon. In its simple form, let’s define it as “finding new ways to apply digital technologies to satisfy customers, improve decision making, and solve business problems.”
The beauty of digital transformation is that it’s all about betterment. Better business models, better use of data, and better operations. It might feel overwhelming. It might feel like there’s a lot of confusing rhetoric out there. But you’ve probably taken steps on a digital transformation journey—whether you know it or not.
Maybe This Sounds Familiar
Say you’re an OEM company and hear that a “big fish” client is in play. Millions of dollars on the line, but you’re going to have to act fast. So the engineers get to work. Days or weeks of modeling later, they have a 3D design that should meet the needs.
But here’s where transformation comes in. Now, instead of sending the design out and waiting days or weeks for a prototype, the engineers simply can turn to their 3D printer and have a physical manifestation in a few hours. If it worked, they can move onto the next phases of prototyping. If it didn’t, they received nearly immediate feedback.
Does that feel like a normal process to you—or does it feel like digital transformation? Well ask yourself the following:
- Did this empower the OEM to respond more easily to customer needs?
- Did it use technology to solve a problem?
- Did the engineers hesitate to use the technology?
- Did this change a workflow and help make the business more agile?
Though it’s not a complete change in business model, it represents a step along the way—a micro-transformation, so to speak.
In the example, the 3D printer is the tool that helps the business solve a problem and better serve a customer. The team used the tool without thinking twice, and by doing so were able to increase efficiency.
Transformation could just as easily consist of launching a customer-focused app and using data from the app to change the way you interact with the customer. It might start with a move to host data in the cloud that pushes you to a warehouse management system and ends up with a change in warehouse design. Either way, it’s always about finding out what’s next.
What Digital Transformation is NOT
So now that you know what DX could do for you, let’s explore a few things that Digital Transformation is not, namely:
- Digital Transformation is not a one-time thing: One of the biggest misunderstandings of digital transformation is the thought that it’s a metamorphosis. Technology and business processes are constantly advancing, meaning that you’re never done with digital transformation—just better than you were yesterday.
- Digital Transformation is not limited to global enterprises: The reason you hear more about big companies’ digital transformation journeys is because they have PR budgets and shareholders who need to hear about the changes. But anyone can have a digital transformation journey. In fact, DX initiatives are often easier at smaller companies who can adapt and pivot more easily than their global counterparts.
- Digital Transformation is not a standard process: There is no one-size-fits-all digital transformation process. Some companies have further to go than others. For instance, a company who has moved to a cloud-based document management system or paperless office has a bit less work to do than someone still relying on manual processes and paper.
- Digital Transformation is not only a change in software: Can software help you accomplish steps in your digital transformation journey? Of course. But without a culture in place that facilitates a new business model, you’re simply faster—not transformed.
- Digital Transformation is not easy: With so much hype and such high expectations, it’s no wonder that 84% of all initiatives fail. People need to be aware and enthusiastic about changes. Between managing expectations, keeping people on board, and working on consistent evolution, you can position yourself for success.
So How do I Go About Transforming?
Digital transformation is built on constant improvement, cultural change, and better use of technology. Depending on your industry, it could mean a complete overhaul of processes or a few small tweaks.
Often, the best way to think about transformation is to start with a picture of where you want your business to be. From here, even the smallest steps in the right direction can help you snowball toward your goals.
Three Starting Points for Digital Transformation Initiatives
For a product-based business, you’ve probably heard this concept talked about somewhat consistently over the past five or so years. But getting from business as usual to pursuing transformation is hard. From automation to smart things at your facility, here are a few areas you may want to address on your journey.
#1 – Implementing Automation
DX does not require automation, but it definitely helps. Knowing this, it’s often one of the easiest steps in the right direction. Why? Three reasons. First, it shows results. Results provide motivation and instant feedback. Second, it’s easy to build on automation. Third, it frees up your team to work on value-adding activities.
Companies that rely excessively on manual processes are slow to change. Business automation can facilitate DX, if it’s done right. Often, technology is the key to getting the ball rolling—and increasing the momentum by which change takes place.
Often, automation comes down to the platform. For example, enterprise resource planning can provide you with a hub into and out of which data flow. In turn, this facilitates decision making.
#2 – Giving Your People a Clearer View Of The Business
With an automation strategy in place, the next step is to embrace the numbers. Big data helps people see that efforts to digitalize the business are working, and improved analytics helps your people see results faster.
A digitally transformed business finds more value in data, and uses data to evaluate and evolve. This only adds momentum as the data sources become more diverse and the models become more complex.
But a coherent analytics strategy requires tightly integrated data sources, well-defined inputs, and well-defined terms. This is where business intelligence solutions come in, empowering users to connect the dots and see the what, why, and how.
#3 – Feeding the Model and Improving the Business
If digital transformation is a forest, each technology represents a tree. Some might be saplings, some might be mature, but either way, it’s a forest.
Knowing this, the beauty of a transformation initiative is that a well-executed one builds on itself. Automation frees up people, analytics gives them information, and the peoples’ expertise informs the larger strategy. Each step puts you in a better position than you were yesterday, and makes tomorrows choices easier.
Often, feeding a transformation model requires ever-evolving strategies and technologies to help you, and as data processed ramps up, processing power requirements do so as well. In turn, one of the easiest ways to manage this is through a solution that evolves with your business needs—most commonly delivered through the cloud.
Many Paths, Many Decisions—But the Right Partner Makes It Easy
The digital part of DX is about technology. The transformation is only partly technical in nature. It also has to do with strategy and careful change management. We can help in both areas. We have worked with many clients undergoing the DX process. To learn how we can take you on the DX journey, let’s talk.