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Reports estimate that digital technologies and services spending will reach $2.4 trillion by 2025 and reach an expected total of $3.4 billion by 2027, showing companies' plans to stay competitive through investment strategies that benefit customer needs, meet industry regulations and stay ahead of digital disruptions.
How can your organization meet those demands while staying ahead in today's digitized age?
What Exactly is Digital Transformation?
There are millions of answers available when searching Google for this term, dispelling any notion that digital transformation involves only technology changes.
An organization undergoing digital transformation involves fundamentally altering how it operates, interacts with customers, and communicates.
Traditional methods of working are being upended to make way for digital. This requires cultivating a culture of digitalization as well as upgrading skills across your company as a collaborative effort toward this transformation process.
Digital transformation transforms how organizations operate by altering their systems, processes, workflow, and culture.
It impacts all levels of an organization simultaneously while uniting data from all areas to collaborate more efficiently across departments and functional groups. Businesses are now better able to connect the customer journey using automation solutions like workflow automation or AI for a seamless customer journey.
Are Digitalization and Digitization Different Terms?
With all the many terms associated with digitization - such as digitization, digitalization, and transformation - it can be easy to become confused when hearing about these different terms for digital products or services.
Here is an explanation of each:
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Digitize: This means to make something digital.
You can create an online version for a magazine or newsletter, or you can use electronic signatures to sign documents online.
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Digitalization: Involves using digital technology to transform your business model or create a new revenue stream.
Digitalization is about transforming your business into a digital one by using online channels and technologies.
Cloud computing can be used to store data or automate workflows to improve efficiency.
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Digital Transformation: The process is one of reinvention.
The focus is on leveraging digital technology and processes to create new systems, develop a digital mentality and take advantage of new opportunities.
Types of Digital Transformation
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Process Transform- This focuses on processes like data, analytics, and AI.
It also includes any other process which can help to lower costs and drive operational efficiency.
Walgreens, a healthcare retail giant, is an excellent example.
It relaunched the MyWalgreens mobile app to centralize digital assets while providing a better experience for customers.
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Transformation of the Business Model- This refers to making major changes to how an organization or business operates.
These can be personnel, process, or technology-related.
Think about Netflix, for example.
It revolutionized video distribution by completely flipping the business model.
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Domain Transform- This is a fantastic opportunity for a company to explore a brand new area or domain that they may have never explored.
Consider Google's many businesses, such as Google Nest.
This product is an Internet of Things device that includes smoke detectors and thermostats for the home.
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Cultural/Organizational Transformation- This is about redefining mindsets, processes, capabilities, and skills for a digital world.
Growth initiatives are key to driving forward digital transformation through a culture of new thinking and a change in mindset.
Pitney Bowes, which shifted from being a company specializing in mailing services to one that specializes in shipping technology and digital commerce, is an excellent example.
Digital Transformation: 6 Steps for Success
For successful digital transformation, starting with a plan is of critical importance. A framework should be in place so you can revisit any step and see where improvements could be made; six steps should be considered essential:
1. Be Clear on Why you do things
Understanding why digital transformation is necessary is central to digital transformation success. Understanding why you embark upon such a journey will allow for an enriched digital journey experience.
Consider why your transformation is necessary: Are your objectives to Increase efficiency, enhance Customer experiences, or better manage data? Once these goals have been identified, develop plans to meet them.
2. Conduct an Audit of Your Business
To effectively establish where you would like your business to go in terms of both processes and systems in place and their effectiveness, assess what digital tools are currently in use - are they working, how is your company structured, etc.
3. Fill Gaps
You have likely embarked on digital transformation because there are inefficiencies or missed opportunities within your business that need addressing.
So where are these gaps that need closing? Are you extracting customer data value effectively; are leads coming in retained; do customers see consistency across channels when treating leads/customers/leads etc.
4. Evaluate Your Capabilities
At this step, talent becomes even more critical than technology. Without possessing the digital expertise needed for the transformation of a business, any attempt at transformation would likely fail.
Are your employees equipped with the necessary digital knowledge?
5. Strategy to Support Digital Transformation: Draft an Action Plan Now
Once you understand your goals, capabilities, gaps, and in-house talents thoroughly, it's time to devise a digital transformation strategy for your company that can guide its transformation process.
Create an actionable road map containing KPIs and funding details as a roadmap toward digital success.
6. Be Agile! Review and Revise
As digital and customer ecosystems are constantly shifting, your digital transformation strategy needs to remain flexible enough for revision when necessary.
Agility will serve your company well as it moves through this transformation; be adaptable enough to adapt quickly or pivot if required.
Digital Transformation: 8 Benefits
Cost is one of the primary drivers behind digital transformation for many companies. By shifting data onto the hybrid, public, or private clouds, costs for operating them decrease considerably.
At the same time, team members focus more on other tasks than hardware expenses and expenses.
1. Data Collection Improved
Businesses collect enormous volumes of customer information; however, optimizing that data to drive business expansion is the true aim.
Digital transformation provides businesses with a way to gather precise information, integrate it effectively at scale for improved business intelligence, and increase revenue growth. By connecting disparate data sources into one consolidated view of the customer journey, business operations, finances, and operations.
As part of your process, it is vitally important that you review how customer data is collected, stored, and analyzed.
As part of that evaluation process, it may be wise to reevaluate your tech stack to ensure sensitive customer information remains encrypted when entering and leaving CRM software systems.
As part of your digital transformation effort, be mindful of giving clients more access and control over their data when reviewing customer journeys.
Privacy can be an asset in distinguishing your company - consumers are becoming increasingly wary about how their personal information will be collected and utilized; showing respect for clients by adopting strong privacy policies with which they may make any adjustments as soon as desired will show you care about protecting privacy values and showing they value you respect their needs.
2. Increased Resource Management
Digital transformation consolidates resources and information into one set of business tools. Rather than dispersed databases and software packages, digital transformation streamlines resources within your own company while decreasing vendor overlaps.
In 2024, enterprises typically will utilize over 900 applications - this digital transformation allows enterprises to integrate all databases, software programs, and apps into a central repository for easy use and management.
Digital Transformation transcends departmental or functional boundaries in an organization and has far-reaching effects.
Digital transformation applies across an organization for increased efficiencies and innovations within processes, from Sales and Marketing teams, C Suite and finance, and all departments containing sensitive data such as finance. Data must be optimized and secured at every point, while teams must also benefit from simple tools for use.
3. Unlock Customer Insights with Data
Data provides the key to unlocked insights about customers, helping your business become more customer-centric by better-comprehending customer needs and expectations.
Derivations can come from structured (like personal customer data ) or non-structured sources, like metrics from social media; both will assist the growth of your company as data-driven strategies lead to the production of tailored and more relevant content for users.
4. Enhancing Client Experiences
Consider how digital conversion can not only increase efficiencies within your team but also create a smooth, intuitive customer journey for clients - from emails and digital products through user portals and outreach to prospects.
Digital experiences are becoming an ever-more important priority for customers, who expect low prices and fast deliveries from brands they patronize.
The Customer experience (CX) has become the new battlefield: according to research, two-thirds of companies compete on CX.
Reports reported that two-thirds of companies now compete primarily based on Customer experience alone. So showing respect for privacy can set your company apart and allow the consumer to decide how their data is collected or utilized by your brand, allow consumers to exercise control over how their data collection/used; empower them and empower them when making informed decisions about their own volition.
5. Digital Culture Is Fostered (Leading to Improved Collaboration)
Digital transformation can facilitate an encouraging digital culture by equipping teams with tools tailored specifically to their environment, which not only helps make collaboration simpler but also assists the organization with progressing digitally.
Adopting this mindset shift is crucial if businesses wish to remain sustainable over the longer term and ensure sustainability for themselves and future generations.
6. Increased Profits
Digital transformation can enhance both efficiency and profitability for companies. Check out these findings from SAP Center for Business Insights & Oxford Economics.
Eighty percent of companies that completed digital transformation reported increased profits. 84% of respondents stated they increased their market share. Mes Leaders anticipated 23% greater revenue growth compared to their competition.
7. Improved Agility
With digital transformation comes increased agility for agile organizations. Businesses can adopt Continuous Improvement strategies from software development to speed their time to market by adopting faster adaptation, innovation, and improvement processes.
8. Productivity Can be Increased
Employing appropriate technology tools can significantly boost workflows and productivity. They enable employees to be more productive by automating repetitive manual tasks, sharing company-wide information across platforms, and providing access to essential tools that allow employees to be more efficient with their time.
Three Great Examples of Digital Transformation
You can find some excellent examples of companies that have successfully transformed their business models. Three well-known companies in various industries will give you some inspiration.
Domino's
According to Marketing Week, the well-known Domino's pizza chain was founded in 1960 and is now a "truly digital business." In 2021 91% of sales will be made via digital channels.
The brick-and-mortar store that was facing bankruptcy in 2011 has turned the situation around. In 2011, the brick-and-mortar business turned things around from bankruptcy to success. Domino's was created (and the restaurant business disrupted), and now delivery has been made easier with e-bikes, autonomous deliveries, and a new revenue stream of 4,36 billion dollars in 2021.
Nike
Nike is one of the most recognized brands in the world. The swoosh symbol can be instantly identified. Nike had to go through a digital revolution to stay competitive.
Nike's brand, supply chain, and mindset were transformed by strong leadership. In addition, the company updated its digital marketing strategy and created powerful campaigns to boost direct sales.
The company also expanded membership options and piloted concept stores in 2018.
Social media is also used by the brand to promote its social initiatives, build community and increase brand awareness.
The series of tweets is to raise awareness about Mental Health Awareness Week for athletes.
Matt Friend, Nike's Chief Financial Officer, said that consumers continue to move towards digital to discover the products they like.
NIKE has continued to capture market share and build strong consumer relationships over the last four years.
IKEA
IKEA is a name that everyone who has ever furnished their home will recognize. Ingvar Kamprad founded the company at the age of 17, and it has grown to be one of the world's most popular brands.
The company has been taking a very aggressive approach to its digital transformation. It is constantly looking for new technologies and ways to reach customers and increase sales.
The company uses an omnichannel strategy to allow customers to easily move between channels.
IKEA's choice to cease producing its well-known printed catalog has shifted investments to other areas. IKEA acquired Geomagical Labs, which will allow customers to virtually create 3D models of rooms and 'delete existing furniture'.
The brand also plans a "Shop and Go" payment system, geolocation for products in stores, and chatbots to simplify customer service.
Read More: How to Integrate the Latest Technologies into Mid-Market Companies
What was COVID's Role in Accelerating Digital Transformation?
In response to the pandemic, companies have turned to digital networks and technologies to serve and reach customers.
Businesses that already had an online presence needed to scale up their operations to keep pace with the demand. This was a surprise for those who had only just begun their journey of digital transformation.
A report states that companies have increased the speed of digitization by 3 to 4 years in their interactions with customers and suppliers, as well as internal operations.
In the meantime, digital products or those with digital capabilities have increased by 7 years.
During this period, there were other significant changes in the business world. These included remote working (and an explosion of digital nomads working across different cities), shifting customer preferences and needs, as well as cloud migration.
A survey found that executives are confident these changes will continue to affect the industry.
Digital Transformation Across Industries
Digital transformation has touched every industry. Companies across all sectors invest in digital transformation to serve their customers, compete, and embed digital into their processes and cultures.
Look at industries across the board to understand areas for transformation and trends.
Digital Transformation in Governance
This sector has been slow in embracing the digital transformation because Privacy and Compliance with regulations are key.
In a report by Deloitte, only 30% of the organizations that were surveyed rated their digital abilities as being better than their peers in the public sector. In comparison, 70% said they lacked behind their private sector counterparts.
Digital transformation and governance challenges are:
- Protection and collection of data
- Information Sharing
- Siloed strategies
- Budget and cost pressures.
- Risk-averse cultures
- Skills gaps
To overcome these challenges and become more digital, you need to:
- The transition from cloud to a new type of weather.
- Communication security is important.
- Information sharing across functional boundaries.
- Digital skills training.
Healthcare Digital Transformation
By 2025, the global market for digital health is projected to reach over $500 billion. Health information technology will be the leading segment.
In its transformation, the sector is faced with a variety of challenges:
- Delivery and Service to Patients
- Care speed
- You can also find out more about Privacy.
- Data management and collection.
The pandemic has accelerated the change in this industry due to changing consumer preferences and innovations in care delivery:
- Remote patient monitoring.
- AI-based automation, e.g., image-guided therapy.
- Tele-ICUs
- Tele prescribing
Financial Services and Banking: Digital Transformation
A survey found that while 92% of financial leaders had begun their digital journey, only 11% believed they were at a more advanced stage.
The financial sector faces challenges related to data and sensitive information protection:
- Management Reporting
- Accounting for transactions
- Data analytics in real-time and data management.
- Privacy and Compliance
Digital transformation initiatives will be implemented in the future, including 2024. They aim to improve customer service and increase security:
- Touchless transactions
- Hyper-personalization
- Super apps
Manufacturing Digital Transformation
The digital transformation of the manufacturing industry is projected to grow by 767 billion dollars in 2026, with an increase in spending on IoT:
These challenges are faced by the industry:
- Selling to businesses is ecommerce.
- Data analytics and big data
- Real-time data
This industry, like the financial sector, had to speed up its digital transformation and increase activities in some areas such as:
- Robotics
- AR is a system for assembly lines.
- 3D Printing
- B2B eCommerce
- IoT to provide real-time data
Business Transformation Through Digital Technology
According to the report titled '2024 Digital Transformation for Business', 72% of companies are increasing their digitalization rate to meet COVID-19's challenges.
Businesses, unlike large corporations, can take advantage of their size. It may be easier to change the mindset of the business, implement specialized training that focuses on specific areas and have digital strategies and technologies make an immediate impact.
Businesses are faced with several challenges:
- Improve operations and service delivery.
- Customer experience
- Market expansion
- Sales and Marketing
- Talent sourcing
Several strategies are being developed to combat each one of them:
- Automation or digitalization of processes.
- Investing talent and digital skills.
- Improve online payments and sales.
Human Resource Digital Transformation
By 2028, the HR market will be worth $43 billion. The adoption of HR software is driving growth. The challenges facing this industry are:
- Optimize workplace experience.
- Increase efficiency
- Train and upskill staff
- Automated Workflow
- Talent Management
HR professionals are tackling these obstacles around the world by:
- Remote, hybrid, and other new ways to work.
- Platforms for digital learning
- Social talent acquisition
- People Analytics
- Performance management is ongoing.
- Cloud-based Human Resources
Trends of Digital Transformation for Commercial Trends by 2024
Companies are striving to incorporate digital into their operations as effectively and seamlessly as possible, including:
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Think About a Digital Business Model- Any model you choose should be customized to fit your business.
Consider your own products and services and how you can use online channels and technologies to improve the Customer experience.
You could start by setting up an online store or focus on social commerce.
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Put the Focus on Employee Onboarding- No matter how much technology or tools you have, if employees do not know how to utilize them, then it is of no use.
Create an employee onboarding program to ensure that new hires are aware of the digital tools available.
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Personalize Without Compromising Privacy- To personalize communications, you'll need to collect customer information.
Many consumers today are concerned about giving out confidential information.
Transparency and the collection of zero-party information are key to achieving this.
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Tools for the Digital Workplace- Remote and hybrid working is now the norm and requires collaboration tools to work properly.
Zoom, Monday, Slack, and other tools are available for document sharing, communication, and project management.
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Upskilling- It's hard to deny that digital skills are in short supply across the globe.
What's your solution if you cannot find the talent? What can you do to find talent?
Trends for Digital Transformation Technology for 2024
As digital expands across every industry, maintaining our approach and mindset are paramount for successful outcomes.
Here are key tech trends for 2024:
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5G- This fifth-generation mobile network will allow faster connections, lower latency, and more bandwidth.
It will revolutionize industries and improve the everyday experience.
It will allow for advanced services such as eHealth, traffic and connected vehicle systems, and cloud-based mobile gaming.
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Security Zero-Trust- With an increase in cyber-attacks and hacking, companies are looking for a zero-trust security model.
It will secure data, applications, identities, networks and infrastructure.
- Hyper Automation - This is "automation on steroids ', where businesses can automate business and IT processes through Robotic Process Automation (RPA), low-code/no-code adoption, AI and Machine Learning.
- Predictive Analytics- The tools of predictive analytics will enable businesses to predict the future by analyzing data with AI, ML, and other factors, such as business climate, consumer behavior patterns and economic conditions.
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Customer Relations Management and Customer Data Platforms- As the value and importance of customer data increase (read about zero-party information), businesses will begin to invest in more robust platforms.
Cross-referencing the data between these platforms will make it easier to gain insights.
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Generic AI- These are AI programs that can create content from existing material such as images, audio, or text.
FaceApp, for example, allows you to upload an existing image and compare it with different age ranges.
Here Are Five Mistakes To Avoid To Ensure Its Success:
According to recent statistics, 70% of digital transformation initiatives fail to achieve their goals, which suggests there may be several obstacles blocking progress with your transformation plan:
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The Wrong Data- It is not quantity, but rather a quality that matters when it comes to data.
Companies need to ensure they have the correct data to drive insights and move forward.
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Staff Resistance- If staff doesn't understand why and what the benefits are, they will push back.
Be sure that your staff understands the reasons for the digital transformation, as well as the advantages to both the company and its customers.
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Do Not Underestimate Costs- A digital transformation can be expensive as it involves a complete reinvention of an organization.
Be sure to set a realistic budget for your digital transformation that will meet all of your goals and expectations.
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Lack of Commitment- It is going to take a lot of time and effort.
Be sure to have a plan that spans several years and to set expectations within the business about the time required.
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Lack of Skills- Often, companies lack the skills and knowledge required to transform their business.
Consider creating a customized program to improve the skills of your staff.
Conclusion
Digital Transformation can be a complex undertaking that involves both technology and people. DMI offers assistance for digitally transforming services to your company through driving ecommerce sales, building pipelines and relationships online, and embedding digital throughout.
Check out our Business page to gain knowledge on making your enterprise thrive in today's highly competitive marketplace.
