Contact us anytime to know more — Abhishek P., Founder & CFO CISIN
The spending on Digital Technologies And Services will reach $1.8 trillion and increase to $2.8 billion by 2025.
This growth shows how companies plan to invest to stay competitive.
How can you transform your company to meet your customer's needs? What strategies do different industries use to survive in the digital age?
This blog will explore digital transformation from a variety of angles:
- Digital transformation definition.
- Digital transformation: Steps towards digital transformation.
- Digital Transformation Examples.
- Digital transformation has many benefits.
- Trends in digital transformation.
- Digital transformation mistakes.
Digital Transformation Definition
What is Digital Transformation? You'll find billions of answers if you search for this question on Google. Some people may think that digital transformation only involves digital technology.
This is not true.
The digital technologies of an organization is fundamentally changing the way it operates, interacts with its customers, and communicates.
The 'traditional way of working is disrupted to make it more digital platform. This also involves cultivating a culture of digital and upskilling your employees, as a company must work together to undergo a change.
"Digital Transformation is reinventing business models." It's reinventing processes."
What Is The Difference Between Digitalization And Digitization?
It's very easy to get confused when you hear a variety of digital terms. Digitization, digitalization and digital transformation are the most common terms.
Take a look at the differences between each:
-
Digitize, or Digitization: A process to make something digital.
You can create an online version for a magazine or newsletter, or you could use electronic signatures to sign documents online.
-
Digitization: This is the use of digital technologies to alter your business model, or create a new source of revenue.
Digitalization is about using digital technologies to transform your business.
Cloud computing can be used to save data, or Automated Workflows to improve efficiency.
-
A Digital Transformation: It is an act of reinvention.
The focus is on leveraging digital technology and processes in order to create new systems, develop a digital mentality and take advantage of new opportunities.
Digital Transformations Can Be Classified Into Different Types
There are 4 types of digital transformation that should be considered to get the most out of it. They include:
-
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 walgreens mobile app in order to centralize digital assets while providing a better experience for customers.
-
Transformation of the Business Model - It is about fundamentally changing how an organization or business operates.
This can involve personnel, technology, and processes. Think about Netflix, for example. It revolutionized video distribution by completely flipping the business model.
-
Domain Transform - This is a fantastic opportunity for a company to explore a completely 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.
-
Cultural/Organizational Transformation - It is vital to reinvent attitudes, practises, competences, and abilities for a digital context.
Growth initiatives that support a culture shift and rethinking of how we think are key to driving forward digital transformation, shifted from being a company that provided mailing services to one offering shipping technology and digital commerce as well, is an excellent example.
Digital Transformation: 6 Steps To Success
It's crucial to start with a strategy because digital transformation can be a lengthy and complicated process. You should create a framework for digital transformation so that you can revisit any step and see if there are improvements to be made.
Six steps are essential:
1. Understanding Why you Do it
Understanding the reasons for going digital is a key component of digital transformation. It's crucial to understand why you are embarking on a digital transformation journey.
Consider the main reasons behind your transformation. Are you looking to enhance customer service, improve the efficiency of processes, or better manage data? You can then plan to meet your goals once you have identified the reason for doing so.
2. Audition your Business
You need to understand where your business is today to determine where it needs to be. Examine the processes and systems in place, and their effectiveness.
What are the digital tools you use and do they work? How is your company structured and run?
3. Fill in The Gaps
You are driving digital transformation because you see inefficiencies or missed opportunities in your business. What are the gaps that need to be closed? Are you, for example, extracting the value of your customer data? Are you able to retain and engage leads who come in? How do you treat your customers from one channel to another? Look at our case studies and see how companies around the world identify their gaps.
4. Consider your Own Capabilities
This stage goes beyond technology and focuses on your talents. It's pointless to transform your business without the right digital skills.
Do you possess the digital skills required to transform your business? Are you able to upskill your employees with digital skills?
5. Digital Transformation: Create a strategy
After you have a clear understanding of your goals, your capabilities, your gaps, and your in-house talents, then it is time to develop a strategy for digital transformation that will guide your company.
It should be a road map that you can follow, with KPIs and a plan for funding.
6. Be Agile in your Review and Revision
It is important not to set your digital transformation strategy in stone. Digital and customer ecosystems are constantly changing, so you should always be prepared to revise your strategy when necessary.
When navigating through this kind of transformation, agility is key. Your company must be flexible enough to adapt and pivot if necessary.
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 in order 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.
What was COVID's Role in Accelerating Digital Transformation?
Ecommerce sales grew during the Covid-19 epidemic. Consumers in the U.S. spent $870 billion on online shopping by 2021.
This is up 14% over 2020. Digital Commerce 360 estimates that if not for the Pandemic, online sales wouldn't have been at this level until 2023, two years after.
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 in order to keep pace with the demand. This was a surprise for those who had only just begun their journey of digital transformation.
A survey of senior executives found that companies had accelerated their digitization by 3 to 4 years. 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 (including an explosion of digital nomads working across multiple cities), shifting customer preferences and needs as well as cloud migration.
The 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 in order to serve their customers, compete, and embed digital into their processes and cultures.
Look at the transformation of several industries and their future trends.
Want More Information About Our Services? Talk to Our Consultants!
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, only 30% of the organizations that were surveyed rated their digital abilities as being better than their peers in the public sector while 70% said they were behind.
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:
- Cloud transition
- Communication security
- 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:
- Patient delivery service.
- 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, which include:
- Remote patient monitoring
- AI-based automation, e.g.
Image-guided therapy.
- Tele-ICUs
- Tele prescribing
Financial Services and Banking: Digital Transformation
According to Digital Survey, 92% of finance executives have begun their digital journey. However, only 11% are confident that they are in an advanced state.
Protecting sensitive data and information is a major challenge for the financial industry.
- 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 in 2022.
They aim to improve customer service and increase security.
- Transactions that are Touchless
- Hyper-personalization
- Super apps
Apple and Google, two of the biggest tech companies in the world, are increasing their activities within this sector
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 through 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 assembly lines
- 3D Printing
- B2B Ecommerce
- IoT to provide real-time data
Small Business Digital Transformation
According to the report titled '2020 Digital Transformation for Small Business, 72% of small business owners are increasing their digitalization rate to meet COVID-19's challenges.
Small 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.
Small businesses are faced with a number of challenges:
- Improve operations and services delivery
- Customer experience
- Market expansion
- Sales and Marketing
- Talent sourcing
There are strategies being developed to combat each one of them:
- Automation or digitalization of processes.
- Investment in digital and talent skills.
- Online sales and Digital Payments: Improving them.
Human Resource Digital Transformation
By 2028, the HR market will be worth $43 billion. Adoption of HR software is driving the 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 adopting the following measures:
- Remote, hybrid and other new ways to work
- Platforms for digital learning
- Social talent acquisition
- People Analytics
- Performance management: ongoing
- Cloud-based Human Resources
Digital Transformation has Many Benefits
Digital transformation has many advantages for both a company and its employees. These include:
- Transforms customer experience.
- Data-driven insights are a powerful tool.
- Encourages collaboration
- Improves employee experience.
- Innovation and agility are boosted.
- Updating skills and knowledge.
- Promotes digital culture.
- Consolidates processes & operations.
Trends in Digital Transformation for Commercial 2023
Companies are trying to integrate digital into their business as effectively as possible. These include:
-
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.
-
Put the Focus on Employee Onboarding: It doesn't matter how much technology or tools you have if employees aren't able to utilize them.
Create an employee onboarding program to ensure new hires know the digital tools available.
-
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.
-
Tools for the Digital Workplace: Remote and hybrid working is now the norm and requires collaboration tools in order to work properly.
Zoom, Monday, Slack and other tools are available for document sharing, communication and project management.
-
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 in Digital Transformation Technology for 2023
Maintaining the mindset and process we outlined above is crucial as digital accelerates across all industries. These are key tech trends for 2023.
-
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.
-
Security Zero-Trust - Due to the increase in cyber-attacks and hacking, companies are seeking to implement zero-trust security models.
It will secure data, applications, identities, networks and infrastructure.
- Hyperautomation - 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- Predictive analytics tools will enable businesses to predict the future by analyzing data with AI/ML, correlating that information against factors like economics, business environments, consumer behavior patterns, and other variables.
-
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-reference data between these platforms will make it easier to gain insights.
-
Generic AI - These AI programs 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.
Five Digital Transformation Mistakes to Avoid
According to BCG, 70% of digital transformations fail to meet their goals. This means there are many things that can go against your digital transformation.
Let's take a look at what you need to avoid in order to achieve success with your digital transformation.
1. The Wrong Data: It is not just about the quantity, but also the quality of data. Companies must ensure they have the correct data to drive insights and progress.
2. Staff Resistance: If staff doesn't understand why and what the benefits are, they will push back.
Ensure that your staff understands the reasons for the digital transformation and the advantages to both the company and its customers.
3. Do Not Underestimate Costs: A digital transformation can be expensive as it involves reinventing a company.
Be sure to set a realistic budget for your digital transformation to meet your goals and expectations.
4. Lack of Commitment: It is going to take time and effort. Be sure to have a plan that spans several years and an understanding of the time required across your company.
5. Lack of Skills: To transform a business, you need manpower. Many companies lack the necessary knowledge and skill.
Consider creating or adding a training program to your staff to help them develop the necessary skills.
Want More Information About Our Services? Talk to Our Consultants!
Conclusion
The people component of digital transformation is as crucial as technology. DMI can assist you in driving ecommerce, building pipelines, developing online relationships, and embedding digital throughout the company.
Visit our Business page to learn how you can make your business successful in the competitive market.
All types of businesses have benefited from digital marketing. It has helped the business grow by incorporating it into its marketing strategy.
Globally, it has changed the way businesses operate. Most of these changes are positive. Implementing Digital Marketing Strategies will help you reap
