What Is Digital Transformation? Why Is it Necessary?
The technological landscape is in a constant of flux, and an increasing number of businesses are embarking on digital transformation journeys each year. While the term “digital transformation” refers to the implementation of digital technologies to overhaul business processes, it is a far more complex endeavor than simply integrating new technology. Rather, it involves a comprehensive realignment of business culture and operational processes that require a carefully crafted digital transformation strategy.
In 2021, the global digital transformation market was valued at $1.51 trillion, and the COVID-19 pandemic created a space for ongoing investments in digital technologies. Businesses saw a need to reevaluate how they meet the ever-changing needs of their customers, and many of the trends created in this tumultuous time are here to stay.
What Is Digital Transformation?
A digital transformation definition might involve integrating digital technology throughout all business areas, resulting in fundamental changes to your business' culture, operations, and values. Digital technologies offer many opportunities to create new business processes — or modify existing ones — to meet fluid and ever-changing market and business requirements.
Reimagining your business in the digital age and leveraging technology-based opportunities to streamline workflow and augment customer value is an excellent example, but digital transformation is far-reaching. It's a complete overhaul of business culture, from how you optimize applications to streamline your process to how you use technology to engage customers.
Businesses must approach digital transformation with an open mind, rethinking how it uses all their resources — people, processes, and technology — to meet changing customer expectations and create more value through software.
The process involves adopting and embedding technologies to drive fundamental changes, including greater business agility, increased efficiency and productivity, and discovering new value for everyone involved, from employees and stakeholders to customers.
Regardless of what the process looks like, for your business, the most fundamental change is a new mindset. Digital transformation is an opportunity to reimagine your process from a grassroots level and move away from the traditional business context and toward an experimental and collaborative approach to providing value to stakeholders.
Why Is Digital Transformation Important?
Digital transformation is transformative in many aspects of business structure. As the business landscape changes and customer demands become more technology-based, businesses have adapted their models to stay relevant. Often, this includes a digital transformation strategy, which is becoming a necessity for business survival. Whether born from the need or desire to enact change, some of the benefits of digital transformation include the following:
- Meeting customer expectations: Customers expect on-demand service as the business space becomes increasingly digital. Digital transformation should be holistic and enhance agility and flexibility to meet customer demand from every possible angle.
- Enhancing operational effectiveness: The work-life balance and employee flexibility have emerged during the COVID-19 pandemic. Digital transformation is critical to facilitate work-from-home scenarios. Employees need modern tools to work in a contemporary framework, and digital transformation fosters collaboration, efficiency, and employee engagement.
- Prioritizing data security: Data security is a top priority for most businesses, and they must employ robust security strategies across all networks, applications, and data.
- Strengthening business partnerships: Transparent business partnerships are essential to multiple business operations. Increased customer demands and a competitive marketplace have made these partnerships even more important. Digital transformation engenders trust and streamlines traditional partnership documentation, opening businesses to more fruitful future partnerships.
- Maintaining a competitive position: Many industries have already adopted digital transformation strategies. Digital transformation is becoming non-negotiable for companies to maintain their roles in the market.
- Increasing employee retention: Employees with access to intelligent tools and process automation are more engaged. When they work for a business that cares about providing them with meaningful tasks, the workforce is likely to be more productive, engaged and satisfied.
What Does Digital Transformation Look Like?
Digital transformation varies depending on individual requirements and challenges, although there are some common themes that business and technology leaders consider constants throughout the process. Some critical digital transformation themes include the following:
- Enhanced customer experiences
- Improved operational agility and flexibility
- Changed culture and leadership
- Elevated workforce enablement
- Focused digital technology integration
There are three critical elements to successful digital transformation, including the following:
- Process transformation: A strategic initiative aimed at improving business efficiency and effectiveness by modifying areas of a business process to achieve new goals, such as modernization or integrating new technology.
- Business model transformation: Moving away from a more traditional business model by reinventing or augmenting their current models to open significant growth opportunities.
- Cultural transformation: Aligning digital transformation efforts with an organization's internal mission and values by formulating a clear vision of the transformation and communicating it throughout the organization.
What Is the Difference Between Digital Transformation, Digitization and Digitalization?
Many terms are used to update digital business processes, the most common being digital transformation, digitalization, and digitization. The three functions are all critical and have different meanings and can be explained as the following:
- Digitization: Converting physical documents and similar information from analog to digital formats.
- Digitalization: Using digitized information to boost efficiency and work quickly.
- Digital transformation: Changing how you conduct business, internally and through all customer interactions.
Digital Transformation Tools
Several tools can assist your digital transformation, including industry-specific options like eCommerce tools for efficient buyer and seller interactions. As digital transformation is a process that affects every level of a business, there are several tools to streamline the adoption of innovations and improve business sustainability, including the following:
- Collaborative suites: Centralizing communications and information sharing is crucial for mobile access to data and business resources. Collaborative tools allow employees to share information in real-time and access the digital tools they need for improved communication and collaboration.
- Communication tools: Digital communication platforms centralize all vital information and provide a trusted source for all team members. Good communication tools ensure everyone on a team is informed in real-time, allowing everyone on the tram to contribute — regardless of location — via video call, chat or specific team hubs.
- Intranet platforms: Intranet platforms facilitate internal and external communication by building strong online communities for team members and providing ease of access for external social media sharing. When used effectively, these platforms can increase employee engagement and productivity and build a solid organizational culture.
- Customer relationship management (CRM) tools: CRM tools help your business stay abreast of increasing customer demands, understand and address customer needs, automate tasks, shorten sales cycles and increase retention.
- Content management system (CMS) tools: CMS tools allow you to manage your digital content, like websites and mobile applications. Businesses that need an internal team to manage their content may consider bringing in an agency to assist in this part of digital transformation.
- Cloud storage: With cloud storage, mobile workers can access data without being in a physical office. They provide global access to information and have high-security standards to protect stored data.
- Project management tools: Project management tools help to automate task scheduling, track goal progress and measure performance. With user-friendly interfaces and clear, defined objectives, employees are more productive, and customers are happier.
Digital Transformation Challenges
Digital transformation presents many opportunities for businesses to rethink and reimagine every level of their operations. Such a significant change comes with challenges, and business leaders must proactively manage them to ensure the best possible adoption throughout the organization. Some common challenges associated with digital transformation include the following:
- Change management: A change management culture is vital to a successful digital transformation. It identifies the root causes of challenges and builds strong relationships with stakeholders and employees.
- Technology adoption: New technologies and processes can be met with resistance to change from workforce members, which can significantly slow down the adoption curve. Businesses must provide employees with complete onboarding and continued support to help them learn the new tools and combat adoption challenges.
- Digital transformation strategy: Lack of digital transformation strategy can present significant challenges to your organization. Before embarking on a digital transformation journey, it's best to have a plan to migrate your existing systems and incorporate new technologies.
- Budget constraints: With the correct application and a clear view of the return on investment (ROI) you would like to achieve from the transformation process, you can look at it as a long-term investment and reap the benefits in the future.
- Security concerns: Many digital transformations involve migrating from on-premises solutions to the cloud, with a good list of security concerns. Cybersecurity experts are an excellent choice for identifying weaknesses and providing employee training.
- Culture: One of the biggest challenges in digital transformation is facilitating the culture to catch up with innovation. Everyone in your organization must be ready to change their daily workflow significantly. Fostering a culture where learning is celebrated is an excellent way to make the changes easier for your workforce.
Trends in Digital Transformation
By definition, digital transformation is constantly changing. As technology evolves, the business transformation will take on new meaning within the relevant industries. Although trends can be challenging to predict, some of the significant areas of change are likely to include the use of artificial intelligence (AI) and automation. Almost 92% of businesses invest in AI on an ongoing basis to automate processes, enhance customer personalization and analyze data.
Another area to watch is the expansion of automated technologies, which go hand in hand with AI. More businesses are looking to streamline enterprises to remain relevant. Cloud technologies are also likely to progress to enhance company scaling. COVID-19 changed how people work and technologies that augment hybrid work will likely keep evolving.
Low-code, no-code platforms and other technology that allows hyper-automation experienced a boom in 2021 and 2022— use is likely to continue rising due to the accessibility of the platforms to people with minimal training. The automation features streamline software development and quick turnaround times.
How to Get Started with Your Digital Transformation
Implementing digital transformation is exciting, but having a solid digital transformation roadmap is an excellent way to manage the changes with the best possible results in mind. There are some simple steps you can take to lay the groundwork for your large-scale transformation, including the following:
1. Be Clear on Your Objectives
Digital transformation is different for each industry and each organization. To start with your digital transformation strategy, you need to have a clear understanding of what your objectives are and what steps you're going to take to achieve them. Consider how best digital transformation could impact your business. Some options include the following:
- Enhance the customer experience
- Create a cost-effective and efficient operation
- Adapt and embrace change
- Create a process to gather actionable data from analytics
2. Focus on Your Customers
At its core, digital transformation is about leveraging digital tools to transform the customer experience and make it of significant value to them. Plan for a successful digital transformation with the customer's needs in mind. Research to establish how to make the customer experience more streamlined or combine customer communication and management, for example. Whatever steps you need to take, ensure meeting customers' needs is at the heart of it.
3. Consider Process Changes
Your digital transformation could require a complete change in your operational processes. Making a change of magnitude could be challenging, so take the time to create proactive change management strategies and facilitate easy adoption throughout your organization. Ensure you communicate clearly and that everyone understands their roles and responsibilities.
4. Choose the Right Technology
Not all technology is necessary for every transformation in every industry. Consult experts with skills in digital transformation, and ensure you're choosing technology that supports the processes you plan to optimize. Decide what your needs are and select technology to match them.
5. Find a Tailored IT Solution
With the right technology partner, you can create a flexible approach to digital transformation that fits your unique business objectives, budget, and systems. Together you can find the right combination of technology and services to achieve your goals and maximize your ROI.
Digitally Transform Your Company With CGS
Digital transformation is here to stay, and businesses must choose the best software and services to assist with the process. CGS has the technology and capabilities to transform your business from the ground up, from product design to order fulfillment to management and sales.
For end-to-end supply chain management solutions that power transformation in fashion and consumer goods, the CGS BlueCherry® Suite provides your business with everything it needs to succeed, now and for the future. Our CGS suite of IT services will provide all the assistance you need to develop a digital transformation roadmap, and migrate and manage the digital transformation process from start to finish. Please contact us today to learn more about how CGS can help you create a seamless digital transformation within your organization.