Drive to Reimagine

What is digital transformation all about?

Jeremy DSouza
.
Feb 10
.
5-6 mins

Table of contents

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What is digital transformation

Hearing about digital transformation all day? Want to know what it’s all about before you decide whether you should hop on the bandwagon? We’ve got you covered in this article.

What is digital transformation?

Digital transformation can look very different when you look across industries. But if you do want a generalized explanation, it’s all about integrating digital technology into various aspects and processes of a business. It causes changes on a very deep level in the company - both in terms of how the business functions internally, as well as how they interact with their customers. It’s all about reimagining the way in which organizations employ technology to improve the performance of a business. 

While digitally transforming your entire business sounds brilliant, it might not be the best idea to do it all at once. If you ask anyone who has tried it before, they’d tell you that it’s a recipe for disaster.

You’d want to identify high-priority areas for your business where digital transformation is urgently required. Concentrate your efforts on those areas first, digitally transforming those will have the greatest impact on your business.

If you’re wondering where to start looking for these areas, MIT Sloan has listed three critical areas

1

Customer experience

This involves making efforts to understand customers in more detail, employing digital technologies to supplement customer growth, and creating more customer touchpoints.


2

Operational processes

This one is all about using digitization and automation to streamline internal processes, improve employee productivity, and track performance to make strategic decisions in a more effective manner.


3

Business models

The goal here is to augment physical offerings with digital tools and services and even launch new digital offerings.


Why is digital transformation important?

It’s all the rage ever since the pandemic started, but it’s not a new concept. It’s been going on since the late 20th century, gained great speed in the first two decades of the 21st century, and suddenly went into hyperdrive as soon as the pandemic started.

A lot of businesses around the world realize how important it is for them to evolve. Their options, at this point, are pretty much - go digital or go extinct. 

Need an example? Just look at Blockbuster Video. They stuck to the old way of doing things and allowed Netflix to eat up their business and make them go the way of the Dodo.

Want another example? How do you think Amazon beat out all the brick and mortar bookstores, became the world’s largest bookstore, and then proceeded to feast on the business of all types of brick and mortar stores around the world?

Let’s put it this way - if businesses (even market leaders, as seen with Blockbuster Video) don’t engage in continuous digital transformation, they’re more than liable to get displaced, sidelined, and even shut down.


percentage of organizations engaged in digital initiatives - Gartner
Gartner’s research on digital transformation


The goals of digital transformation

You obviously aren’t going to just pull off a digital transformation just for the sake of doing it. There’s got to be an objective that you’re trying to accomplish through the exercise. Here are a few of the reasons why business leaders are the world choose to kick-off digital transformation initiatives:

  • Reduce customer effort
  • Deliver streamlined and interactive customer experiences
  • Reduce go-to-market time for new products and services
  • Improve employee experience
  • Increase employee productivity
  • Understand customers, get deeper insights into their needs and preferences (to push out offerings that are more relevant to them and match their needs)
  • Provide customer support in a quicker, more effective manner


the status of digital transformation according to Chief Strategy Officers (Gartner Statistics)
Gartner's research on the status of digital transformation according to Chief Strategy Officers

The types of digital transformation

1

Process transformation

This is all about using artificial intelligence, machine learning, APIs, etc., and even looking at data and analytics to reimagine business processes, increase efficiency and reduce costs. This includes using marketing automation and tools like chatbots to transform the way you acquire and engage your customers, as well as using robotic process automation to streamline back-office processes. 


2

Business model transformation

Digitally transforming your business model involves taking another look at how you deliver value to your customers. It focuses on challenging traditional business models. Take Apple as an example. Their introduction of iTunes completely revolutionized the way music is distributed.


3

Domain transformation

Domain transformation involves capitalizing on the opportunity that new digital technologies offer. Pull an Amazon; see how they went from being just an eCommerce marketplace to launching AWS and dominating the cloud computing/infrastructure domain that used to be the playground of titans like IBM and Microsoft.

4

Cultural or organizational transformation

A digital transformation initiative facing push-back from employees is far from surprising. They’re used to doing things a certain way and are afraid that the new approach is going to take more effort from them or it just won’t work. You need to have a plan in place to change their mindsets and focus to get them to accept the new technology and even create a culture that encourages them to look out for ways for their functions to evolve digitally.


The benefits of digital transformation

1

Raises your productivity levels

Digital technology and automation can increase your productivity exponentially. And we aren’t just talking about the process for which this technology is implemented… the productivity spikes extend beyond that. Your team will spend less time on that process or function, which means that they’ll get more time to focus on other tasks… tasks that actually need their attention.


2

Enhances the customer experience

You got to be able to reach your customer on whichever channel they want to be reached over. Just doing phone or email customer service is not going to cut it. They need to be able to get support over social media, chatbots, live chat, and other channels as well.


3

Gives you a competitive advantage

If your competitors are not moving heavily on digital technology yet, you could win yourself a major competitive advantage by making the first move. Want an example? Let’s go back to Netflix and Blockbuster. Blockbuster kept doing things the way they were always done, Netflix decided to change the game by going digital. You don’t need me to tell you what happened next.


4

Reduces your costs

Along with increases in productivity, digital transformation can also bring your some serious cost savings. You’ll not have to spend as much money or dedicate as many resources to a particular task as you did before digital transforming your processes.

Organizations look forward to the benefits coming with digital transformation (statistics)
Organizations look forward to the benefits coming with digital transformation (Image Source: FinancesOnline)

The obstacles to digital transformation

The biggest obstacle to digital transformation is that your team might not be too keen on it. That could apply to your management team as well as the people working under you. If they don’t buy into it, your digital transformation might fail, or it might never even get off the ground in the first place.

The next obstacle we’re going to touch on ties directly into this - it’s all about communication. If management just decrees that certain changes are going to happen and don’t explain why they’re happening or how the new technology being adopted will help the employees, they’re not going to be to open to the idea.

There’s also the fact that a lot of businesses think that they can go ahead and track the ROI from their digital transformation initiatives by using the same KPIs that they had already established and were using before they went digital. But the fact is that when you’re making changes in your business, you’re going to have to make some adjustments and tweaks in your tracking mechanisms and your KPIs.

Jeremy DSouza

Jeremy is a marketer at Engati with an interest in marketing psychology and consumer neuroscience. Over the last year he has interviewed many of the world's brightest CX, AI, Marketing, and Tech thought leaders for Engati CX.

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