What is a Digital Transformation?

You have probably heard quite a lot of different definitions for ‘Digital Transformation’. They range from ‘Yet more computer company hype’ to ‘the 4th and biggest revolution in economic and social history, ever’.

Digital Transformation looks different for every business and can be hard to pinpoint a definition that applies to all. In general, digital transformation can be described as the integration of digital technology into all parts of a company resulting in fundamental changes to how businesses operate and how they deliver value to customers.

The promise of digital transformation is that it will make your customers digital experience easier. Allowing customers to enjoy doing business with you, while at the same time cutting costs and risks. The inevitable reactions from business leaders include:

How? By when? and How much will this cost?

As a former CIO, I was closely involved in a succession of new technologies that did trigger major long-term advances in our business and personal lives: from mainframe computers to the advent of PCs, then the world-wide-web and e-mail, internet & e-commerce, mobiles, sat-nav, social media and cloud.

Did those technologies transform the companies involved? In many cases, yes. But only when the organisation, including senior leadership, took time to grasp the real business potential of the new technology. And then made sure it aligned with and supported their strategic goals.

However important those and other advances were at the time, they were spaced over a period of about forty years. So, businesses had time to think about each, make an informed decision and then implement in stages.

In today’s digital age, there are a vast range of advantageous technologies are coming to market at the same time. And the majority of those are getting better and cheaper every few months. They include ground-breaking supply chains of software, networks and hardware, including robotics, smart machines and Artificial Intelligence.

They are also becoming easier to configure and use. Each might have a different purpose, but modern connectivity and global networks can help your firm to quickly establish new business models and collaborative networks, or ‘ecosystems’, with suppliers & partners.

Separately each technology might well create a benefit for your business, such as using low-cost warehouse robots to reduce logistics costs or machine learning AI and Chatbots to handle routine queries. But grouped together, and correctly linked to your business strategy they also have the potential to transform you into a world-beater.

Yet, however powerful, no technology alone will make a digital transformation program succeed.

Many businesses start their digital transformation journey by selecting one or two potentially exciting digital innovation and then become discouraged when the breakthroughs they originally expected don’t take place.

Likewise, converting inefficient and ineffective business processes into digital ones won’t make them any better. Effective digital transformation means re-examining your company’s business operations end-to-end, and even modifying its culture and updating its legacy systems. At a minimum, it involves changing the ways that staff work and how interactions with customers take place. The role of partners and suppliers also needs to be examined, as well as how internal decision making takes place. And of course, not forgetting the measures that your firm takes to secure its data and financial information.

So ‘digital transformation’ is a misnomer. For your technology investments to reap the right rewards your business must transform along with technology.

Why is this important to you and your business?

The UK’s ability to support digital transformation on a national scale has slid below that of many other countries. According to case studies in 2018 (from OECD, IMD & IFR), Britain is now 35th in the European continent for fibre broadband. Our mobile broadband access is 20th out of 63 countries. Of the 10 car making nations in the EU, Britain ranks last in the take up of robotics. And for a country that invented much of the computing technology in use today, we have a lower % of IT professionals in our population than Estonia, Finland, Sweden and Switzerland.

Our own 2018 study of hundreds of UK and USA businesses showed that over 40% of UK businesses are not planning to develop a digital transformation strategy for 2019, or for at least the next 2 years. Of the ones that do have such a strategy, most are focused on customer-neutral technologies such as financial reporting and administration. By contrast, USA companies are investing heavily in digital technologies that improve customer experience, help to predict future demand with ‘Big Data’, and recruit scarce talent into their organisation.

In short, we have a lot of catching up to do and fast.

The next challenge will be to compete with international competitors. Most of whom will then be doing business online in ways that can provide better customer service and experiences, more accurate forecasting and keener costs.

Given that 70-80% of change programs fail to meet expected results, there is a real danger that the compound impact of any sequential transformation of this magnitude will sound the death knell for many otherwise healthy UK companies.

Therefore, to cope with future challenges, Digital Transformation should be taken seriously and will need expertise in planning and execution.

If you would like to understand how digital transformation applies to your business, and how you can embrace this new wave of technology read about our digital transformation services here, or get in touch.

In next weeks blog post we explore how Digital Transformations can serve Small and Medium Enterprises (SMEs).

Former CIO, Ross Harling, has helped numerous organisations with technology-driven business transformations. He has received several Business, Ethical and Environmental awards for his work in this and other fields. Since 2014 Ross has also been an Expert Evaluator for the European Commission on Business and Technology Innovations. 

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