Digital transformation will underpin virtually all business processes, models and activities over the next few years. There's a growing sense among companies that, in order to stay ahead of their competitors and attract new customers, they have to prioritize investment in their digital transformation strategies.
What happens if businesses fail to jump onto this bandwagon? Then they simply risk falling behind. By investing in digital technology and software, companies are able to accelerate productivity, creativity and innovation. Technology can also help firms better understand customers.
According to research from IDC, two thirds of executives working for 2,000 of the world's biggest companies planned to implement digital transformation strategies by the end of 2017. And a study conducted by software firm Progress claims that 85% of surveyed business leaders believe that their firms could suffer financial losses if they don't stay up-to-date with the most recent digital trends.
Understanding customers better
If there's one saying that will never go out of fashion in the business world, it's that the customer is always right. But sometimes it is difficult for businesses to understand what people actually want. Dr Peter Colman
, from business strategy firm Simon Kucher & Partners
, believes that digital transformation techniques are helping businesses to tap into new markets and deliver new products for customers.
"Digital transformation is a way to change the whole business model and create more value for customers, which in turn opens up new revenue opportunities. Let's be clear -- it is not an IT project. Technology is just the enabler for these opportunities. We've seen lots of channel disruption as companies either add additional digital channels [such as e-commerce sites/mobile apps] to their existing routes to market or disintermediate middle parts of the value chain [e.g. travel agents, brokers, distributors etc.]. This has been possible due to lower costs to serve and reduced barriers to entry, but this in turn has created more price transparency," he says.
Technology is making a range of traditional product categories more widely available to the mass market. For years, people have been downloading music instead of buying physical CDs, but this model is now extending to cars and the home. Colman believes this can help businesses reach new customers and increase revenue. "We see a raft of changes in this dimension too. First we saw the digitalization of physical products such as newspapers, music etc. We are now seeing the digital enhancement of physical products such as smart cars/homes etc. as well as wearables," he tells us.
"Finally we've seen a trend where we add a digital service layer on top of physical products. For example, a manufacturer that has shifted a large proportion of its business to this 'servitized' model is Rolls-Royce with its well-known 'power-by-the-hour' approach. We've seen similar in other sectors such as wind turbines, lifts and power generation."
Firms are already changing
Michael Olaye, CEO of Dare and CTO of Inside Ideas Group, agrees with Colman that companies are in a position where they must adopt digital technologies to forge better relationships with consumers. He says: "Customers demand and deserve more. Digital today should be weaved into the business, playing a key role in how it's structured and how it operates, with shorter lead times from concept to release. Businesses now realize that they have to connect the dots, that they have to adapt products and services to their clients' needs using digital."
However, he doesn't necessarily believe that digital transformation is a make or break situation for businesses anymore. He says that most companies understand the benefits of technology and have already began to change with the times. He tells us: "Digital transformation forced businesses to implement new systems and hastily embrace new technologies. But it doesn't actually disrupt business models anymore. In 2018, businesses are constantly transforming anyway, to meet the ever-expanding needs and expectations of their clients, whether that be via automation, data analysis or any number of performance-optimization methods."
Boosting productivity and agility
In today's constantly changing and interconnected world, professionals need to deal with lots of emails, complex business tasks and timely meetings. But Lee Hull, executive director at Intercity Technology
, believes that digital solutions can help companies and their employees stay on top of things.
"Productivity is simple once you've got the right tools to work with, and technology is the obvious facilitator here. When it comes to efficiency, getting internal communications right is key and should be the first step in any organization's digital transformation journey," he says.
In particular, Hull points to unified communication solutions. He explains that they "bring together desk phones, mobiles and file sharing tools into one secure, user-friendly platform." Such systems, he says, improve collaboration and allow employees to work flexibly. "This type of technology is particularly beneficial for large organizations with multiple offers and those with an international presence. Once organizations have streamlined their internal communications, efficient ways of working will become second nature. Customers will be happier, employees will work better together and businesses will be able to reap the reward of overall growth," he adds.
Alasdair Ford, chief technologist and practice lead digital workplace at Logicalis UK, says companies should implement collaboration tools in their digital transformation plans. He says: "They dramatically improve productivity by providing digital spaces where employees and partners can develop ideas and work together on projects. The better the integration and the ease of accessing the tools, the more productivity gains are maximized.
This software, Ford says, means employees can get more work done. It also encourages firms to tap into agile business models. He explains: "In our new world of collaboration, the need to meet regularly in person can be minimized. Face-to-face meetings can be costly in terms of scheduling, travel time and travel expense, and if improvements can be made in a digital space, then projects and ideas can progress even when people occupy different time zones. Knowing that people will be available also provides speedy, real time access to information, which reduces the delays normally experienced by the 'back and forth' style of communication around a project."
Allegra Santis, creative marketing specialist at Oak Internet, also thinks digital transformation is a positive thing for employees. In particular, she believes that virtual working environments are driving efficiencies in the workplace. "Cloud-based intranet systems make HR processes more efficient than before, and opens up more opportunities for businesses as well. Companies can work remotely, improve the work-life balance of their personnel, and engage their employees. Also, cloud-based systems are scalable, so that small start-up organisations can embrace new, advanced technology, leveling the playing field between them and larger competitors," she says.
Digital transformation is a term that has been used for a few years, but only now is it really starting to mean something. The fact is, most people have access to mobile devices and the Internet, so naturally digital tech gives firms the ability to reach out to their customers easily and quickly. However, it's clear that digital transformation is making big waves in the workplace too.
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— Nicolas Fearn, TechX365 contributor