What is Digital Transformation?
This is an interesting question. Digital Transformation can be many things to many people. For instance, Salesforce defines Digital Transformation as:
“The process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation.”
This is an interesting take, but in my opinion, it needs to be brought down a level or two. Simply utilizing digital technology is not, in itself, transformative to a business. You can automate any process through technology but that doesn’t mean you’ve undergone a digital transformation. For instance, if you digitize a hard copy work order and require that the same information be captured digitally, that is digitizing the data, but if that data is then sent to the back office and treated the same way as the old paper copies, there is no transformation associated with that digitization.
So, I think it is more important to look at the second word in the phrase, transformation. Digital transformation is really about transforming, or reimagining, the business, and the digital element is the how.
Reimagining the Business
What were your original business objectives? What did you hope to accomplish? Many business processes in existence today are the result of decades of constraints. Communications constraints, technical constraints, personnel constraints, and data constraints.
Reimagining business processes means removing those constraints in the planning process and looking at the outcomes that your organization is truly after. What is important to your company, your employees, and your customers? Where are areas, that if truly transformed, would drive the biggest benefit to all three? What would the results of that transformation look like?
Once you have defined your strategic objectives, determine what tools, technologies, and applications are available to help you achieve those outcomes. Map your existing processes and see which add value and which do not. In many cases, achieving your objectives and transforming the business will be just as much about what you stop doing as what you begin to do.
Applying Technology Where It Makes Sense
Now that you have identified the core objectives, how can you best go about achieving them? In some cases, it can be as simple as eliminating non-value-add manual processes, reducing hand-offs, or streamlining procedures. In many instances, outdated, manual, and administrative tasks can be automated. Data can initially be collected digitally, and then repurposed many times, eliminating multiple hand-offs, duplicate data entry, and multiple manual data accuracy validations.
Entire workflows can be automated and guided to drive best practices, reduce process steps, and validate the accuracy of the information on the fly. Transforming the business is about faster, less expensive, more accurate, and higher quality services to consumers with less effort and more automation for staff. Digital technology can greatly assist in this and is an incredibly powerful tool, but it is not business transformation on its own.
Many of our customers ask, “Can your system do this?” Our answer is normally, “Yes, but why do you want it to? What is the value?” Our best prospects do not tell us what they want, they ask us what they need and what is possible to do. We have seen organizations digitize their existing processes and perform poor work faster thanks to that digitization. While they may see some efficiency gains, I would not call that a positive digital transformation. On the other hand, applying technology to a 50-step process and reducing it to a 20-step process that is faster, more accurate, less expensive, and meets the customers’ needs better is very transformative.
Measuring the Outcome of a Digital Transformation
As noted above, if you can achieve your target performance objectives by leveraging process improvements and digital technology, and the result costs less, delivers greater value, meets or exceeds customer expectations, and has good staff adoption, you have achieved positive digital transformation. The value of that transformation should be measured and calculated by a business case. What was the cost in time, inventory, labor, funds, and any other quantifiable measurement to deliver the services before the transformation journey, and what is the difference in those metrics after? Has user adoption, sales, and renewals increased? Has cash flow and customer NPS improved?
Digital transformation is, in the end, business transformation. Customers’ expectations and demands continue to evolve based on the services and experiences they have in every other aspect of life. While there may be some urgency to digitize for the sake of digitization, true transformation is powered by fundamentally changing the way a business delivers its products and services.
So, has your business truly undergone a digital transformation?
Continued Reading: Refining Digital Transformation Through Asset Centricity