Digital transformation is at the top of nearly every business agenda. Companies are looking for ways to improve operational efficiency and deliver better customer experiences. With more businesses working with distributed workforces and remote workers, long-term digital efficiency has become even more of a priority.
The digital transformation market is projected to grow to more than a trillion dollars by 2025. Spending on tech transitions is growing at an annual growth rate of 16.5%. A digital transformation strategy is crucial to remaining competitive and viable.
Developing a Digital Transformation Strategy in 5 Clear Steps
Most business leaders today understand the need for digital transformation, but many struggle with where to begin. Designing more efficient systems to integrate data into your business model isn’t simple or easy.
As you map out your digital transformation strategy, here are five steps you need to consider to get started.
1. Create Your Digital Transformation Team
Your digital transformation strategy should start with identifying your digital transformation team. While your company’s top technology leaders need a seat at the table, the most successful digital transformations are driven by the very top of the organization.
Getting alignment from company executives is job one. True digital transformation will dramatically impact your business strategy, so it’s crucial that everyone is on board and comes to an agreement on the way your business will operate.
Many digital transformations fail because of a lack of alignment even when everyone does their job. For example, the Chief Digital Officer (CDO) may be focused on cross-departmental communication by eliminating data siloes while the company’s Chief Financial Officer (CFO) puts a greater priority on reducing labor costs. Both goals are realistic but without a clearly defined strategy, they may become at odds.
2. Identify Your Transformation Needs
Digital transformation is all about assessing the way businesses operate and how you can impact operational efficiency in both the short term and longer term. By modifying the current workflow or replacing it with digital technologies, it requires a reimagining of the way you conduct business.
This is the hard part. You need to gather key stakeholders together to identify opportunities that will grow your business. It helps to start with the customer and work backward.
As much as 66% of organizations understand success in digital-first businesses as delivering an excellent customer experience (CX). Your digital transformation needs to focus on ways to deliver that improved CX. Transformation teams need a deep understanding of customer needs to identify areas for transformation. Often, these issues can be complex.
For example, let’s say you are trying to dramatically improve the experience for customers on your eCommerce site or mobile app. Not only do you need to examine the code on the application, but it requires you to evaluate your supply chain, inventory management systems, authorization systems, and payment systems (among others). Within each of these areas, you may need to assess where you can create operational efficiencies and the roadblocks that prevent them currently.
You may determine you need different products and services to augment what you provide for customers now. Is your supply chain flexible? Does your mobile application support customization? Do you have an efficient way to pick, pack, and ship additional stock-keeping units (SKUs)? Even small changes can have a ripple effect.
Digital transformation journeys can go in a lot of different directions. Where do you get the most bang for your buck?
According to Deloitte, the most effective digital initiatives that pay off for businesses are data mastery and more intelligent workflows. Companies improving in these two areas had the most measurable improvements in business outcomes. Deloitte’s study showed that 51% of revenue growth was attributed to these two factors. Data mastery and intelligent workflows as part of a company’s digital maturity are also responsible for as much as 49% of the improvements in customer satisfaction.
3. Assess Existing Workflow & Identify Technology Gaps
Once you have identified the key areas for digital transformation, the next step is to look at the processes and business models you’re using.
You need to map the existing workflow to understand where you are now. Then, you need to design the workflow for how you need it to be to achieve desired results. Identifying the technology gaps that prevent you from achieving these goals is a central facet of digital transformation. Figuring out what’s holding you back helps you more clearly see what needs to change.
Data analytics and data mapping against key company metrics can help you define these stumbling blocks. Let’s say you are trying to improve the first-call resolution (FCR) times in your customer contact center to improve customer satisfaction.
Data mapping takes a deep dive into the entire workflow from the time a customer first contacts you until the issue is resolved. How long were they on hold? Were they routed to the right agent within your expected time frame? Did the agent have the right scripts or documents available readily to minimize search time and resolve customer concerns quickly?
By doing this kind of analysis, you can identify the areas that prevent goal completion and define ways to improve. In this example, you might choose to then invest in more robust software that uses natural language processing, intelligent routing, and predictive intelligence to improve response times. Integrated with your customer relationship management (CRM) and marketing automation to eliminate data silos, you can significantly improve operational efficiency and improve customer satisfaction.
This is just a small example. A digital transformation requires you to reimagine your entire workflow. You will also need a way to evaluate your technology projects to manage resource utilization and deliver optimal value. A project portfolio management (PPM) solution will be an important consideration in making data-driven business decisions about where to invest in digital transformation and understand how they impact your business.
4. Conduct Due Diligence
Even when you have identified the gaps and technology needs, the number of choices among vendors and emerging technology solutions can be overwhelming. While your due diligence process should focus on solutions that will let you achieve your strategic business goals, you need to follow a three-step process to ensure you are making sound investments.
- Research: Identify your needs and study vendors and companies that can provide potential solutions. Narrow your list to a reasonable number as you move to the discovery phase.
- Discovery: In discussions with vendors and tech providers, this discovery phase is essential. The right vendor will understand both your industry and your business goals. Here is where you will define the parameters of your projects and develop your request for proposal (RFP).
- Demonstration: No matter what any sales rep tells you, you need to see the solutions they are proposing in action. A hands-on demo using real data is the best way to evaluate where a system operates the way the spec sheets say.
Your due diligence needs to go well beyond just working with outside consultants and vendors. You also need to evaluate your current team members with an eye towards how these changes will affect them and redefine their roles.
For example, one of the key roadblocks in digital adoption for employees is ease of use. The easier it is for team members to make the switch to new business processes, the faster and more widespread adoption will be. Your due diligence should include an evaluation of ease-of-use both in any tech you adopt as well as how it will impact the technology rollout and training schedule.
You’re looking for quick wins that can demonstrate value quickly to help create buy-in, a key part of managing the company culture.
5. Manage the Culture and Communication
One thing that often gets overlooked in digital transformation is that technology is only one part of the transition. Your goal isn’t to adopt new tech, it’s about transforming the way you do business. Tech is just the way to make the transformation happen.
That means you have to focus not just on the tech stack and process automation, but you also need to pay attention to the people that will drive the process. Without getting your team to embrace the change, your process will fall short of your transformation goals. Perhaps that’s why, according to industry studies, more than 70% of digital transformation programs fail to provide business value.
When it comes to digital transformation efforts, more than half of employees say their company does a poor job of communicating the importance of digital initiatives. If employees don’t understand the need for change, the benefits it provides, and how the change aligns with your business strategy, you may never realize the business outcomes you desire.
Business process automation, artificial intelligence (AI), machine learning, and automation can drive significant benefits for companies, but employees may be hesitant. This stat underscores that well: 88% of C-suite executives believe AI will improve things. Less than half of employees believe AI will make things better.
That’s a significant disconnect.
When employees aren’t convinced about a transformation strategy or its value, they often default to fear of change. They may fear becoming obsolete, losing their job, or losing status within the organization.
Digital transformation initiatives that work include:
- Communicate early and often throughout the change process
- Demonstrate how digital transformation is necessary
- Communicate the importance from the top levels of the organization
- Explain how digital transformation framework presents new opportunities to learn and grow
- Be consistent with your messaging
- Celebrate successes and milestones publicly
Getting buy-in from employee influencers beyond the management ranks is a powerful way to drive adoption. Find the employees that others respect and get them on board early in the process. If at all possible, find people that aren’t tech-savvy. If you can get these change leaders to buy in, that carries a powerful message to the rest of the team and will likely carry more weight than what managers are saying.
Digital Transformation Consulting
It’s also crucial to follow through even after the digital business transformation is complete. At some point in the process, you need to disable legacy systems and require employees to fully embrace the transformation. Without a hard deadline, many will find excuses to continue to work the way they’ve always done.
Old habits die hard without help and undermine the entire process.
If your organization needs assistance with developing and implementing digital transformation initiatives we can help. Get in touch with our team of experts to discuss your needs and craft a strategy that enhances your transformation efforts.