These days it feels like you can’t get through a working day without someone mentioning digital transformation. In fact, the IDC have predicted that by the end of this year DX spending will have reached $1.7 trillion globally, up 42% on 2017. But just because everyone else is doing it, does that mean you should be?
The truth is that we can easily be swept along by a trend - social media, influencer marketing, app development - without really understanding what we’re doing and why. When everyone around us is talking about the new digital systems they’re rolling out or the new digital processes they’re implementing, the temptation is to jump in so you don’t get left behind.
And in many ways that’s no bad thing. Keeping up is a valid motivator for engaging with digital transformation. But rather than charging in blindly, stop and ask yourself these three important questions first.
Why do we as a company need to transform?
If you can’t find a good reason for doing something then you have your answer - don’t. Digital transformation takes time, effort and resources so there’s no point starting expensive projects for the sake of it.
However, we’ve found that our clients are usually motivated by one of three very compelling reasons for digital transformation:
- Reducing costs and / or increasing efficiencies through the application of digital technologies.
- Improving quality, whether that’s by eliminating human error, improving the customer or worker experience, or by using newer and better algorithms.
- Increasing revenue, perhaps by reaching new markets, improving conversion rates, offering better value or doing something totally new.
In practice we find that while one of these goals will often be the driver, usually all three are delivered together.
Here are some signs that indicate you might need to look at digital transformation more closely:
- You get through a lot of paper and / or have rooms full of files.
- You have people doing tedious, repetitive or menial jobs, either on paper or in basic IT tools like email, spreadsheets etc.
- You’re losing market share or your competitors are doing better than you.
Even if you’re still not sure whether digital transformation is relevant to your business, it’s worth asking yourself what will happen if you don’t transform? As we’ve already said, the world is changing. Businesses are constantly innovating and if you don’t move forward, you’re likely to get left behind.
This argument is hard to quantify and put into a business case but it’s possibly the most pressing reason for engaging in digital transformation.
What do we need to transform?
Broadly speaking digital transformation refers to any type of business change that has digital technology at its centre. But it can be further broken down into three key areas:
- Digitisation of existing internal business processes. This might be paper-based ones or ones that are partly digitised but can be further improved and have their application widened thanks to advances in digital technology.
- Digitisation of existing customer services. For example sales processes, order fulfilment, invoicing or after sales care.
- The creation of new or ancillary services and revenue streams in the digital realm e.g. cross-selling relevant add-on services or products after an initial sale.
The first two are about doing something you already do only better. The third is about using digital technology to do something entirely new.
When you’re thinking about what to transform, consider where you can have the biggest impact. Where can you save the most money, gain the most cost savings, bring in the most new clients? Look at what other organisations - both within and outside your sector - are doing. Get experts in to do an audit and help you identify where the opportunities lie.
How can we transform?
The specifics of how you implement digital transformation will depending on what you’re looking at changing, whether you want to “do it better” or “do something new”. But whatever the case, the first step should always be to do your research, whether that’s via individual user interviews or observations (ethnography), analysis of usage data, focus groups, market research, staff surveys or a combination of methods. A discovery stage will allow you to clarify pain points and identify possible solutions before trying them out.
Also remember that you don’t have to dive in with a massive project straight away. Start small and learn. Test the water, not just in terms of the technology but also the softer side of change such as user adoption. It’s all very well being innovative but if you don’t have your staff or your clients on board then you could well be wasting your time. Develop your transformation iteratively, use prototypes to test your ideas cheaply, do the highest value piece first and use that as a way to learn so you can do the next step better.
And don’t be afraid to call in the experts, even in the early stages, to challenge your perspective. Where you’re entrenched in your current ways of working and the workarounds that have served their purpose up until now, a business that is experienced in supporting clients through the digital transformation process will bring in a fresh point of view that will save you a lot of time, effort and money.