IBM’s digital transformation definition offers a great starting point: It involves “using AI, automation, hybrid cloud, and other digital technologies to leverage data and drive intelligent workflows, faster and smarter decision-making, and real-time response to market disruptions.”
And although that’s correct, it’s a lot to take in. We’ll peel back those layers below, but for now, it suffices to say that digital transformation is when businesses use new online technologies to replace old methods and then integrate them into all areas of business. This transformation offers companies a distinct edge over their competitors and delivers value to employees, customers, and clients.
What is digital transformation?
Today, digital transformation is an integral part of any organization’s success. But what is digital transformation, exactly? Unfortunately, the term is used so widely that its meaning has become muddied. So we’ll explain what it is and how it has become ubiquitous in business conversations and activities.
Why it matters
The world has gone the way of digital—and organizations still using an analog approach are guaranteed to fall behind.
“We cannot become what we want to be by remaining what we are.” – Max Depree.
If organizations hope to expand and grow—digital transformation is a requirement.
Digital transformation optimizes the internal processes of your organization—making it more efficient. It also empowers employees, allowing them to work quickly and effectively. And it helps customers at the same time by assisting organizations in understanding them better—so your company can better meet their needs and wants.
And all of this helps organizations competitively by keeping them relevant, efficient, and effective in an increasingly digital world.
Examples of digital transformation success at companies
There has been a significant reshuffling in organizations since the pandemic. Initially, those who had been slow to adopt digital tools were forced to do so to stay relevant and continue to exist. Now, organizations are using digital transformation to keep pace in the changing world and grow. Here are examples of companies whose digital strategies have helped them stand out in a crowded space:
Nike is a pioneer and a digital visionary. They move with the times and stay ahead of any new trends. And it has served them well. According to Nike’s earnings report, in 2022, Nike’s digital channels and applications accounted for 26% of its revenue in Q3. There isn’t an area in their organization that isn’t touched by digital transformation. For example:
- In 2022, Nike launched a chatbot to help e-commerce customers and offer personalized product recommendations.
- They expanded their physical robots. As a result, it increased the speed of order processing and tripled order capacity during the holidays, all while increasing the accuracy of forecasted demands and minimizing environmental impact.
- Nike uses AI and machine learning to forward-position the products consumers love most and deliver items faster and more precisely without compromising on its sustainability goals.
Digital transformation makes Nike the competition to beat and helps them mainstream processes to deliver the best experiences internally and externally.
For another example, Latin American-based Cencosud shines. An organization that offers various businesses such as Supermarkets, Home Improvement, Department Stores, Shopping Centers, and Financial Services (with joint ventures in almost all countries), Cencosud created three digital products. We’ll speak to two of them. Each brings Cencosud customers and employees a better experience:
- Mi Local: Translating to “my store” in English. This digital product helps employees perform their tasks at a store level. It provides a task manager to simplify how employees work, keeps employees abreast of inventory, and alerts them when restocked products have arrived at the store. The data is in real-time to quickly solve any issue.
- Connect: Connect is for Cencosud’s shoppers. It assists shoppers in building shopping lists and helps them access store services. They can receive personalized ads, and it supports contactless payment. It also tracks customer loyalty programs so they can earn, track, and spend their points. By using technology to focus on what shoppers want and need, this digital product improves the experience for their shoppers and keeps them coming back.
Cencosud’s adoption of digital transformation focuses on the organization as a whole—both employee and customer.
Telehealth is a recent example spurred by the pandemic. This technology existed before the pandemic, but it didn’t prove its business value to traditional family practices until COVID-19 breakouts made people wary of medical facilities.
- Today, people are going out again to visit their doctors in person, but some of the digital technologies that were adopted in 2020 continue to improve family practice operations.
- People can sign up for appointments online without waiting on hold. They can check in from the parking lot with a mobile app. They can even check their test results and message their doctor through patient portals.
Will people leave their trusted doctors for the digital convenience offered by competitors? Probably not. Digital transformation doesn’t always lead to a frenzy of Silicon Valley startups and overnight market disruption. But for the doctors taking advantage of digital technologies, profitability is on an upswing. As for Silicon Valley, don’t write them off yet. Tech like the Apple Watch is expanding the healthcare pie, offering customers on-demand ECGs, blood oxygen monitoring, and more.
And our final example is none other than the King of online shopping (and shipping)—Amazon. Digital transformation and Amazon go together like peas and carrots. And they have been the leader in many digital adoptions, from online shopping to lightning-fast shipping time. So Amazon has stood the test of time. But it’s not all consumer-oriented.
Amazon has AWS Professional Services, a global team of experts that helps people with their digital transformation journey using the AWS cloud. They know that what makes their organization run is their customers and specifically those customers who are also selling on Amazon. And business only runs as smoothly as the internal workings of your organization.
Amazon supports its vendors by delivering a set of instructions, best practices, and documentation for every step in its cloud adoption digital transformation journey. Additionally, AWS has “targeted guidance through best practices, frameworks, tools, and services to support digital transformation projects related to AWS Cloud.”
Understanding how to develop and execute effective and efficient plans for digital transformation is critical for any organization—and amazon seems to be getting it right by assisting vendors in their cloud computing onboarding experience across the vendors’ organization and throughout the IT life cycle.
Beyond these specific examples, the benefits of digital transformation are limitless.
Benefits of the digital transformation journey
There are many reasons your organization needs digital transformation, including the potentially positive impact on ROI—but we’ll get to that a little further on. Digital transformation often happens in stages. It looks different at different times and across different industries. But it always has the same goal—using digital technologies to revolutionize the way a company does business. Here are nine benefits to review with your team as you consider your digital transformation options in-house:
1. Reduce costs with better onboarding
The time and money spent training new employees can get costly. However, with digital tools, you can streamline this process, making it mutually beneficial for both you and your new worker. In addition, updating your digital resources can bring your new hire up to speed faster than traditional ways, and it is less costly as well.
For example, security Boulevard cites, “a typical bank must invest $150 to onboard a new individual client, but a fintech requires just $30 due to a considerably more effective procedure with digital onboarding.” And because the process is more effective (and efficient), your employee will be more engaged, and productivity will quickly increase.
2. Enhanced customer experience
Today’s customers are very tech-savvy and want a great end-to-end experience—from when they first learn of you to after purchase and beyond. And this often involves access to your organization through multiple touchpoints — mobile apps, social media, email, live chat, etc. Digital transformation is the driving force behind excellent CX.
3. Drives innovation in a competitive world
Whether you’re adopting digital transformation or not, your competitors are. By choosing to remain where you are, you’re choosing to become obsolete. With digital adoption, you’re ensuring that your organization stays relevant to the demands of modern workplaces and the market. This requires investing in AI and machine learning, and making a commitment to exploring advanced technologies as they become available—or implementing a platform that does it for you.
4. Greater agility
The ability to change and be flexible is the key to surviving the ongoing shifts in today’s world. Technology changes every day, and with-it products and customer demands. As a result, previously reliable revenue streams may dry up. If this happens, you need the tools to pivot and offer operational efficiencies by way of increased automation capabilities.
The solution, in short, is a digital transformation strategy. With a digital workplace and digital environment, your company will anticipate challenges and changes, creating solutions before the crisis gets out of hand. And this will make you viable in the future.
Digital transformation increases operational efficiency. Consolidating manual “paper and pen” processes and providing a one-stop-shop digital experience for your employees is essential to getting work done efficiently. A digital workplace tool such as a modern intranet helps with digital transformation by creating a singular space for office updates, relevant data, employee directories, etc. It also houses all workplace tools in one area, so there’s no time lost signing in and out of apps. With digital transformation, you’ll save time and decrease frustration.
6. Employee experience
This is a trending must-have—and it’s one with staying power. Potential talent is looking at the workplace through a new set of glasses—or, better yet, a microscope.
They want to know what it’s like to work for you before even stepping foot in your office. Digital transformation helps create a company culture that thrives. It does this by streamlining work processes, offering continuity in workplace procedures, and supporting employees where and when they need it most. And this culminates in a more prosperous and cohesive employee experience that employees will discuss outside the workplace.
Your employees are your greatest asset and advertisement, so investing in digital workplace tools to support their overall EX is critical.
7. Encourages collaboration and improves communication
As it goes—communication is vital. Underline that. Without clear communication, an organization will suffer at every level—from the top down and bottom up. Therefore, you need a digital platform that promotes fantastic internal communication and collaboration across all departments – one that moves data from stand-alone systems to cloud-based systems.
Digital tools eliminate unclear communication, redundancy, slow response times, lost information, and ineffective idea-sharing—all killers of collaborative efforts. Instead, with the help of digital transformation, organizations reap the benefits of increased productivity, accountability, and creativity. And it’s this edge that will take out the competition.
8. Improved decision-making
Your business can collect and analyze actionable data with digital transformation. With traditional methods, data was scattered across multiple disconnected platforms, or in some cases; organizations didn’t collect data at all.
With digital workplace tools, organizations can have robust data collection and centralized data storage at their fingertips. Additionally, some workplace tools offer a Sentiment AI or tools which allow organizations to understand the heartbeat and backbone of their business—their employees. This data is then analyzed and translated into information that promotes informed decision-making.
9. Enables future digital growth
Your company will be left behind without investing in digital business transformation. There are plenty of examples in the graveyard of companies who didn’t see the importance of digital transformation—Blockbuster, anyone? Or how about Toys R’ Us? They weren’t prepared to pivot, so they closed up shop. The sooner you adopt digital transformation, the better prepared you’ll be for any changes in the future.
Digital transformation isn’t optional, especially with so many companies switching to internal and external cloud-based services for just about everything, from operations management to digital sales and customer service. Not to mention the adoption of AI. Your organization must transform to survive whatever curveball is thrown its way in the coming years.
How to form a digital transformation strategy
It’s not as simple as picking any old digital tool for your organization’s purpose. Instead, successfully implementing digital transformation involves locating clear metrics, establishing business goals, and looking critically at business processes.
62% of organizations invest in new tech due to their old digital tools aging out. Therefore, businesses need to focus digital transformation efforts toward tech that will grow and scale with it as technology evolves.
So, where do you start? Here are some tips on how to form a digital transformation strategy:
1. Align on why
A digital transformation strategy begins by identifying your business needs and goals. Then, discuss where you want your business to be in 5-10 years. You also need to identify organizational values. This is critical at the C-suite level, as a cultural shift goes together with digital transformation and your company’s leaders set the tone for everyone else.
2. Prepare for a change in company culture
Equal enthusiasm across the organization is critical for cultural change to happen. There will always be pushback, and that’s when organizations need to develop a team mindset, with culture ambassadors taking up the charge from IT, sales, marketing, design, and more. Nurture the value of working together as a team and identifying projects that improve employees’ efficiency, effectiveness, and productivity.
3. Start small
Rome wasn’t built in a day. Identify an area you can quickly pivot in and use that as your test pilot for measuring success. Quick wins set the stage for future initiatives – and help get approval from leaders, teams, and employees. Be patient; transformation takes time.
4. Map out your technology use
Technology is necessary to help achieve defined business outcomes. So, what does your digital transformation arsenal of tools look like? What will you need for your specific goals and purposes?
This digital tool belt can include the cloud, AI and machine learning, robotics, IoT, mobile applications, etc. Some of these tools may already be in use within your organization—but maybe they’ve aged out, are clunky to use, or require logging in and out of multiple apps, wasting valuable time. In any case, you may need technology that encompasses one or more of these things in a single tool. And a modern intranet should come complete with AI and machine learning, cloud services, integrated apps, digital sharing, and more.
Whatever you choose, developing a technology roadmap for short and long-term business initiatives is essential to digital transformation success.
5. Choose the right tool(s) to implement digital transformation
Just because you’ve found the right technology doesn’t mean you have the right partner to implement it. When shopping for digital tools, there are a few questions to remember. These questions will help you decide what digital tool is best for you and your business goals. They are:
- Does it support global scaling?
- Does the technology commit to continuous improvement and keeping pace with advances?
- Can they support both short and long-term strategies?
- Does its technology integrate with my existing tech stack?
- Does it have flexible digital tools and expertise to adapt to my users’ evolving needs?
- Does it have experience working successfully with similar use cases/applications?
Seek partners who complement your strengths and understand your business goals, as this will help accelerate results and drive initiatives.
6. Be transparent and get constructive criticism
Create a feedback loop with stakeholders, leadership, and employees to ensure everyone learns and benefits from the digital transformation experience. Organizations must clearly define each project’s key performance indicators (KPIs) and keep teams aware of what needs to be delivered to make the project successful. Finally, digital transformation is a journey; therefore, it is critical to stop from time to time, asses, and adjust as needed.
7. Transform and scale
The transformation looks different in every organization. First, you’ll need to consider opportunities to scale horizontally–this means you may need to apply similar strategies to various locations. And then, you’ll also want to scale vertically by connecting applicable technologies. For example, some digital tools, such as modern intranets, have AI-driven technology that can monitor and analyze your progress.
Digital transformation is a personalized roadmap revealing which areas of your organization would benefit the most from change. Next, we’ll look at the digital framework.
Digital transformation framework
A digital transformation framework is a structure or set of guidelines that help an organization plan and execute its digital transformation efforts. It’s your organization’s reference point that can evolve as needed.
Today, digital transformation frameworks are data powered and can help organizations focus on the things that matter. Here’s how a digital transformation framework can help your business:
Analyze your vision and goals
What issues need resolutions? And where do you want to see your business in five years? How can you differentiate yourself from other organizations? A digital transformation framework will help you see your organization from above—revealing obstacles to remove.
Understand your current state
How are you operating now? Are your employees excited and engaged at work? The right digital tools will help you organize all the moving parts of your organization, ensuring that employees know what they need to do and where to go to find what they need to do their jobs efficiently.
Analyze employee productivity
If employees spend too much time searching and becoming blocked by siloed data, they’re getting frustrated—and employee productivity will suffer. Using a digital workplace tool that removes data silos and creates a network of information sharing is critical in your digital transformation journey.
Evaluate employee experience
Understanding your employees’ experience will help you see your organization in a new, honest light. This simple framework can help you adjust things that may not be working for your employees, and it can help to create a more cohesive culture. If your employees see you working for their betterment, they’ll work for yours.
Identify and govern resources
Use your digital transformation framework to manage the content that your employees interact with. Keep things current and fresh, deleting any outdated material. And better yet, use a digital tool that offers auto governance—this will automatically archive or delete irrelevant material, so you can spend time focusing on other areas of your digital transformation.
Timeline comparison to benchmark
Use a digital transformation framework as a timeline comparison to benchmark against. It’s an excellent tool to understand where you were versus where you are now and then use those results to adjust as needed.
After a few months, something you thought would work great isn’t working well in the wash. This realization is an opportunity to reassess and improve your digital transformation strategy.
A digital transformation framework is your roadmap to success—it identifies what’s working and what’s not and allows organizations to improve their processes, productivity, company culture, and more.
The role of culture in digital transformation
A positive, supportive culture can facilitate the adoption of new technologies and ways of working, while a negative or resistant culture can hinder progress. Therefore, a cohesive company culture is necessary if you hope to implement digital transformation successfully.
Leaders must foster a culture where continual improvements and change are the norms. Everyone must be willing to abandon older ways of doing things and adopt newer processes. Without this, you could adopt the best digital tools out there, but if your workers aren’t willing to learn to use them, you’re wasting your time. Digital transformation is supposed to help increase efficiency, productivity, and collaboration—but to do that, your people must be on board.
Additionally, your company culture must be committed to continuously improving to truly see digital transformation success. A culture that’s happy doing things the way they’ve always done them will slowly make the digital transformation leap.
And if you haven’t been a digital culture, technology can be a bit overwhelming to those who’ve never used it. Sitting down with employees and helping them connect the dots on how this digital transformation will help make their jobs more efficient and effective down the road will build enthusiasm and help adoption rates.
To facilitate a smooth digital transformation experience, leadership must be in tune with company culture to enable change where needed before pulling in digital tools.
What drives digital transformation
There are many drivers for this digital revolution, and they are born out of social, organizational, and market needs and demands. Let’s explore some of those now.
The need for instant gratification has been the driving force behind adopting digital. Customers expected companies to meet their needs yesterday—and today’s technology has answered those demands and provided some excellent tools to help anticipate market and consumer trends in the form of analytics.
Customer experience (CX)
Customer experience teams collect and organize customer information. These insights improve the customer experience, but only if you have the right digital tools which help keep customer-facing employees on the same page with company policies and procedures. When employees don’t have the same access to company intel, it can end with customers receiving an inconsistent experience from the same organization. Digital tools ensure continuity across the board of how a customer experiences an organization.
We’ve been talking about the pandemic ad nauseum. However, it drove digital transformation further and faster than has been done in years. Technology created more ways to connect us across borders with apps like Zoom and Slack.
The number of remote workers increases daily, and digital tools are needed to keep workers connected and engaged. Remote work means adopting technology that helps keep processes running smoothly and supports employees in the know and connected to their colleagues. And digital transformation tools like an intranet is a hero for these purposes.
A company that doesn’t invest in digital transformation is at a competitive disadvantage. Organizations are improving their operational processes and communication by adopting digital tools that enable their employees to get the job done more effectively and efficiently—and this makes them a force to be reckoned with on the competitive floor. As a result, digital transformation isn’t an option any longer—it’s a requirement.
Cost savings and revenue opportunities
High costs are a powerful driver of digital transformation. Digital transformation reduces them by identifying and removing inefficiencies. It can also automate repetitive tasks that previously took up much time by doing these tasks manually. And reduced revenue is also a powerful motivator in adopting digital transformation.
As an example, organizations worldwide lost revenue during the height of COVID-19. Digital transformation provided aid in cutting costs while they recovered. Statista reported that “68 percent (of organizations) report that digital transformation sped up a great deal in their organizations after the pandemic.”
Potential talent looking for jobs are looking at your digital transformation game. A study by Truce found that one in five people (21%) agreed that providing the latest technology is the best way to attract and retain top talent. Potential workers are looking for organizations that already have desirable tech.
So, if adopting digital tools means more significant attraction of top talent for organizations, what else does it mean?
What digital transformation trends mean for business
So, where can we see digital transformation at work today? And where is it all heading?
Focus on resiliency
This is the motto of the future. Be prepared for seismic shifts in market dynamics and consumer needs. Organizations should focus on agility and the ability to pivot when change happens. And they should be able to do so with minimal impact on internal employees and processes and external customers.
Using a cloud to enable innovation
As organizations focus on how to restructure, reimagine, and reengineer their overall portfolio to help realize their vision and goals–the cloud becomes the delivery engine that makes everything happen. Clouds enable organizations to move and pivot when developing new business services or applications. In addition, the cloud empowers teams and leadership with shared resources, self-service capabilities, elastic scalability, and automatic chargebacks.
Increased automation of business processes will continue to speed ahead. And as the technology matures, organizations will face pressure to drive down costs through automation. And the benefits are broad—AI personalizes employee experience and drives employee engagement and productivity. It’s also valuable for analytics, providing your company with real-time insights into organization processes, employee sentiment, topics, and even message comprehension.
This isn’t necessarily in the “new trend” box, but it’s a continued one. And remote work requires digital transformation. More companies offer this option; if you don’t have it, you may find yourself among the least desirable workplaces. Or if you provide it and don’t have the digital tools to make your employees’ experience meaningful-you’ll lose as well.
Data management the entire lifecycle
There’s a lot of information in your organization that employees don’t need to see again after a specified time. Digital tools that automate the management of documents, data, and information are imperative for weeding out unnecessary noise and keeping processes moving smoothly and communications clear.
Your cyber security cannot be an afterthought. Cybersecurity should be front and center of your digital transformation objectives with the complexity of cloud and distributed architecture and the rise of ransomware. In addition, there are too many users, apps and devices connected—you need beefed-up cybersecurity that protects.
AI ethics and governance
With great power comes great responsibility! Humans have all kinds of biases. Organizations need to use digital transformation tools that remove human bias. AI creates transparency, and there just need to be clear guidelines around the application and use cases for AI.
Maturing machine learning
Machine learning used to be the stuff that science fiction stories were made of, but we’ve come a long way in a relatively short while. Nevertheless, analytics will continue to pave the way for understanding in our workplaces. A modern digital tool such as prescriptive analytics can suggest options for taking advantage of an opportunity or mitigating risk. Additionally, it shows what the outcome of each decision may be.
Digital transformation ROI
Now we get down to the nitty-gritty—ROI. Every organization wants to know how digital transformation will affect its bottom line.
Organizations can measure how well they’re doing on their digital transformation journey and whether it’s worth the investment. But it can be challenging to quantify. So it’s helpful to take more of a portfolio view instead of a project one.
For example, you don’t want the underperformance of one project to reflect negatively on the overarching efforts of IT. And you’ll need to tie your technology to monitoring KPIs on customer insights, business processes, employee activity, and anything else relevant to your organization.
With that in mind, here are a few practical steps and best practices in understanding if your digital transformation is paying off:
- Set initial metrics in advance. What do you need to track? Next, identify the objectives or goals of an initiative that supports the organization's digital transformation strategy. Without setting initial metrics, you’ll be working in the dark.
- Develop micro-metrics for agile experiments. Adaptation is the name of the game today. And sometimes, as we track these metrics, we learn we need to adjust—and that’s okay because as we adjust, we get closer to our goal and success.
- Measure business outcomes. Look at the strategic impact (revenue growth, customer value, turnaround time), operational impact (productivity, scale, operational effectiveness, employee experience, and productivity), and cost impact.
Measuring the ROI of digital transformation initiatives will be critical going forward. According to Statista, “By 2026, global digital transformation spending is forecast to reach 3.4 trillion U.S. dollars.” And in 2022, organizations had already invested 1.6 trillion in the U.S. alone.
You want to be sure you’re using digital technology that you can measure, which is effective for your business goals presently and in the future. A modern intranet can get you there. So, if you’re curious about how digital workplace tools can help your organization forge a new path to success internally and externally—reach out for a demo!