How to digitally transform your business.
Digital transformation is becoming increasingly unavoidable, and by 2024, it’s expected to reach a market valuation of $2.51 trillion.
Yet for all that money spent, McKinsey research shows the average company only makes a third of its expected revenue from digitalization. Without a solid strategy and the right technology, digital transformation can be a great way to spend a lot of money quickly and have very little to show for it.
In this article, we’ll give you everything you need to know to successfully implement digital transformation in 2024. We’ll break down the basics of what digital transformation really is (when you get away from the hype). And we’ll walk you through a simple, four-step process for transforming your business with digital tools.
If you’re ready to skip all the details and get stuck into leveling up your organization with digital technology, then JTM Digital Solutions work management has you covered. Our one-stop shop for managing all aspects of work can make it far easier to get digital.
What is a digital transformation?
Digital transformation is the process of using digital technologies to improve your business, whether by improving your customer or employee experience, making your operations more efficient, or offering new digital products and services.
digital transformation has changed a bit over recent years. It was previously a term to describe a pretty comprehensive business change — going from paper-based to online banking, for instance.
But these days, the majority of respondents in a survey by Baker McKenzie said that “digital transformation is a tool for improving process efficiency rather than fundamental business change.”
In other words, it’s about using digital tools to make your business better in small, incremental stages, and unlike other types of business transformation, which have a beginning and an end, digital transformation is an ongoing, long-term process of using innovation to give you a competitive edge.
Researchers at MIT also found that digital transformation will have a new focus in 2023: employee experience. Today’s digitalization projects prioritize how easy it is for employees to use technology to get their work done, often by offering platforms that can handle multiple aspects of their workflow in the same place or by choosing tools that integrate well with each other.
Examples of digital transformation
Digital transformation can sound like the kind of project only undertaken by massive global enterprises — with a team of consultants, an army of IT pros, and a vast tech budget.
But actually, transforming your company with digital tools can be simple:
- Switching from each employee managing their tasks individually to using a shared digital project management tool so you can collaborate on projects more easily
- Using an online meeting app that creates AI-generated summaries and next actions after every team meeting, so you never forget a task
- Managing your customer communications with a centralized sales and marketing platform, so you can keep track of your customer relationships and collaborate with your teammates to close more deals
Of course, if you’re curious about more comprehensive digitalization projects, many major brands have undergone massive transformations in the past few years, taking advantage of new technology.
1. Disney overhauled the customer experience at its parks and resorts with its MagicBand wearable digital wristbands, that let guests open their hotel rooms, pay for meals, and reserve tickets.
2. Domino’s Pizza has become the “poster child for digital transformation”, with digital ordering via mobile app, voice-activated ordering, and a pizza tracker.
3. CVS Health has shifted from a brick-and-mortar pharmacy chain to a digital healthcare company, with telehealth services, mobile prescriptions, and a paid digital wellness subscription model.
While not every business needs to invest in IoT wearable technology or even a mobile app, these three transformations share commonalities that every business can learn from. In particular, Disney, Domino’s, and CVS all focused on using technology to create a better customer experience and secure a competitive advantage.
The four types of digital transformation
There are four different ways that you can transform your business with digital technology:
1. Process transformation
In this method of transformation, you’ll be using technology to improve your processes and make your business more efficient or cost-effective. This might look like:
- Automating a workflow that you do every day
- Reducing the number of steps that it takes to complete a specific task
- Cutting down on the amount of manual data entry that you have to do
2. Business model transformation
This is a more dramatic overhaul of your business, where you use technology to completely redesign a product or service. For example:
- A clothes store creates an online e-commerce store
- A restaurant building a mobile app so people can order food from their phone
- A gym could offer a digital platform where people can stream workouts from their homes
3. Domain transformation
A domain transformation in this context means that you’re digitalizing to take on a new market or industry. For example, a local specialty bookstore could open up an online digital community to connect with prospective customers in other geographies.
4. Cultural or organizational transformation
In terms of digitalization, a cultural transformation is likely to mean using digital tools to improve elements of how you work together. For instance, shifting from an in-person office to remote working is a major cultural transformation and will require you to implement new digital tools and ways of working.
Why is digital transformation important?
If you hope to stay competitive and relevant in an increasingly digital and interconnected world, you’ll need to embrace the mentality of ongoing digital transformation. Digital technologies can help your company streamline your operations, offer a better experience to your customers, and adapt to changing market conditions.
Here are just a few of the many benefits of digital transformation:
More profits
The most important driver for digital transformation is that it can help you make more money. For instance, a 2022 study by McKinsey found that banks that embraced digital technology dramatically outperformed their competitors across several key financial metrics.
better customer experience
Software can make it easier to delight your customers. In the same McKinsey banking study, the difference in profitability came down to more content customers. The banks used personalization to convert more leads. They then kept their new customers happy with faster service by using automations and giving them self-service tools to save them from needing to go into the branch in person.
Improved efficiency and productivity
Using digital tools can make your company run more efficiently. An example: a Deloitte study of call centers found that digital leaders were able to decrease their staffing by 11%, while digital laggards had to increase their staff by 20%.
What is a digital transformation strategy?
A digital transformation strategy is a plan that outlines how your company is going to use digital technology to level up your operations, processes, or customer relationships.
A well-designed digital transformation strategy should include:
- SMART goalsDigital Transformation for your transformation project
- Key milestones and deliverables
- Resource allocation
- A project roadmap
- A project team with defined roles and responsibilities
Popular digital transformation frameworks
There are many approaches to digital transformation. Here are three of the most popular options:
- McKinsey’s 7S Framework Developed by management consulting firm McKinsey, this approach to digital transformation breaks down the process into seven key elements: strategy, structure, systems, shared values, skills, style, and staff.
- Four Pillars of Digital Transformation Developed by professors at leading business school INSEAD, the four-pillar framework proposes that digital transformation can address IT uplift, digitizing operations, digital marketing, and new ventures. Where you start will depend on how digitally mature your organization is and what resources you have available.
- The 5 Stages of Digital Transformation This model was developed by digital futurist Brian Solis. It breaks down the digital transformation process into five stages, from adopting a customer-unified mindset to embracing an employee-centered workplace.
The six key elements of a successful digital transformation
Six areas of your business need to be taken into consideration for any digital transformation, whether you’re planning a major, sweeping restructure or a more incremental process overhaul. They are:
1. Choosing the right digital technologies
Finding the right tools for your organization is key to a successful digitalization project. Look for tools that work with how you’re already working, rather than those that mean that you’ll need to start from scratch.
If you’re a small business, you may not need all the bells and whistles of the latest data analytics platform or fancy new AI tool, but you should prioritize modern software that takes advantage of evolutions in technology, like machine learning and automation, to make your lives easier.
Most importantly, any new digital technology should be easy to use, quick to learn, and easy to integrate with other tools you’re already using.
2. Overhauling your operations
When you’re undergoing any kind of digitalization initiative, consider how you can use technology to make your day-to-day work more productive.
For instance, if you switch to monday work management, it’s much easier to spot bottlenecks, reduce the number of steps it takes to complete tasks, and track your progress on projects at a single glance.
3. Consolidating your data
Your technology can only take you so far if your data is all over the place. When you’re undergoing digital transformation, take the time to make sure that your data is stored centrally and securely and is easily accessible.
For instance, if your sales reps are all working from their own spreadsheets, now’s the time to unify them on a shared platform so you can get a whole picture of what’s going on with your leads and opportunities.
4. Improving the customer experience
Digital transformations can make your customer experience far better — or far worse! When you’re considering adding a new tool, first start by analyzing what impact it will have on your customers. Will it make it easier for them to interact with your team or to purchase your products? Or will it add additional complexity to the customer journey?
5. Managing cultural change
No digital transformation initiative will succeed without leadership buy-in and cultural change. When you’re designing your digital transformation strategy, you’ll need to build in time for change management — regular and ongoing communication with stakeholders, opportunities for employee feedback, and staff training in new tools and processes.
6. Developing a business roadmap
Of course, no digitalization project will be successful without a solid project plan. We’ve got a deep-dive guide on project planning for you here, but in summary, you’ll need to kick off your digital transformation project with a budget, a schedule, a task breakdown, an overview of available people and other resources, and a list of milestones and deliverables.
4 steps to build and implement a digital transformation strategy
So, we’ve covered what digital transformation is, the different types of frameworks you can use, and all the elements that go into digitalization projects.
It’s time to bring it all together in a step-by-step guide to designing and implementing a successful digital transformation strategy.
Step 1: Analyze your current reality
Start by breaking down why you’re considering digital transformation. What are your company’s current pain points and weaknesses? What’s stressing out your employees or stopping your leads from buying from you?
Next, evaluate your existing technology. What have you got in place? Where are the gaps? Where could digital tools make the biggest difference?
Finally, look at your operations. Where are you slow or disorganized? Where is your team spending most of their time? Which areas still create a ton of tedious admin and manual data entry?
This audit process should help you figure out your top priorities and potential gains for your digital transformation initiative — and help you “sell” the process internally.
Step 2: Make a plan
Now that you know where you want to go, it’s time to figure out how to get there. At this point, you’ll need to get specific about your budget, time, and resources and what specific results you want to create. A few tips for developing an effective strategy:
- Involve your stakeholders (including executives, department heads, the IT team, and end users) in the planning process. This will keep your strategy more in line with organizational priorities, customer requirements, and end-user needs and make it more likely to succeed.
- Establish key performance indicators (KPIs) so you can keep track of your progress and show the return on your investments in new technologies.
- Appoint a dedicated digital transformation project team, so you know who is responsible for which part of the project and it is easier to make decisions.
- Identify potential bottlenecks and risks, and come up with a plan to mitigate them so your project doesn’t get derailed.
- Create a project roadmap that outlines the specific projects, initiatives, and milestones needed to achieve your digital transformation goals. Prioritize these initiatives based on their importance and potential impact on your business.
Step 3: Implementation
Now it’s time to purchase your technology and then begin the process of introducing it into your business. Here are a few tips for successful implementation:
- Stay safe. When choosing your vendors, look for solutions that prioritize cybersecurity and compliance, so you know that your company’s data will stay safe.
- Consider integration and scaling. Choose digital solutions that work well with any tools you’re already using and that are easy to scale as your business grows.
- Start slow. Once you’ve picked out your digital technology, it’s generally recommended that you start with a pilot project. Pick a single team, or even a single process, to get started with your new platform. That way, you can check that your assumptions are correct and that this is the right approach for your business before you go all-in.
- Support your employees. Remember to implement a change management plan to help employees adapt to the new processes and technologies. Set up training, offer support, and keep communication ongoing to ease the transition.
Step 4: Optimization
Digital transformation isn’t a one-and-done thing; it’s an ongoing, iterative process. That means you’ll need to continuously monitor your progress and measure your results against your established KPIs.
It also means that you need to encourage feedback from the team. What’s working for them? Where are they still struggling? What opportunities do they see to make better use of the new technology?
