Digital transformation is not just a big buzzword but often misunderstood term in IT. Lets try to understand it better.
Q: What is digital transformation?
A: Digital transformation is a comprehensive process that involves integrating digital technologies into all aspects of a business, fundamentally altering its operations and delivery of value to customers. The ultimate goal is to transform decision-making process to data-driven decisions, leading to value creation such as cost reduction, profit maximization, process time reduction, improved visibility, customer satisfaction, and 24×7 live reporting of key information.
Q: How is digital transformation different from IT adoption?
A: IT adoption is about having various IT tools and applications for your business processes. It is more about the tools running smoothly and not necessarily focussed on value creation. Most of the tools facilitate online transaction processing which means business will be impacted if any outage in applications.
Digital transformation is next level IT adoption. Its focus is on creating value and measuring it to justify it as an investment. The value can be cost reduction, profit maximization, cycle time reduction, data driven decision, customer satisfaction etc. Your business will not come to halt if digital transformation is temporarily off. Most probably you will lose the value it creates for that period.
Q: My business is doing quite well. Why should I go for digital transformation?
A: Congratulations on your business success! you need to check overall IT maturity of the industry you operate in before you plan to give digital transformation a miss (at least temporarily).
Once your competitors start following this path there’s only one rule: adapt or get knocked out. If you are an early adopter, you many have a clear advantage against your competitors.
Q: Why do companies need to undergo digital transformation?
A: Companies need digital transformation to stay competitive in the rapidly evolving business landscape. It enables them to respond to market changes, enhance customer experiences, streamline operations, reduce costs, and foster innovation. Ultimately, digital transformation is about future-proofing the business against uncertainties and technological advancements.
Q: How to start the digital transformation exercise?
A: Begin by conducting a comprehensive assessment of your current digital maturity level, identify areas where digital transformation can create value. Create a clear vision aligned with business goals, and develop a detailed roadmap outlining specific steps and milestones. This process ensures a strategic and goal-oriented approach to digital transformation.
Q: What are the key components of digital transformation?
A: Key components include technology infrastructure, ERP, artificial intelligence, data analytics insights, process automation, cloud migration, cybersecurity, live reporting, and a focus on customer experience. Cultural transformation, leadership commitment and a customer-centric mindset are also critical for a successful digital transformation.
Q: What are the steps involved in digital transformation?
A: The steps include assessing current IT maturity, identifying key areas for improvement, defining a clear vision and strategy, developing a detailed roadmap, implementing cutting-edge technologies, establishing robust data management practices, defining key metrics for tracking value, fostering cultural change, and continuously monitoring progress and making improvements.
Q: How to form a team for digital transformation?
A: Appoint a dedicated leader who is seasoned player in analytics, AI, automation, and ERP (exposure won’t help) on top of some domain knowledge . You need a digital transformation expert who knows how to extract value from technology not someone who is merely into IT management. Create a cross-functional team with members from IT, operations, marketing, finance, and other relevant departments. Ensure diverse skills and perspectives, Foster a collaborative environment for driving the transformation agenda.
Q: Should one engage a vendor or an in-house team for digital transformation?
A: The decision depends on the organization’s capabilities, goals, and resources. Some may prefer in-house teams for control, while others opt for external vendors for specialized expertise. A hybrid approach, involving an independent external lead consultant along with a mix of in-house and vendor teams, is often effective.
Q: What is the cost involved in digital transformation?
A: The cost varies based on the scope and scale of the transformation. It includes expenses related to technology adoption, training, change management, and potential downtime. However, the best part is that it should not bother you. You should never look at cost in isolation but always consider value along with it. The key objective of digital transformation is to convert IT to investment from cost. The returns should be much more than your investment and should be tracked in a quantified manner.
Q: How to handle change management during digital transformation?
A: Acknowledge the insecurity it brings for some of the employees as they need to upgrade, and changes in their work profile. Leadership buy-in is must and the entire initiative should always be top driven (Sponsor has to be someone who clearly stands to gain from a successful digital transformation). Effective change management involves clear communication, stakeholder engagement, and addressing concerns. A robust communication plan, employee training, and highlighting the benefits of the transformation help create a positive mindset, ensuring the success of the digital transformation.
Q: Do I need to change my workforce to achieve benefits from digital transformation?
A: Most of of the in-house workforce can be trained as end-users of technology and retained. Hiring external resources with specialized skills may be necessary to complement the existing workforce. Digital transformation is more about upskilling and adapting the workforce rather than a complete overhaul.
Q : We are a small company with stable business and not high on IT maturity. Do we still need to go for digital transformation.?
Even with stability, digital transformation can enhance your small business in unique ways, even with low IT maturity. All you need is to keep your cost of digital transformation in keeping with potential returns so that you get desired ROI (Digital transformation is investment not cost). Start small, focusing on areas with clear benefits and expand further. A targeted, step-by-step approach can make it manageable. Don’t wait for disruption – proactively shape your future with strategic digital transformation.