From corporate synergy, omnichannel experience, core competence, IOT, to Personalization, buzzwords and buzz-phrases dominate a business era or specific industries. In the real sense of it, what these words stand for are not to be discredited; expect that the seemingly unending usage of these words, even when not relevant, can raise eyebrows. Digital Transformation is one of such buzz-phrases today. What does digital transformation really mean?
Let’s start by taking perspectives from the definitions offered by thought leaders in Chief Information Officers (CIOs) communities. They include:
- Digital Transformation is the transformation of business by revamping the business strategy or digital strategy, models, operations, products, marketing approach, objectives etc., by adopting digital technologies. (Stolterman, Erik; Croon Fors, Anna (2004). “Information Technology and the Good Life”)
- Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure. (The Enterprisers Project, an online community of CIOs)
- Digital Transformation is the application of digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, and uncover new monetization opportunities. (Bill Schmarzo on com)
- Digital transformation (DX) is the reworking of the products, processes and strategies within an organization by leveraging current technologies. (Margaret Rouse on Tech Target)
Though these definitions may vary, there are recurring themes; Process Change, Digital Technology, and Results, which as in the definitions may vary across organizations or among stakeholders. At the heart of any digital transformation initiative is the interplay of these three.
Businesses have processes with which they achieve their objectives and deliver value to their Customers. Beyond marketing that is general to most businesses, other processes may include a the assembly of a products, quality assurance, preventive maintenance routine for manufacturing or invoicing, billing and risk management processes for finance. Most organizations in a way or the other currently use computers — used to manage or support these processes.
Digital transformation however goes beyond using a digital tool to support a process to being the driver of the process. It is the use of digital to fundamentally rethink and reform a business process. For example, Delivery whether in-store or at a customer’s preferred location is a key business process. Domino’s Pizza has gone beyond using computers to track the choice of its customers. It has made it possible for customers to order for pizza from any connected device. Customers can track their order in real-time and also digitally give feedback on the pizza delivered and the service experience.
For an organization undergoing a digital transformation at an enterprise-wide level—not necessarily implemented simultaneously across all units of the organization—it is more of the sum of the digital transformation of its processes.
Digital Technology today needs no introduction. It has come to transform our everyday lives, shaping the fabrics of our society today. Enterprises have been early adopters of digital technology. But for Digital Transformation, this goes beyond adoption to the use of digital tools to revamp, rethink, or redesign a business process. This has seen the emergence of new enterprises popularly known as startups with new business models that are entirely digital. Some argue that the need for traditional enterprises not to be disrupted has led to the case for digital transformation.
Digital transformation is not just the application of a digital tool; rather it is achieved through the combination of several digital technologies. Prominent among them are Social Media, Mobility solutions, Analytics, Cloud Computing, Social, Machine Learning, and various forms of Automation. The first four, summarized as SMAC has come to be one of the models used for digital transformation.
Going back to the example of Domino’s Pizza; beyond its own website, customers can also order from its Twitter page. The company also has it in plans to make it possible for customers in the US and UK to order pizza using voice commands through amazon echo devices. For its delivery process alone, Domino’s has put Social Media into use for its twitter order capability, Cloud Computing for its website, and Machine Learning by which voice recognition devices work. It is obviously expected that for the continuous improvement of the delivery process, data from these channels are collected and analyzed for insights.
Also recurring from the several definitions of digital transformation is the result it has on processes and on the business at large. Some are as basic as making processes more efficient and effective, and faster, to ambitious results such as monetization opportunities and the emergence of new business models. The fear of getting disrupted has however seen many enterprises embark on Digital Transformation initiatives; the primary goal is not to become trendier in the digital age or as a result of “compliance”, it is to help companies better achieve their overall objectives in consideration of today’s realities
The result of Digital Transformation is multi-faceted. Not just do the processes made more efficient or faster through Digital Transformation, it saves the organization cost, it reduces the operational burden on employees and results into more delightful customer experiences, which is key to customer retention and business growth.
As in the case of Domino’s Pizza, not only has the digital transformation of its delivery process made it more convenient for customers and the company more attractive to a millennial generation of talents, it has also made the 58-year-old company achieve core competence in one of its key business functions.
The Need for Cultural Change
This is often overlooked in digital transformation. This in fact is one of the top reasons why implementing digital transformation can be really hard. It calls for bold changes right from the start and the need to change the way most processes are traditionally run. It also leads to processes being more data-driven rather than intuition—most employees may be used to. It is then not unusual to find an organization undergoing Digital Transformation to have new roles, departments, products and services.
Beyond the understanding of what digital transformation is, to follow in this series are the case for it, an in-depth look into SMAC, and case studies of digital transformation.
Kaplan, B., Truex, D., Wastell, D., Wood-Harper, A. and DeGross, J. (2004). Information Systems Research: Relevant Theory and Informed Practice. Boston, MA: Springer Science & Business Media. Url (https://books.google.com.ng/books?id=6fmSk7ykB2sC)