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What Is Digital Transformation? An Explainer Guide for Businesses

Business Guide to Digital Transformation

Digital transformation (DX) is the process of using digital tools and technologies to create new — or modify existing — business processes, culture, and customer experiences. Forward-looking enterprises turn to digital transformation services to unlock greater business opportunities. That’s because digital transformation solutions enable new capabilities and innovation by revamping the legacy systems bogging down a given process. Ultimately, this facilitates new, improved ways of conducting business that bring additional value to the customer.

Digital Transformation for Business

The importance of digital transformation cannot be understated. Looking at the numbers, global spending on digital transformation technologies will eclipse $2 trillion by 2021. Already, 62% of executives have a transformation program in place to digitize their business, according to a Gartner survey. Many executives believe this level of investment in digital tools and technology will be the driving force of their revenue by 2020. The World Economic Forum estimates that the value of digital transformation for both industry and society will top $100 trillion by 2025.

Still, Forrester notes that a major roadblock for the full embrace of digital transformation is confusion about what exactly it is. Digital transformation looks different for each and every business across every industry. However, boiling down digital transformation to its building blocks can bring some clarity to this initiative. Essentially, the business mandates governing digital transformation are:

  1. Rethinking inefficient business processes and the digitization of legacy systems.
  2. Collaboration among cross-functional teams for increased innovation.
  3. Experimentation with emerging digital technologies, real-time data and analytics, artificial intelligence, machine learning, and social media.
  4. Becoming more agile to increase customer satisfaction and engagement.

Keeping the above four things in mind ensures a winning digital transformation strategy. Digital transformation success for enterprises results in new technology innovations in business. For a smaller business, success could be something as simple as going paperless.

Regardless of business size, savvy leaders should leverage and integrate digital technologies into all areas of their business when possible. This digital disruption of the status quo can seem daunting for many businesses at first. However, with the right digital transformation roadmap and strategy guiding you, the endeavor will reap major benefits and give you a competitive advantage in your industry.

Beyond the implementation of new technology, digital transformation can encompass anything from designing new business models, a change in leadership, or the digitization of assets. Bottom line: embarking on a transformation strategy with the goal of improving the experience of your company’s customers, supply chain, partners, employees, and stakeholders is the very essence of digital disruption and transformation

Business Guide to Digital Transformation 

How Do Digital Transformation and Customer Experience Intersect?

With such a rapid proliferation of technology, businesses should take stock and leverage digital tools that will foster a better customer experience. Brands live or die by whether or not they can match customer expectations. The current market saturation means customers have more options than ever before—and what they truly crave is a seamless, digitally-powered customer experience.

Where does the digital disruption of the customer experience start? Businesses must change the way they deliver their products and services to be properly aligned with customer expectations. This often means incorporating newfound digital technologies that foster an engaging customer journey. For instance, experiences powered by apps like the one Amazon Go stores offer is a perfect example of a digital transformation operating model that encourages greater customer engagement.

Beyond mobile apps, tools like artificial intelligence, machine learning, and social media allow companies to provide better customer service and create more personalized experiences. However, it’s imperative to process customer data to better understand customer behavior and the experiences they crave. From there, companies can utilize these insights to overcome the challenges they’ve been facing and transform their customer experience. In today’s digital age, an experience that’s both unique and reliable will be the one that keeps customers coming back for more.

What’s the Value of Digitally Disrupting Business Processes?

Business processes power every aspect of your company. If they’re outdated or overly complex, most likely they’re negatively impacting operations and, ultimately, your bottom line. That’s why change is always welcome when it comes to business processes. Companies that fail to revamp or change legacy systems are the ones that will be left behind in the digital age.

But with a digital transformation roadmap, companies can start to rethink processes and build digital solutions that foster greater levels of success. It’s about deciding where to apply emerging technologies and restructuring business models to accommodate them for maximum value. Oftentimes, this is where you can map out a new, revamped process that offers your business a competitive advantage.

Similarly to customer experience, businesses can start to change and transform complex business processes by utilizing data and analytics. With real-time insights, companies possess immediate visibility into the processes and operations that are lagging. If the problem becomes recurring, it’s a tell-tale sign that a particular process is ripe for change. The disruption of a core business process can be daunting. However, the strategic implementation of technology to transform or automate it represents a better, more resourceful approach than simply letting an inefficient process continue to underperform.

Conclusion

Before building any sort of digital transformation strategy or roadmap, business leaders need to ask themselves one question: “What does digital transformation look like for my company?”

There is no tried and true answer for this question. The execution and tactics that go into pulling off digital business transformation vary by industry, but the underlying goals remain the same. It’s important for leaders to clearly identify solid, measurable KPIs—each with a clearly-defined business outcome—and then create a transformation program that works to fulfill them. From there, the starting point to digital transformation is well within grasp.