When businesses shift from their traditional means of operation and management to methods improved by modern technology, the transition is referred to as a Digital Transformation. Before the smartphone, Cloud technology, and even the Internet, businesses used to fantasize about an interconnected, high-tech society. Nowadays, digital transformations have become the driving force for delivering good digital business experiences to customers and employees. So what has changed about the conversation around this idea? Here’s what you need to know.
Why Digital Transformation is a Necessity
Digital transformation applies to the applications of digital technology influencing any aspect of human society. It is not just about incorporating a few computers and software into your office but involves a distinct change in thought and organizational culture. For businesses, it’s about having a new computing infrastructure – mobile, cloud, Big Data, and analytics – that is accelerated by the Internet of Things (IoT), advances in machine learning, and innovations like blockchain.
According to IDC, a global market intelligence firm, an estimated 40% of all technology spending will go toward digital transformations, with the amount expected to exceed $2 trillion in 2019. Leadership must coordinate efforts with their IT teams to keep up with dynamic business demands and help drive progress. As more digital transformation success stories emerge, companies are now following the trend too and pushing new initiatives to expand their digital capabilities and manage their current operations. Digital transformations are driven by the following characteristics: business process and efficiency, innovative technology, customer behavior, and market demand. The next sections will explore in detail why these drivers of digital transformation impact tech-minded businesses.
Innovative Technology That Sparks Ideas
According to a Forrester Consulting research study commissioned by Accenture Interactive, some of the key drivers of digital transformation are profitability and increased speed-to-market. Technology enables businesses to get their physical products and services to customers faster and more efficiently.
More and more consumers shift their attention away from physical products and services, to ones that are centered around a digital medium. As a response, businesses can digitize their systems to help with market research, production, campaigns and distribution for their products and services.
Under Armour, for example, integrates a fitness app to read health metrics and fitness regimes of their users, as a way to better understand their audience and recommend products to customers based on activity. Sprint is another company that faces digital pressure from rivals like AT&T and Verizon and recently have focused their efforts on analyzing data to improve the customer experience. Through the use of Elastic Stack open-source software, the IT staff at Sprint can churn through 50 terabytes of data generated by their backend log to analyze the performance of their website.
Greater Reach In Markets
Digital transformation enables businesses to think globally and find new markets and opportunities. Cloud technology, in particular, removes barriers to entry for most smaller companies and allows them to expand as far and wide as they can afford. Technology also gives businesses the room to operate beyond geographical location, as a simple internet connection allows individuals to access cloud resources for their business.
Reframed Business Operations
Digital transformation reframes the traditional business model to prioritize data-driven decision making with effective communication on all levels. Leaders that deploy strategies to upgrade their current operations allow their business to stay competitive due to the following internal advantages:
- Accelerated business activities
- Lower operational cost
- Overall employee transparency and empowerment.
Technology has increased employee mobility and collaboration through the use of tools and software that makes sharing knowledge easier. Many employees can work remotely and larger teams can even communicate across the entire workforce, regardless of level. Leveraging technology can also help reduce or even eliminate processes that do not require human judgment, which allows employees to do more strategic and productive work. For example, T-Mobile transformed its IT department by automating its testing process to reduce the number of errors they received and allow their IT team to focus on the core test scripts that require human judgment.
Pushing businesses to focus more on customers is the most obvious impact of digital transformation. These digital changes result in greater customer insights and a better overall customer experience. With the rise of e-commerce and social media, there is an enormous opportunity for businesses to influence customer behavior and obtain customer data. By using applications and programs that can be integrated into these platforms, businesses can capture and analyze data and transform them into meaningful insights and predictive models to deliver what their customers want.