The rate of adoption of digital technologies by companies of all stages and sizes has been growing fast over the past decade. These technologies range from e-commerce applications, customer relationship management (CRM) systems, video conferencing and financial management software, all the way to blockchain and artificial intelligence (AI), to name just a few. In the last couple of years, especially, entrepreneurs have been adopting digital solutions at an unprecedented pace because of the COVID pandemic. The crisis has pushed companies to become more efficient and flexible, to reduce costs, adapt to remote work, and rely increasingly on virtual product and service delivery.
In this context, digital transformation has become a buzzword in the business community. However, digital transformation is not about the ad hoc adoption of isolated technologies to solve specific problems. As put by the Harvard Business Review, digital transformation is when a business becomes “a data-driven organization, ensuring that key decisions are influenced by data-driven insights, rather than human intuition”. A company is truly digitally transformed when it is systematically leveraging technology and data-processing to drive changes in business model, corporate culture, and decision-making. At that level, the firm is also more likely to innovate successfully, based on sound insights.
There are two levels of business digitalization that normally precede digital transformation. The first, digitization, refers to the simple process of changing from analog to digital form. This is a common step especially for older or more traditional businesses. For example, a restaurant may convert its history of handwritten orders into digital form by scanning and tagging old notepads into PDF files and storing them online. Therefore, digitization happens when information is digitized. The second level, digitalization, is the process of employing digital technologies and information to transform business operations. Firms of all stages and industries can go this route. For example, a company may take its recruitment process – from applications, to resume selection, screening of candidates, interviews, and onboarding – online using a human resource management system. Therefore, digitalization happens when processes are digitized.
Digital transformation begins to occur in a company when digitalization is advanced, i.e., when most key processes in the business have been digitalized and are being handled in an integrated manner. Only then should management be able to collect enough business-wide data (supply chain, sales, accounting, marketing, resource management, consumer behavior etc.) in a cohesive fashion, to support decision-making and innovation. Also, systems should always speak to each other or be integrated into a business intelligence (BI) software that helps make sense of large sets of data and link all the dots. Ultimately, digital transformation helps companies become more adaptable, innovative, and therefore customer-centered.
To start driving digital transformation in your business, first ask yourself “What is the main problem or challenge your business faces, which could be solved digitally?” Once you identify the pain-point and the data required to monitor and solve the problem, consider “What would be the ideal type of tool to help solve the problem?” For example, assume a startup is growing fast. However, as it expands, it is not keeping up with connecting orders to transportation options, maintaining deliveries on track, and managing time-sensitive logistics. The CEO identifies that the ideal solution would be a full-service supply chain management platform to synchronize supplier orders, transportation route schedules, and deliveries.
Once the type of digital solution is identified, the next step is to research the specific products available in the market: search online for brands and reviews, look at specialized blogs and e-magazines, talk to specialists, attend relevant tech events. It is also a good idea to find out what competitors use, whenever possible. Next, create a product comparison table that compares features, services, and prices. Finally, contact the vendors that present the most promising solutions and ask for a demo. Once the digital product is chosen, implement it and monitor results. Repeat the process (which starts with the questions enunciated in the previous paragraph) as many times as needed for the key challenges you face and methodically bring digital transformation to your company.
At the same time, beware of the cultural challenges that often accompany digital transformation, such as resistance to change in business processes, struggles in the use of new technologies, and even fear of losing jobs. To overcome these issues, first, make the process inclusive. Involve all relevant staff, from problem diagnostic to solution identification to implementation. Listen to their opinions and concerns. Second, educate people across the organization on the benefits of the new technology for each one of their roles, as well as the importance of digital transformation for the growth and sustainability of the business. Finally, ensure all impacted staff are trained in the new processes and technologies and are not left behind. Promote continuous learning and re-skilling, including for those whose jobs may have become redundant.
Digital transformation is a process filled with challenges. It is however a requirement for the survival of any business, from a mom-and-pop shop, to an innovative startup, to a large corporation. The time to transform is now.
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