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Digital Transformation

What is Digital Transformation

What is Digital Transformation?

Digital transformation is introducing digital technologies into various spheres of human and business activities to improve efficiency, optimisation, and productivity. Thus, digital transformation implies significant changes in all company business processes and replacing outdated management methods with modern capabilities. For example, it can be using artificial intelligence systems, the introduction of blockchain technology and robotisation. In addition, digital transformation can include machine learning, virtual and augmented reality, cloud computing, process analytics and many other technologies.

There are also two other critical processes associated with the digital transformation that many people mistake for being synonymous with it. These are:

  • Digitisation. It converts analogue data into digital forms, such as scanning documents and storing them electronically.

  • Digitalisation is the concept implying the introduction of modern technologies into only some business processes to facilitate them, for example, installing a CRM system which is a special programme to automate and control interaction with customers.

In other words, compared to the digitalisation processes, digital transformation is a more comprehensive change of business processes and working models and the entire organisational culture, internal communication, and structural system with the help of modern digital technologies. Thus, digital transformation goes beyond a single process or project and affects the entire organisation.

Why Digital Transformation is Important

Today, digital transformation is central and essential to achieving operational efficiency and innovation across the organisation. It enables faster company growth, greater operational efficiency and more responsive problem-solving.

Critical challenges that digital transformation addresses include:

  1. Optimising business processes. Many companies still use outdated technologies to manage their business. Digital transformation allows to automate and speed up most routine procedures, partially replacing specialists, thus reducing errors, and improving the quality of products and services.

  1. Increasing operational efficiency. Modern technology can reduce the cost of production and various tasks, such as data processing and communications, and enable more efficient use of resources.

  1. Creating new growth opportunities. Digital technologies help companies to expand their product and service offerings, as well as their sales geography. Furthermore, innovations will help capture new market segments and grow their audience.

  1. Improving interaction with customers. The transformation will allow companies to understand customer needs and preferences better, provide faster and more convenient service, and create new channels of communication with the audience.

  1. Maintaining competitiveness. Companies that are successful in digital transformation and actively use innovation can more easily remain competitive in the marketplace because new technologies improve productivity, product, and service quality and make the company more adaptable to changing conditions.

Additionally, digital transformation provides more accurate, objective, and detailed analytical information and improved data protection. Thus, timely implemented transformations allow the company not only to develop and keep up with the times actively but also to increase competitiveness and quickly respond to any changes in the market. Therefore, digital fluency is gradually becoming the key to active growth and business development.

Areas for the Introduction of Digital Transformation

Areas for the Introduction of Digital Transformation

Large-scale digital change in an organisation is almost impossible to implement without a detailed plan or strategy. But first, you need to understand which business areas should implement digital technologies. You can integrate innovation in three main areas:

1. Transformation of business processes

This process involves profound changes and subsequent adaptation designed for an extended period. In other words, business process transformation consists of the transformation of key work processes, i.e., the organisation of work, product development and production methods, customer service and so on, following the set goals, the characteristics of the changing market and the needs of potential audiences. In this case, digital transformation is only a part of the whole business transformation, which aims to create a new technological and flexible structure to reorganise and improve the efficiency of all work processes.

2. Transformation of business models

A business model does not describe specific actions that need to get performed to achieve the company's goals, i.e., it is not an in-depth study and subsequent reorganisation of the business but a brief analysis to understand how to develop the company and what resources need to be attracted to grow the business. Given the relevance and necessity of digital technologies, business models should include and emphasise innovation. In other words, a new innovative form replaces the classic or traditional business model.

3. Transformation of corporate culture

Digital transformation primarily transforms work processes and the business model. However, it will only be successful and efficient if it aligns with the company's culture and values. Innovation will affect all aspects of the business, so it requires the support, commitment, and motivation of employees, who, in turn, will also have to reorganise their work and re-learn specific skills. Technology will present new challenges to employees; communication processes and company infrastructure will change. Therefore, it is also necessary to transform the corporate culture in parallel and prepare employees for the upcoming changes. It can be training master classes on working with the implemented technologies, webinars, frameworks, or workshops. Thus, a motivated team and successful adaptation are essential for successful digital transformation.

How to Implement Digital Transformation

How to Implement Digital Transformation

While most companies recognise the critical need for digital transformation, they don't know where to start. The following steps will help you make change possible.

Step 1: Analysing the Current Situation and Defining Objectives

It is necessary to assess the company's current position in the market and business processes, to accurately determine its strengths and weaknesses, competitors' advantages, and the most acute needs of the audience, which can be qualitatively and promptly satisfied with the help of the latest technologies.

Depending on the information obtained, it is necessary to determine the results the company wants to get from the digital transformation process. For example, this could be increased productivity, improved customer engagement and a stronger competitive position for the company. Remember that a clear vision of desired outcomes, an integrated approach and a focus on growth are essential elements of any transformation.

Step 2: Drawing up a Roadmap or Digital Strategy

A roadmap or route map is a unique document specifying all the goals of the changes needing implementation and the steps necessary to achieve the results. Based on the analysis of processes and technologies, it is essential to develop a strategy to determine which technologies should get used, which processes, who will be responsible for their implementation, and what results to expect. At this stage, key priorities are identified, a time plan for the transformation is drawn up, and a budget and a list of necessary resources are written down. It is important to remember that it is not essential to plan a transition to complete digitalisation quickly. Innovative technologies require phased development, gradual scaling, and further integration.

Step 3: Preparing for Digital Inclusion

At this stage, assessing the possible risks and hiring experts, training employees, and purchasing equipment is necessary. Ensuring all the essential resources are ready for a successful and complete digital transformation is vital.

Step 4: Realising Digital Transformation Implementation

Once a company has analysed, set goals, and prepared for digitalisation, the only thing left to do is to follow the strategy and accomplish all the tasks identified in the early stages. It involves further planning, coordination, and communication at all levels of the organisation to ensure that the team works together, and that the technology deployed delivers results.

Step 5: Evaluation of Results and Further Development

Once the digital transformation process has begun, evaluating the results and ensuring that critical objectives have been achieved is significant. It is also essential to assess the extent to which the company's employees have been able to adapt to the new working environment. Depending on this, you should continue working on digital transformation, focusing on the most challenging aspects.

Tips for Implementing Digital Transformation

Tips for Implementing Digital Transformation

Tip 1: Think About Your Customers First

In any business process, customers should come first. The company must ensure that its products meet all the needs and demands of its audience. It is possible only by entirely focusing on the desires and interests of the audience. Thus, customer centricity helps establish trust between the company and customers, which can lead to increased sales and audience loyalty. Moreover, if customers are satisfied with the quality of products or services the company offers, they will return repeatedly.

Tip 2: Use Agile Development and Management Methodologies

There are a few so-called agile project management practices and methodologies. Agile, Lean, Kanban, Scrum, and many others are the most popular. Almost all industries use them, including IT, finance, marketing, HR, etc. Such technologies are based on several fundamental principles:

  • People are more important than tools.

  • The key objective of the work is to create a quality product.

  • Experimentation is more effective than sticking to a plan.

  • Constant improvement is necessary.

Such approaches help a business to adapt to changing market conditions and to react just as quickly to changes in the external environment. Additionally, it can increase the quality of products and services and improve processes within the company. As a result, using flexible technologies and methods in business can help a company become more competitive, innovative, and efficient.

Tip 3: Use Several Innovative Technologies at Once

It is important not to focus on a single innovative method. Utilise all available opportunities to leverage artificial intelligence, machine learning, and blockchain technology. A company can drive and rapidly implement sustainable, profound change by adhering to agile ways of working. The key is to stay focused on customer needs.

Tip 4: Develop a Partner Ecosystem

The consulting firm Accenture conducted a study which showed that more than 85% of partners are looking for new sources of growth and operational efficiency. Cooperation and collaboration with partners facilitate the exchange of experience and knowledge, which is especially important in digital transformation but also allows you to expand your customer base, increase business turnover and enter new markets.

Tip 5: Remember That Digital Transformation Is Your Investment in a Successful Future

Financing digital transformation is a complex and costly process, so it is best to approach it in stages. However, in the long term, digital transformation can bring significant economic benefits, increase the efficiency of business processes, and improve a company's competitiveness in the market.

Examples of Digital Transformation in Business

For example, the Milan-based company ELSE Corp has developed the project, and with its help, it is possible to open virtual 3D stores of customisable shoes. However, the uniqueness of this project lies in the fact that potential customers create the perfect shoes for themselves, considering all their wishes, such as colour, design, and other features of the shoes.

Heedbook is also a great example of a company that has made a digital transformation. It is a cloud-based service accessed anywhere worldwide. The programme only requires a webcam; all video and audio information is stored in Microsoft Azure cloud storage. Google software is used for speech recognition, and Microsoft software is used to determine gender and age. Heedbook's underlying artificial intelligence system analyses all the data received.

Deutsche Post DHL Group is a global logistics company that offers postal and international express services, freight transportation and supply chain management services, and e-commerce logistics solutions. It uses digital technologies to manage its warehouses, automatically sort shipments and deliver orders.

General Electric actively engages state-of-the-art technologies in manufacturing and new product development, such as 3D printing parts for the aerospace and energy industries.

Amazon, the largest e-commerce platform, has created an entire ecosystem that combines online shopping, cloud services, streaming platforms and more.

Thus, digital transformation is becoming increasingly demanded and even necessary for success. It contributes to increased efficiency and competitiveness in the market, improves customer interaction and simplifies many routine processes. After all, to remain a market leader, it is necessary to constantly improve, assess your position and adjust your working methods, which innovative technologies can successfully handle. As a result, digital transformation is a crucial factor in developing modern business and its successful functioning.