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Gartner perfectly sums up what digital transformation is — and what it’s not: “Digital transformation isn’t just a technology strategy; it’s a strategy to leverage technology to enable new business models, new products and services, and new strategies — and drive business growth.”
The main catalysts currently driving widespread digital transformation are (i) the pandemic, (ii) digital-first consumers and (iii) greater scrutiny on cybersecurity measures.
The pandemic shifted the attitudes of business leaders towards digital transformation. ‘Nice to have’ became a critical need almost overnight, and those resistant to digital change faced the harsh reality that their current business models weren’t viable in the long-term.
According to research carried out by BCG, a staggering 70% of digital transformation projects fall short of their objectives, often with profound consequences on wider business. But when digital transformation goes according to plan, companies stand to gain a competitive advantage that will propel them toward sustained resilience. This translates into better customer experiences, enhanced productivity, and access to new growth opportunities and innovation.
In fact, according to a survey conducted by McKinsey in 2021, just 11% of business executives stated that they believed their business would be economically viable through 2023, while another 64% said their companies need to build new digital businesses to help them get there.
The pandemic demonstrated to many technologically resistant businesses that their structures lack the agility required to stay resilient in times of uncertainty. Although digital transformation isn’t a guarantee of business survival in the future, one thing is clear: without it, companies will struggle to stay competitive.
As a consequence of both necessity (the pandemic) and convenience (online trends), digital-first customers are driving businesses to rethink their business models to cater to those customers’ needs.
In many cases, the mounting pressure means companies must undertake digital transformation projects to stay relevant. For example, as part of its digital transformation efforts, Disney launched the Disney+ streaming service to compete with innovative disruptors like Netflix and cater to the growing modern, online audience. And it worked! Disney+ revenue in its first month of release eclipsed $20 million. By evolving in line with changing consumer habits, Disney has managed to secure its place in the digital streaming world — remaining a powerhouse for modern media.
Advancements in technology empower businesses with the efficiency and competitive edge they need to thrive in today’s market. However, the risk of cybercrime has never been greater. Today’s cybercriminals are more tech-savvy than ever, meaning any vulnerability in a company’s system poses a significant risk to the data stored there. Not only are data breaches bad for a business’ reputation, they are extremely costly. According to IBM, the average cost of a data breach now stands at over $4 million.
Even the largest corporations have fallen victim to data breaches — Facebook, LinkedIn, Alibaba and Adobe have all experienced a data breach in the past five years. While these companies have the funds to fork out for a hefty fine and related expenses, smaller businesses will struggle to survive such a breach.
Business leaders recognise that fragmented, legacy systems are their Achilles’ heel, opening them up to data leaks. By bolstering infrastructure, locking down data and continuously upgrading and maintaining systems, businesses can stay one step ahead of any cybersecurity threats.
To be truly successful, organisational transformations — especially digital — must permeate across teams and departments. Below we’ve highlighted some of the characteristics of successful digital transformation:
Senior leadership must set the tone within an organisation. Without commitment and support from these people, implementing any sort of digital transformation will be difficult. Leaders must also create an internal culture where digital transformation and a positive attitude to change overall is the norm.
Providing relevant training and development opportunities can be pivotal to a firm achieving its goals without having to hire new talent. The key involves investing in training and upskilling in areas such as cloud computing, data literacy, deep technology and organisational change.
Businesses can also identify the need for new roles, such as ‘integrators.’ Integrators are employees who translate and integrate new digital methods and processes into existing ways of working.
Modern technology is now far more reliable and accessible than it was previously. For example, cloud computing enables a company to work far more efficiently as anyone can access their system from any device with an internet connection.
Clear metrics are vital when implementing any change within an organisation. This data needs to be readily available for anyone that needs it in real-time. High stakeholder engagement is useful when making iterations, as it enables staff to quickly see whether any minor changes have any impact on company KPIs.
Digital transformation isn’t a ‘one-off’. It’s an iterative process where people across teams and departments must commit over the long-term to see any tangible benefits.
Although there are no rules as to how a business should measure success, it’s essential to choose realistic KPIs tailored to individual needs:
“If You Can’t Measure It, You Can’t Manage It” — This quote by management expert Peter Drucker sums up digital transformation. The most effective way to advance is by setting realistic KPIs that can be measured and adapted over time.
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