What is Digital Transformation? Why it Matters

What is Digital Transformation & Why it Matters

20/05/2019 Written by CommerceCentric

It’s easy to dismiss “Digital Transformation” as another business buzz word, or cliché or shorthand for “moving everything to the cloud”. But doing so could mean missing out on a serious growth opportunity for your business.

The problem is that — like most modern business processes — no-one can agree what digital transformation is, much less what it means or who should own it. With no single, handy explanation to refer to it’s no wonder it falls below the radar of so many business leaders.

Prevailing definitions of digital transformation can cover a number of business areas and their owners, but there’s one thing they all have in common: the recognition of the need to find the technology to support change, not drive it.

What is Digital Transformation

We’ve used our years of working in this field successfully supporting our clients through the process to come up with the following definition. According to CommerceCentric ‘digital transformation’ is:

Using digital technology to change the way you operate, particularly around customer interactions and the way that value is created.

Using digital technology to solve traditional business problems.

Integrating digital technology into all areas of the business.

Digital transformation is nothing short of total business transformation. We would go so far as to say that it’s a total cultural change too. It means rewriting business models and internal processes to deal with customers in new and exciting ways.

But it’s less about using the technology directly and more about leadership’s role in dealing with current or imminent changes to market conditions.

Easy to say, harder to do.

What does digital transformation mean for your business?

Digital transformation means moving your business from a traditional one to a digital one. A business that recognises how your customers want to shop, browse, talk to you and buy from you, both now and in the future. It means recognising customer expectations from you, and responding to them, before your competitors do. It means learning from your interactions with your customers, rapidly adapting to optimise those interactions, and gaining value from them.

It means moving from analogue thinking to digital thinking. And adopting a “digital first” mindset.

Make no mistake, digital transformation is a fundamental change to the way your organisation does business. It’s a long-term investment, and to be successful you need to rethink old operating models, be prepared to experiment more, and become more agile in your ability to respond to customers and competitors.

You also need to recognise the critical role that technology plays in your organisation’s ability to evolve with the market and continually increase value to your customers.

What is Digital Transformation

The challenges with digital transformation

Digital transformation isn’t an overnight process, neither is it confined to the remits of the IT or even the Marketing departments. It will impact on all departments and at all levels of the organisation:

  • Customer interactions need to be instant, on demand and via the communications channels that customers choose

  • Operations need to integrate and embrace new technologies, or new ways of using existing technologies

  • Value creation and measurement needs to be front and centre of any investment

  • Business models need to be rewritten to put customers at the heart of everything you do

  • Performance You get the behaviour that you pay for, so the way you measure success needs to incorporate customer value-driving metrics

But one of the biggest challenges is measuring the impact of your digital transformation process on the business as a whole. A company-wide, centralised measurement framework with just a few KPIs will give you a much greater understanding of success. For most organisations this shift away from department-specific, operational efficiency measures is a tough ask. But the sharpening of business performance it provides is undeniable.

Why does digital transformation matter?

Digital transformation has gone mainstream. If you’re not already doing it or at least actively considering it, then you can be sure your competitors are. You only have to look at all the recent market disruptors — Amazon, Uber, Netflix — as well as the proliferation of a vast array of connected devices to realise who are the winners in the digital space. These organisations have direct dialogues with their customers. The result is that consumers expect and demand products and services when they want them and how they want them. What was a new and exciting business model even two years ago is now “normal”.

So digital transformation is not just important, it is vital for ongoing profitability, customer satisfaction and experience, speed to market, competitive differentiation, and your ability to grow and compete effectively.

Smart organisations recognise the need to address the changing business landscape and move away from legacy systems and architecture. Take a look at our RETO MOTO case study for an example of digital transformation in action.

If you’re interested in discovering how digital transformation can work in your business, get in touch today.