What is Digital Transformation?
Can you remember a time when computers, cloud-storage, high-speed internet, and digital applications were not a requirement at your place of employment?
If you can, it was likely over a decade ago, and even then, computers were moving into prominence at most companies.
As the years have gone on, businesses have come to rely on digital processes and procedures.
Without even realizing it, companies have undergone a total digital transformation. Everything we do is connected to a virtual application.
From communicating with co-workers to connecting with customers all around the world, businesses have had to evolve to include digital processes. Why is this happening? How is this impacting business in the long-run?
These questions can give us insight into what the future may hold. However, before we explore these answers, it is crucial to understand the meaning behind digital transformation.
Digital transformations can look different for every company. However, there is a definition that ties these unique situations together.
According to The Enterprisers Project, a digital transformation represents the integration of technology in every functional area of business. This event not only changes the actual operational process of a company, but it also impacts the culture.
Typically, digital transformations occur to add more value to customers efficiently. So, in line with digital transformations, company cultures change in a way that promotes greater innovation, creativity, and attention to developing significant customer experiences.
So, why are businesses continuing to experience mass digital transformations, even over a decade later? Let’s take a look at how this development has affected businesses.
How This Transformation Has Impacted Businesses
Technology used to be solely kept within the doors of the IT office. However, technology and digital applications have reached every functional department, from accounting to operations.
Technology allows businesses to do what they do in a faster and more efficient way. This quote from CIO of Vanguard, John Marcante, revealed the impact of this shift:
“Today, companies are being replaced on the S&P approximately every two weeks. Technology has driven this shift, and companies that want to succeed must understand how to merge technology with strategy.”
Markets are moving faster because of the speed at which technology allows businesses to adapt to changes and better service customers. The adoption of digital tools within this transformation is not slowing down any time soon.
The International Data Corporation (IDC) estimates that global spending on technologies and services that enable digital transformation will reach $1.97 trillion in 2022.
So, why is this happening, and what is the long-term impact? Read on for the reasons why digital transformations are taking place today.
Why Businesses Are Experiencing A Digital Transformation
To Better Address Consumer Needs
Creating worthwhile customer experiences have become a top priority for most forward-thinking companies.
67% of consumers say they will pay more money for positive customer experiences.
Also, organizations that provided exemplary customer experiences outperformed laggards on the S&P by 80 percent. Enhancing the interactions customers have with a company not only improves a company’s reputation, but it can also positively impact the bottom line.
One of the ways many companies can accomplish this is through embracing digital transformations. Customers are craving more convenience and servicing. For example, companies like Airbnb, Uber, and Lyft, use digital applications to make it easy for consumers to either purchase a temporary room, home, and car ride or offer the service themselves.
The apps are intuitive enough to make it easy for consumers to jump in. These services have become so popular with consumers that they have even expanded. Now, Airbnb allows consumers to purchase experiences at their vacation destination, and Uber has expanded into delivering food with UberEats.
All three companies are rapidly altering their digital offerings to meet the ever-changing tastes of consumers, while also beating out new competitors who are trying to do the same. Today’s emphasis is on service and convenience, and companies that offer these benefits will win out.
The digital transformation is not only improving reputations, but it is also allowing companies to reduce their expenses. Digital applications are allowing companies to save time and money. For example, the advent of AI and machine learning is enabling companies to accomplish essential processes more efficiently.
As a result, many companies around the world are employing tactics like marketing automation.
So, instead of having a marketing professional handle all the more repetitive tasks of sending welcome emails, producing dynamic content, or research SEO keywords, marketing automation software can handle these tasks so individuals can manage more high-level strategic duties.
In turn, this professional doesn’t have to hire another per-hour worker to handle this.
Digital applications can also help professionals take advantage of greater accuracy in product delivery and distribution, which can also drive down extra costs.
Today, software, apps, and programs are doing a lot of the heavy lifting that belonged to specific employees.
Now, these machines can reduce mistakes, diminish time spent on repetitive tasks, and decrease the overall workload of company employees. This situation allows companies to have the ability to put money in other places.
Drive Efficiency and Innovation
Digital applications allow companies to become more efficient while ultimately driving innovation. For example, look at how the world of banking has transformed because of mobile apps. Today, Wells Fargo, Bank of America, Chase, PNC, and all other major (and even smaller) bank companies allow customers to conduct their banking online.
From taking photos of checks for deposits to transferring money to other accounts, customers no longer have to go into a bank to handle their finances. As a result, the expectation has developed into one that requires all banks to have mobile apps.
Another example is the advent of collaboration and project management technologies within most of today’s companies.
To better manage workflows, many of today’s companies no longer use emails or physical meetings for collaboration. Instead, programs like Slack, Trello, Asana, Basecamp and other programs are now used for more streamlined communication and in-office collaboration.
Internally, this allows for the efficient sharing of ideas that can lead to new and innovative ideas.
Externally, digital apps can significantly benefit consumers.
For example, Tesla has abandoned the traditional model of the car dealership. Instead of using independent dealerships, Tesla has developed its own physical and digital marketplace platforms that sell directly to consumers.
This not only cuts out the middleman but is also allows Tesla to have the opportunity to directly interact with customers to make connections and collect the data they need.
Beat The Competition
Again, for every industry, consumer tastes are changing.
This development makes the competition even fiercer. Years ago, competition likely just related to advertising campaigns, product development, and R&D.
However, today, competition is directly related to the creation of customer experiences, and this directly integrates with digital transformation.
Today’s companies are having to compete with the help of digital applications. For example, this couldn’t be more visible than in the world of machine learning. Amazon, Google, Samsung, and other tech giants have dived into the intersection of Internet-of-Things and machine learning.
From the popularity of Alexa to household items that can connect to the internet, companies are battling to use technology to make life more convenient for consumers.
Even Netflix is facing increased competition from the likes of Hulu and the eventual presence of the Disney+ streaming platform. Each company offers a similar service, but with unique benefits and nuances that differentiate them from one another.
Each company is striving to be more convenient, accessible, and personable. Overall, the consumers benefit from this new emphasis on competition.
Today, companies cannot compete if they do not participate in digital transformations. The IDC predicts that by 2020, 30 percent of G2000 companies will have contributed at least 10 percent of their revenue toward the development of digital strategies.
Increased competition will ensure that these numbers continue to rise in the upcoming years.
Don't Fall Behind
During the early 2000s, many business owners may have thought the advent of the computer might be the beginning and end of the “digital transformation.” However, almost two decades later, we are witnessing even greater levels of adoption of digital apps and programs. From the agility offered by cloud-based programs to the development of mobile applications that provide services “on-the-go,” businesses will continue to see a need to “transform.”
As stated in this article by Slack, the components of digital transformation “are not about what your company does; it’s about how you do things.”
Your digital strategies now impact your business processes and procedures.
No longer do you have to send out emails manually, travel to visit colleagues or potential partners, or fail to meet customers whey they are in the buyer journey. In 2019, there are a variety of digital applications and tools that can accomplish these tasks.
Since business is now intertwined with technology and digital applications, it is likely that as these technologies continue to become more sophisticated and complex, digital applications and resulting customer experience strategies will follow suit.