Digital Transformation: transform or die

“Do not be afraid of big expenses, be afraid of small incomes”. The words attributed to Rockefeller still define the thinking paradigm of the market leaders. However, in modern companies the responsibility for generating revenue is gradually moving from marketers and vendors to IT directors. According to a report by KPMG, company leaders in 63% of cases are focused on IT projects aimed at generating revenue, and only in 37% of cases on IT projects aimed at cost reduction. And the reason for this is the rapid digital transformation, which covers customers, employees, competitors, suppliers, partners, and even state institutions.
Consultants, vendors, bloggers and even politicians tell us about digital transformation. What is behind the phrase “digital transformation”? Is this another hype from marketers? Or a hint at cloud technology? Maybe it is about robotics? And how will all this affect a company? Its employees? And most importantly — its strategy?
Let’s dig into this.

What is digital transformation?

Digital transformation for different companies looks differently. However, in the most general definition, under digital transformation, one can understand introducing technology into various business processes and business spheres, which leads to fundamental changes in the ways of creating value in the eyes of a customer. This definition also incorporates a significant shift in attitudes to IT projects: if previously they were long, costly initiatives, now they should be implemented on the principle of constant “tasting” of various digital technologies. The winners will be those who can learn to select the most “tasty” combinations for their customers.

It is clear why the topic of digital transformation causes confusion in the unprepared reader: opinions are various and scattered. So, Greg Verdino says that “Digital transformation allows us to eliminate the gap between expectations of modern consumers and the currant supply of the yet analog business”. David Terrar believes that “digital transformation is a change in the way of thinking, the transition to innovation and new business models, the transfer of assets into digital form, the continuous improvement of consumer experience for customers, suppliers, employees and partners through digital technology.”

Why does your company need digital transformation?

A simple answer to this question is “Because you simply do not have another choice.” For many companies, the ability to adapt their business model to the changing needs of customers quickly, becomes a matter of survival in the market.

50 years ago, the average time for a company to stay in the S&P 500 ranking was 61 years; by 2011, this figure has dropped to 18 years. Now there are monthly changes to the S&P 500.

The most dangerous competitor of your company in the 5-year term is the idea in the head of a startup founder. Therefore, in the current situation, the phrase “transform or die” accurately reflects the state of affairs. .

Are there any recommended approaches to the digital transformation implementation?

Of course, there are recommendations for how digital transformation should occur (for example, MIT Sloan: nine elements of digital transformation or Altimeter: six stages of digital transformation), but remember that each organisation must work out its own transformation route. We can rather talk about areas that should not be left without attention. These are, first of all, the following: managing consumer experience, increasing operational flexibility, embedding technology in the company’s business processes, changing the product.

The role of cultural change in an organisation

Digital transformation implies not only the introduction of innovative technologies. Perhaps even more important is the changing ways of thinking of company employees. They are also under pressure from new technologies. And the task of top management is to help them adapt to the new environment. Technology has always influenced the way we think. Organisations that will help their employees make the best use of modern technology will be able to gain a significant advantage.

What is the role of business processes in digital transformation?

The success of digital transformation greatly depends on the implementation of BPM-projects. Whatever technology we implement, it cannot improve non-optimal business processes. It is projects on transforming business processes, complemented by the introduction of modern technology, which can become a tool for digital strategy implementation for a company.

Modern BPMS systems can dramatically shorten the creation cycle of new versions of software, which will allow companies to respond quickly to customer needs, the emergence of new technology, ideas, and suggestions from employees.

Probably, never before did the interaction between IT and business create so much space for creativity.

 

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