Companies undergo a digital transformation in order to improve important processes within their business. However, the managers of some companies do not question their workflows and how these could be improved by a digital conversion. Decision-makers who do so carry out “replatforming” - a new direction for the use of technology in the company. Making the switch to becoming a digital company is a substantial project that undoubtedly holds limitless potential.
In this article, we highlight seven decisive reasons to undertake a digital transformation and how your company can profit from this.
- Process improvement and reduction of IT complexity.
Many of the IT systems used by companies were introduced a long time ago. In a non-digitalised company, processes often switch back and forth between digital and analogue media. Systems that are fragmented in this way lead to a lack of efficiency and unclear data transparency.
Hence the unmistakeable need, in most cases, to simplify the IT landscape. In this way, a company can decrease its operational risk by equipping itself with a modern technology platform. Appropriate, goal-oriented digitalisation helps to avoid media disruption and allows the entire process to be mapped in one medium. This means that all those involved have precisely the data they need in the format required to perform their daily work optimally. This saves the company time and money.
- The digitalised economy.
Increasing digitalisation of all areas of life, not just the world of business, is a further catalyst for digital transformation. Data is saved digitally, which means that older systems and processes have to be further developed. Technological advancements, such as ever faster broadband connections, have blurred the boundaries between the physical and digital world. In modern economies, the most recent innovations are a result of the digital boom in the corporate and consumer world.
Take 4G and 5G networks, for example. Consider how the improvement of 5G networks can open up new possibilities of expansion for the digital economy. The introduction of cloud computing, Infrastructure as a Service (IaaS) and Software as a Service (SaaS) is an additional aspect. The reinforcement of the network by means of underwater cables throughout the entire world has created a platform for establishing cloud-based and internet-based companies. These companies are now at the head of the leading digital transformation and innovation (see Salesforce, Amazon, Google, Stripe, Veeva, Workday).
Think about how the first digital business models, products and services are now a leading part of national economies. Companies that get involved in the digital economy have a chance to be industry leaders of the future.
- Changing the corporate culture.
A company can get stuck in a rut with its approach to everyday processes. This is understandable. Processes and a corporate culture can become outdated, which can sometimes make them hard to change. A common reason used to justify a digital transformation project is the reinvention of the culture of a department or an entire company. Take, for example, the projects listed below and how frequently they are carried out in combination with a digital transformation project:
Changing the project management approach for product versions or software development.
Promotion of a start-up mentality, e.g. by founding a completely new spin-off company with its own management board; New10 and ABN AMRO are examples of this.
Introduction of data visibility, transparency and accountability.
Implementation of a lean management governance culture.
- Introduction of new technologies
The fourth industrial revolution has led to a wave of emerging technologies that companies can use to their advantage. Consider the impacts that new technologies had in the 1990s and the early 2000s. The internet, social media, mobile and cloud technology. All of these had profound effects on many sectors and made digital transformation necessary.
Regardless of the industry, artificial intelligence, machine learning, blockchain, voice control, robotics and the Internet of Things (IoT) offer companies an enormous amount of potential. Their true effects have yet to be fully taken advantage of, and this will only happen in the next ten to twenty years.
Companies that are able to seamlessly embed these technologies into internal processes, services and products will be the winners of the digitalisation process. And perhaps with these new technologies, we will see the founding of new business, service or product formats that open up new, previously unimagined sources of income. Forward-thinking managerial staff will recognise the need to adopt new technologies.
- Changing competitive positioning.
The new technologies of digitalisation have the potential to radically alter entire industries. The rise of the internet and of cloud computing has helped companies like Salesforce, Uber and Amazon achieve a huge influence on the industries in which they operate, making them into market leaders.
"As a consequence, the existing players in the industry were forced to adapt or be faced with the threat of being overtaken by more agile and innovative competitors. It is important to take into account the implications of the digital transformation and the way in which this influences the market."
- A new direction for customer retention.
With the progress and omnipresence of technology in the consumer world, the way in which companies operate in the B2C area has changed. Consumers are more informed, more demanding, and have a short attention span. Social media have ushered in an era in which the volume of consumer voices has been turned up.
Similarly, the technology in the B2B area has influenced the interrelation and diversity of the points of contact throughout the entire digital sphere. One of the most frequently cited examples is how the role of salespeople has changed in B2B sales. Both contexts, B2C and B2B, have led to new strategic directions when it comes to customer retention. Here are a few examples:
New customer retention strategy in digital marketing communication (e.g.: customer life cycle).
Loyalty programmes that go beyond the physical and digital scope in order to retain customers (e.g. loyalty points with food retailers).
Use of marketing automation to automate digital communication - from the first enquiry, to customer service replies (think chatbots) all the way to contract extensions (automation of the communication before important extension deadlines).
Use of a lead management system for optimising the internal processing of enquiries, the processing of leads and prioritisation.
- Structuring for scaling.
Many companies carry out organisational restructuring in order to enable greater growth and scaling. When a company grows, any lack of structure or unsuitable systems become noticeable. A major reason for digital transformation is to prevent this.
One example within this issue is the introduction of the European legislation (GDPR) aimed at regulating data processing and management. As a result, many companies had to address their available IT systems and the way they dealt with data, and update or adjust their systems accordingly.
As you can see, there are many benefits to a digital transformation. Digitalisation is by now no longer a question of if but when. It’s an unstoppable process. Every company, be it a small enterprise or a giant corporation, will have to address digitalisation in order to survive on the market in the long term.
Do you have questions about digitalisation or are you planning a digital transformation of your own company? Feel free to leave us a comment or send us an email info@twim.ch.