In 2018, according to the most recent report by Harvard Business Review, roughly $1.3 trillion was spent on digital transformation. In the last couple of years, the numbers increased even more, mainly because companies needed to adjust to a new way of life accelerated by Covid. It is important to note that digital transformation is not just an issue of capital expenditure but also of defining plans and the technology needed, implementing them, and resolving the accompanying problems and possibilities.
Innovation and disruption are the two cornerstones of digital change in the sector. Companies must pay close attention to the ever-changing environment of their industry and ensure they have the required personnel and technology to execute new business models, retain current talent and keep the business running successfully.
Digital transformation: What is it?
A digital transformation is the upgrade of current processes or the introduction of new methods of business operations using digital technology that enhances the customer experience and results in improved conversion rates for the organization. In this new digital age, digital transformation typically involves reinventing corporate processes.
Process, technology, data, and organizational change are the four primary aspects of digital transformation. Comparatively, the three primary components of digital transformation are rebuilding operations, customer relationships, and processes.
What is a Digital Transformation Framework?
Digital transformation frameworks cannot be generic; they must be adapted to each organization's particular challenges and needs.
Let's examine some of the characteristics of publicly accessible digital transformation frameworks.
Case Study: Customer experience is the core of McKinsey's digital strategy
McKinsey developed a DX framework called 4Ds. It emphasizes the importance of keeping the end goal in mind at every step: to increase customer value. An organization that is digital-first places customer experience as its focal point. Likewise, it emphasizes the importance of interconnecting all the stages and not falling short.
Source: McKinsey&Company The 4Ds of Digital Tranformation
McKinsey states, “Even though this approach seems self-evident, most companies struggle with implementation. Many invest heavily in the "Discover" stage, but later on, when "change exhaustion" sets in, the effort and budget diminish. To minimize this risk, it's important to concentrate on quick wins that generate momentum and save money that can be reinvested in future transformations.
Business Digital Transformation Trends: What's Next?
To remain competitive, businesses should focus on upcoming trends such as cloud computing, artificial intelligence and machine learning, predictive analytics, and blockchain adoption. With these increasingly accessible tools and solutions, businesses can ensure their success by remaining at the forefront of digital advancements. For example, the adoption of VPNs is one of the most prominent trends we've seen this past year and it seems to remain an essential tool, especially for companies operating based on a hybrid work model. A VPN service like Surfshark allows companies to securely connect a multitude of devices over an internet connection, improving accessibility to company resources from remote locations.
In 2023 and beyond, organizations will need to strengthen their digital operations. The following are some of the most prominent trends in digital transformation:
- Effective usage of Machine Learning and Artificial Intelligence (AI) should be encouraged (ML)
- A rise in digital partnerships, mergers, and acquisitions
- Increasing public cloud and data cloud security
- Enhanced success metrics for digital transformation and more
Many businesses have already begun to automate and simplify their business operations, as a new kind of consumer necessitates a new company strategy.
The Importance of Digital Transformation for a Business
Now, let's examine the five fundamental reasons why digital transformation in the company is crucial:
Rapid evolution of digital technologies
Technology evolves rapidly. Every firm must adapt to this ever-changing business climate and adopt new technologies. The methods and techniques that were effective in the past are unlikely to be effective now.
All six layers must be aligned for a business to succeed in the digital age: process, platform, people, product, marketing, and customer experience. The company will collapse if even one of these is not cared for properly.
Shifting Client Expectations
Customers' expectations are increasing, and businesses are working hard to meet them. Today, it is easier than ever before for customers to research all available options to fulfill their requirements. Therefore, each organization must put more effort into retaining its consumers by having an active online presence, a fully functional online storefront, providing a variety of payment options, and so on.
Maintaining an edge over the Competition
A revolution in technology and capabilities that did not exist even five years ago has given businesses the potential to take the lead. If they adapt to this change, they will avoid falling behind the competition. A firm that does not embrace digital changes will be replaced by a new one.
Make Informed Decisions, Faster
Businesses may benefit from big data by placing data and analytics at the heart of their digital transformation strategies. Due to the Internet of Things, organizations have more access to data quantities than ever. With the right mix of analytical tools, this data may be converted into valuable business insights, enabling you to make smarter, more expedient choices. The greater the influence and integration of analytical tools, the more deeply they are ingrained in business processes.
Digital transformation — The future
Digitalization is reinventing firms and helping seize unique competitive advantages, yet businesses are reluctant to shift their present business models when the time comes. In recent years, digital transformation has become something of a catchphrase among many senior executives. 79% of corporate strategists, according to a Gartner report, claim to be digitalizing their firms to generate new income streams. However, the transformation has been gradual so far, and fewer than half of organizations that claim to have converted place digital efforts at the center of their strategies.
We live in a digital, global, and hyper-connected society, characterized by a shift at the social and technical level, where the introduction of new market participants, off-site mobility, and constant communication significantly impact us. Today, digital transformation is vital; businesses must leave their comfort zone, reinvent themselves, and compete in a technologically advanced environment.