What is Digital Transformation, Really?
This is the first in our four-part series on Digital Transformation.
Many mid-sized businesses see IT simply as an ongoing problem. When the Board meets, the IT slot is dominated by discussions about anti-virus software, operating system upgrades, contract negotiations and laptop replacement costs. The Board uses up its time, money and emotional energy on these operational details.
What they’re missing is that IT genuinely has the ability to transform a business. IT can bring radical and new ways to grow the business, to serve customers better, and to increase profit margins. And the market places a far higher value on businesses that exploit these benefits.
These opportunities, which many refer to vaguely as “Digital Transformation”, should be the focus of the Board discussions about IT.
So what exactly is Digital Transformation?
For our clients, digital transformation simply means using IT to deliver dramatic improvement. It’s going beyond simple upgrades or fixing niggling IT problems. It means using IT to make a significant change for the better.
Sometimes it’s pretty straightforward, a matter of following IT best practice, which is surprisingly rare! Or it may mean genuine innovation, utilizing technology that breaks new (or newish) ground.
At Freeman Clarke, we see Digital Transformation in terms of four categories.
The Four Kinds of Digital Transformation
- Market breakthrough. For example, some of our clients have used their expertise to create software that offers new kinds of specialist services. Some manufacturers or wholesalers have become retailers. Some have added value by repackaging or combining products and services from other companies.
- Wowing customers. This happens when providing your customers with the experience they want, how and when they want it, rather than imposing your processes on them. And it can give you new ways to de-commoditize your offering by focusing on service rather than price.
- Internal redesign. Many companies’ internal business processes are patchwork decades-old solutions. New technology allows you to completely rethink your processes, to design from scratch to suit your team, your profit goals, and most importantly your customers. AI or software robots allow you to automate manual tasks and reduce errors.
- Risk reduction. Traditional processes often carry unnecessary risks that affect your company’s competitiveness. New technology can provide real-time risk assessment and automation of controls. Or it may allow you to offer higher guarantees to demanding (but high-value!) clients.
These categories are not hard-and-fast rules. In some cases, transformations cross boundaries, for example, radical improvements to internal fulfillment that enables significant improvement to customer service as well. And better internal processes can reduce risk as well as improve margins.
But these categories are a good starting point for any discussion of Digital Transformation.
There may not be enough time at a Board meeting to consider these options, which is why we often suggest a Board-level IT workshop, where you can kick start a discussion with the following questions:
- What is it that your market really needs?
- What do your customers really care about and value?
- If you started with a blank sheet of paper, how would you do things differently?
- What are the barriers to solving the above questions, and how might IT remove them?
Remember, Digital Transformation is one of those vague-sounding buzzwords that obscure a relatively simple concept: using IT to deliver dramatic improvement. If you’re interested in a pressure-free discussion about how IT can deliver Digital Transformation to your business, see below to get in touch!