How to build digital transformation strategy successfully
Digitalization is more relevant than ever as it is one of the most proven ways to stay afloat (especially in critical situations like epidemics and the financial crises they provoke). There is a lot of evidence for this because many companies have already done it. You can read more on why digitalization is needed and which companies are already actively following this path despite the difficulties, in this article. However, every business owner in such situation will also ask how to digitalize business. We must say right away that this is not an easy task and it has to be started with the digital transformation strategy development. What is it and how to do it right? Let's figure it out!
What is a digital transformation strategy and why would nothing work without it?
Nowadays, customers and consumers are the main headache of all goods and services providers. People quickly get used to something good and easily set new standards in the market. If you buy tickets it should be on the phone, paying via bank transfer or the phone itself. You want support 24/7, and to track delivery, and to watch purchase history, and analyze costs spend monthly, and so on.
According to a number of European sociological and statistical studies:
- 57% of consumers believe that all their appeals and issues should be resolved online and only 30% of companies can do it;
- 64% of customers want to receive real-time support using their communication channel of choice;
- The ability to solve problems online, by phone or other means of communication increases customer commitment by more than 36%;
- 78% of all consumers make a purchase based on the level of customer service.
At the same time, McKinsey consulting company conducted a survey, which revealed that only 8% of companies understand that their current business model will remain economically viable if their industry continues to digitalize in the same direction and speed. Businesses that welcome changes and are ready for them, businesses that can adapt to more flexible work models have more potential than ever to succeed.
And we are not talking about a one-time transformation, it is important to learn how to constantly transform business and be open for changes. For this, you need a complete digital transformation strategy.
How to develop a digital transformation strategy?
First of all, when developing a digital transformation strategy, it is necessary to answer the question of what exactly needs to be digitally transformed. To do this, you need to conduct a thorough analysis of your company, however, you do not need to start all over from scratch. Currently, the following digital transformation components or areas that it affects are distinguished:
- Relations with customer;
- Strategy and goals;
- Organization structure and Human Resources;
- Knowledge management;
- Processes, Infrastructure, Data;
- Management and Evaluation metrics;
- Marketing and Distribution process.
Moreover, changes in one aspect will entail changes in the rest. The ties are obvious - a change in relationships with customers entails both the need to reform personnel management and the organization’s culture, as well as a change in the organization’s goals and marketing. A transformation of goals requires the creation of new ways to control and manage, and finally, you change your processes.
These aspects to one degree or another relate to all digital transformation strategy processes. For example, without proper digital transformation strategy of consumer relations and marketing, not a single food delivery service will work, and industries such as telemedicine directly depend on the digital transformation strategy of infrastructure, knowledge and data management.
The success of the digital transformation process depends on its strategy and concept.
However, when developing a digital transformation strategy, a number of key points are mandatory.
1. Collect information about the goals and objectives of the digital transformation
At this stage, you should conduct an analysis and collect information about the composition and values of key indicators of strategy effectiveness and draw up a certain vision. The goals and objectives of digital transformation should be based on the company's strategy and its strategic goals. First of all, it is necessary to highlight existing areas, for example, financial, industrial, managerial or any other. Focusing on them, it is possible to determine with which goals the company has problems. These are the main areas of digital transformation. Ultimately, you need to describe the state of enterprise that you plan to achieve as a result of the implementation of digital transformation measures, and assess the effect of digital technologies implementation. It is also recommended to analyze existing business goals and study the results of technology trends monitoring to form a list and content of digital transformation strategy program. In particular, it may be:
- reengineering and digitalization of production processes;
- digital alternatives to products or services;
- digitalization of managerial functions;
- fulfillment of marketing potential;
- architecture and infrastructure;
- digital competencies of personnel (HR strategy);
- information security;
- organizational change as part of digital transformation.
The number and list of strategy programs are determined based on the characteristics of the enterprise.
2. Identify business processes in which digitalization is especially needed
At this stage, it is necessary to consider all the business processes taking place at the enterprise and realize which of them need digitalization, for which it is not urgently needed, and in which it is better to abstain from using digital technologies. At the same time, the expected results from the use of digital technologies in several scenarios, from pessimistic to optimistic, should be considered as part of the assessment. In any case, digital transformation strategy will require significant changes to ongoing business processes. Therefore, it is necessary to determine in advance the range of planned changes, their essence, as well as form the final benefits that will be obtained through the digital transformation. You should ensure a certain “transition period”, within which there may be several ways to solve the same problems - both “in the old way” and using new technological solutions. In this situation, IT consulting can be a great help. Read more about its advantages here.
In addition, when creating a digital transformation strategy, it is extremely important to identify the risks that affect the implementation (macroeconomic, industrial, technological, operational, etc.), assess their impact and think about measures to minimize them. Also you should calculate the costs of implementing the digital transformation strategy and assess additional income as well as cost reduction associated with its implementation.
3. Go to the direct implementation of digital transformation strategy
Here it is recommended to define tasks and measures in the following areas:
- ensuring the coordination of digital transformation strategy with other strategic, program and planning documents of the company;
- ensuring the planned development of the managerial structures responsible for digital transformation.
A clear distribution of functions, responsibilities and authorities between the created management structures is necessary, including the provision of the needed powers to CDTO (Chief Digital Transformation Officer) to ensure the implementation of the strategy. Once the responsible people have been appointed and all the previous steps have been completed, you should proceed to the search for the executives who are ready to put your strategy into practice.
Remember that managers often lack the technological expertise to implement a digital transformation strategy. In this case, it is recommended to contact the contractors who have IT consulting in the list of their services. Truly good specialists will explain to you exactly how exactly to digitally transform your business, in particular, conduct an examination, study business needs and goals, translate them into a technical language, and justify the need to choose certain software solutions and their functionality.
Even though the current situation is rather turbulent, digital solutions will remain relevant and useful no matter what. The main thing is to find good specialists who will not only help you develop a digital product, but also will give something more, exceeding your expectations.