A Quick Guide on Digital Transformation – What It Is and Why You Need It
December 22, 2022
Every business article on customer engagement, cost savings, production efficiencies, and marketing research focuses heavily on one topic – adopting cloud computing apps, AI (artificial intelligence), and machine learning. In other words, implementing digital technologies to drive efficiencies, lower costs, and improve the customer experience. Regardless of the industry, technology will forevermore be the foundation for remaining competitive and relevant to your customers. But as simple as it sounds, what does it mean for a small and medium-sized enterprise (SME)? Does digital transformation mean you must adopt a full cloud computing framework? What are the difficulties associated with digital transformation? And most importantly – is it worthwhile? Let’s get started on addressing these questions for you.
Pros of Outsourced IT services
Digital transformation looks different in every organization; therefore, it’s not easy to give a standard explanation. However, it is about making a fundamental shift in the way your business operates and delivers value to its external (and internal) customers. It involves integrating digital technology into all areas of operation and is a continuous process of developing, and re-developing, the status quo. Digital transformation often requires walking away from long-standing procedures.
The term ‘digital’ could mean different things to different people. Therefore, the first step to implementing digital transformation is defining the overarching goals you want to achieve. The purpose of digital transformation could be to improve the customer experience, boost collaboration and productivity, drive operational efficiency, or use new technologies to become the best in business. Whether it’s a B2B or a B2C enterprise, digital transformation investments are centered around the following components:
- Client experience
- Operational capabilities
- Organizational culture
- Employee productivity, collaboration, and empowerment
- Assimilation of digital resources
Worldwide Digital Transformation investments to reach $1.8 trillion in 2022, according to new IDC Spending Guide.
The United States will be the largest geographic market for DX spending in 2022, accounting for nearly 35% of the worldwide total.
Importance of Digital Transformation
Since COVID-19, there has been a perceptible shift in consumer behavior, resulting in increased demand for digital in nearly all business categories. Some trends that are here to stay include online grocery shopping, online fitness, streaming, online food ordering, cashless transactions, and remote selling (B2B). From the standpoint of workforce management, the option of remote work/collaboration has become critical for attracting the best talent. For businesses of all sizes, the debate over digital transformation has shifted from “Do we need it?” to “Our existence depends on it.” Customer services chatbots, and housecleaning of redundant technologies and automation to ensure IT resilience are some of the digital transformation objectives that have risen up CIO agendas following COVID-19.
Businesses must keep up with the pace of change, make daring, out-of-the-box decisions, and seek out experimental solutions to improve the customer experience. All of this must be done while maintaining the t existing operations including following regulatory standards and preventing cyberattacks and data breaches. The function of an IT department has expanded from ensuring that business systems are operational to providing the organization with technology that enables it to generate previously unimaginable capabilities. To summarize, CEOs now expect CIOs to contribute to enterprise revenue generation; and digital transformation projects are critical in supporting the leadership team to meet their goals.
- All digital transformation investments must be tracked in order to meet performance indicators for customer insights and business process effectiveness. When done correctly, the benefits of digital transformation are visible throughout the organization including Improved customer centricity – Digitization facilitates the analysis of customer pain points and potential for improving the customer experience.
- Greater business insights – Going digital helps a business capture costs and investment returns more accurately. This can be done across functions – marketing, sales, operations, customer service, logistics, and finance.
- Lower cost of IT – Legacy systems are expensive to maintain. Moving to modern IT cloud solutions generates cost savings while improving system performance.
- Improved business agility – Digital transformation creates system and process efficiencies that facilitate quick responses to market changes. It also empowers decision-makers in the enterprise with the information needed to predict/ plan for future market trends and not just respond to them.
- Improved work environment – Human resources can also benefit from digital transformation through automated employee onboarding, performance reviews, and enhanced remote working environments.
Here are some digital transformation examples:
- UPS has developed a system that optimizes the delivery routes, allowing drivers to deliver more packages per day while reducing the company’s carbon footprint. Its digital transformation has also helped introduce real-time package tracking.
- McDonald’s uses artificial intelligence (AI) to improve the customer ordering and payment experience for customers through mobile apps and in-store digital ordering kiosks.
- Ikea opened an online storefront and allowed customers to interact with the brand both online and in-store. Customers can design their home interiors on the Ikea website before visiting the shop to talk with an employee.
Roadblocks to Digital Transformation
CTOs and CIOs face unique hurdles while making the leap of faith toward digital transformation. As they embark on a digital transformation strategy, IT leaders frequently face problems including budgets, skills shortages, and cultural resistance.
Some of the budgetary constraints (in implementing new automation tactics ) originate from the existing cost of operating and maintaining the legacy technology systems in the enterprise. When the bulk of an enterprise’s IT budget is spent mostly on legacy systems, there is a limited room to design new IT strategies to propel the business forward. As technology ages, the cost of maintaining legacy systems rises. Furthermore, because legacy systems lack the flexibility to interact with newer cloud-based technologies, many firms are hesitant to adopt new technology.
Digital transformation is not merely about adopting new technologies, software, or tools like data analytics. At the heart of digital transformation is the leadership/employee buy-in to make a cultural shift towards automation and new business models. Although IT plays a pivotal role in digital transformation strategy, digital transformation is as much a people issue as it is about technology. Implementing digital transformation needs cross-functional team engagement, and when people fear losing their jobs or feel their value being undermined, IT leaders experience pushback. As a result, it necessitates careful consideration and planning to address internal issues as well as an understanding of the people and the concerns they are experiencing.
Even when the need for digital transformation is apparent, most CEOs, CIOs, and CTOs struggle to determine where to start. QBSS offers ‘Cloud InterConnect’ (CIC), a cloud-based application that can be implemented in multiple locations and monitored centrally for real-time data insights and usage tracking. The CIC platform incorporates the highest security standards and IT best practices to support a secure digital environment for your organization. CIC can also be customized to meet your business needs, with quick onboarding and scaling for new locations. Contact us to find out more.