Digital transformation is a buzzword that has been around for some time. For many, digital transformation started to kick into full gear in the 1990s as personal computers started to become more prevalent. This is when businesses looked at providing more digital experiences for customers and end users and also began transforming the way they worked internally to keep up with the pace of technology. While nearly every industry is undergoing or at least considering digital transformation, according to McKinsey, “the average digital transformation…stands a 45 percent chance of delivering less profit than expected.” Nonetheless, businesses are still investing in these initiatives; IDC estimates that worldwide spending on the technologies and services that enable digital transformation will reach $2.3 trillion in 2023.
So, why should you embark or continue on a digital transformation journey? And what is digital transformation, exactly? As the president of a company that offers software development and digital transformation services, I’ll attempt to outline what success looks like and how to get there.
What Is Digital Transformation?
Let’s start by defining what digital transformation means today. A search for “What is digital transformation?” yields hundreds of millions of results online. Some definitions focus on business or operational models, while others focus more on the technology side of things. This makes it challenging for organizations to pin down what digital transformation is and what they should be working toward.
I believe the definition of digital transformation should be centered around the end goal: offering digital experiences to customers and end users that delight and make life simpler. Whether it’s hailing a ride with the tap of a screen, depositing a check from the couch or filing taxes in minutes, most industries are focused on meeting customers where they are. That could be through the web, mobile, digital assistants or kiosks. Digital transformation is how they meet them there.
With this in mind, digital transformation is a customer-centric initiative that often requires upskilling on technical practices and making organizational changes to ensure all work is focused on value and customer satisfaction. Organizational change or mandates should be top-down efforts, and leadership at all levels should espouse the mission and vision of the company continuously and passionately. As far as technical acuity goes, while every organization might have slightly different requirements as far as how they plan to digitize, there are some core competencies I recommend homing in on:
- Cloud: The move to the cloud is here and shows no signs of slowing down. Gartner expected the public cloud services market to be worth $214.3 billion in 2019. It’s important for organizations undergoing a digital transformation to find the time and resources to upskill on cloud technologies internally.
- DevOps/QA Automation: The above competencies are supported by DevOps and QA automation initiatives. Your DevOps initiative should focus on collaboration, breaking down silos and keeping development work visible. To get started with QA automation, work to ensure that repetitive manual tasks are removed and the door is opened for innovation and strategy building, which ultimately drives more value. A digital transformation is likely to stall without these practices.
- Innovation and Emerging Technologies: It can often feel like new technologies hit the hype cycle daily. While it’s important to weed out what is hype and what will really drive value, those going through a digital transformation should be staying on top of the latest trends. Creating a culture of innovation can help organizations go from vision (wondering how technology like blockchain or AI will contribute to the bottom line) to decision (finding out the true value of adopting a technology). Achieve this by giving developers the freedom to test new strategies.
- Agile Development: In order to keep up with the pace of technology, organizations need to ensure they are following Agile software development practices (paywall). Here are a few tips for getting started with agile development:
- Use Agile’s built-in accountability practices. The sprint deadline, demo and retrospective are meant to show working components to business and leadership.
- Listen to the teams’ requests from the sprint retrospective. If they aren’t delivering but they are giving repeated warnings about roadblocks, listen to what those roadblocks are, and work with the team to resolve them.
- Be patient for a few sprints, but be clear about expectations. A team may need a few sprints to get up to speed and adjust, but it should be clear that the adjustment period isn’t unlimited.
Why and How Should You Embark on a Digital Transformation?
As mentioned above, undergoing a digital transformation can be risky. However, organizations that do not digitally transform may be left in the dust. Here are some of the benefits of going through with a digital transformation and how to capitalize on them:
- Streamlined Processes: Since organizational change is part of a successful digital transformation, you should focus on streamlining processes. Workflows, communication and collaboration should all become more visible and in sync.
- Customer Experience: Your digital transformation should be focused on driving value to the customer. Try to drive positive results in satisfaction scores as you make products and solutions digitized and optimized for end users.
- Performance: With streamlined processes and a focused strategy comes an increase in performance. Use data and feedback to make it easier for leaders to optimize work and shift tactics quickly.
- Competitive Advantage: If companies don’t take action, competitors will move ahead with their digital transformation efforts. The result could be loss of market share and eventual failure. Even though the journey may be long, challenging and full of roadblocks, remember that the cost of not going down this path outweighs the risks of doing so.
- Revenue: According to 2013 research from the MIT Initiative on the Digital Economy, “digitally mature firms are 26% more profitable than their peers.” These digital firms also generate 9% more revenue from physical assets. So, there is much to be gained financially from a digital transformation.
Digital transformation is challenging and risky, but incredibly rewarding. The technology landscape is bound to continue to shift, along with ways of working. However, for those considering or currently stalling in their digital transformation efforts, following the above guidelines should chart a path to success.
This article was originally published as a Forbes Council Post.