Digital transformation has been a growing trend in business and banking for some years now, and is only likely to accelerate in the next few. Applying technological solutions to outdated processes generally speeds things up, improves efficiency, reduces running costs and has various other benefits, assuming that it is enacted smartly. We have talked about what exactly a smart approach is in a previous post.
However, there is obviously a lot more to digital transformation than this simple summary shows. Indeed, the fact that you are on this website, reading this blog, implies that you have at least enough of an understanding of the subject to see how simplistic a summary it was. Even with such a level of background knowledge and understanding, though, there are still aspects of this broad and fascinating subject that you may still not know. That is why we are going to take a look at some of the more amazing facts about digital transformation.
1. It’s not just about technology
Something that is often overlooked about digital transformation is the fact that, despite the name, it’s not only about upgrading your business’ computers and systems. Frankly, how many people still use hand-written files in their business these days? In that sense, the transformation is not exactly one from analogue to digital so much as digital to automated, using more advanced systems and software to reduce the complexity of important processes.
And yet, even this does not paint a complete picture of the transformation. In actual fact, the most significant change businesses go through during their own digital transformation is the change in company culture and organisation. Indeed, a Forrester study found that this is the part of the process that most companies struggle with. Employees who are used to doing things the old way are often found to lack the enthusiasm for digital transformation that their managers possess and are reluctant to shift over to new, more streamlined processes. That being the case, it is generally better to start the process gradually, working to shift the mindset of employees long before you start bringing in new systems for them to learn.
“Many entrepreneurs are under the false impression that simply by introducing new software or machinery into their business, they can undergo an effective digital transformation,” said Sam Williamson, SEO Executive at Flying Scot Glasgow. “But in order to truly undergo a productive digital transformation, a business needs to make sure that they understand how to use the new technology effectively, otherwise it could actually be counterproductive and rather costly for your business.”
2. Your workforce will need to transform, too
Closely related to our first point, a second huge stumbling block companies face during digital transformation is a skills gap. You can have the most enthusiastic workforce in the world, desperately keen to transform how you do business, but if they lack the technical skills to understand the new processes you want to implement, you are going to struggle. You would not be alone in this struggle, either - about 77 per cent of companies consider a shortage of digital skills to be their biggest hurdle when it comes to digital transformation, according to a Capgemini article.
The problem is a relative shortage of staff with sufficient IT training and experience in the world generally, not just in your company. While you won’t need everyone to be able to write their own software or anything of quite that level of expertise, you do at least need staff who can use computers for slightly more advanced tasks than writing a few emails and checking their social media.
Fortunately, there are ways to bridge that skills gap, though most solutions will inevitably mean replacing some of your workforce. Some staff can certainly be trained up to the level you require of them, but there will inevitably be those who lack either the capacity or the motivation to upskill. If this is the case, changes in your hiring and retention policies may be required and you might find that your office environment is the thing that changes the most radically during your digital transformation.
3. Consumers are demanding digital transformations
Digital transformation is about a lot more than updating and improving a few back-end processes. Done well, it makes life simpler for the customer as much as for your staff, if not more so. And having a simpler life has been the main goal of consumers since consumers existed.
Look at the evolution of retail, from shopping and individual stores to getting everything you need from one large facility with everything in one place (supermarkets or shopping malls) to buying online, without even needing to leave the house. Digital transformations are taking things even further, removing the need to enter credit card details for each purchase through things like one-click purchases and digital wallets. Are you noticing a trend here?
A study by Altimeter Group found that the key drivers for digital transformation consist of evolving expectations and behaviours of both employees and customers. More importantly, it found that customers especially will generally look for the path of least resistance, meaning that if processes are too complex at your business, they will go elsewhere. This certainly increases competitive pressure, but it also creates growth opportunities.
4. It’s more expensive to not transform
Between adjusting your company culture and upskilling or replacing significant proportions of your staff, you might be questioning the value of digital transformation. That’s understandable - this is a huge change and kicking it off is going to be expensive. However, failing to start will inevitably mean that you start to fail and not kicking it off at all will prove vastly more expensive in the long run.
COVID-19 has accelerated a trend that was already becoming a significant risk to businesses around the world. Put simply, that trend was one of “go digital or go bust”. In the case of COVID-19, it is a simple practicality since social distancing requirements have put a lot of strain on bricks-and-mortar businesses while those in eCommerce have thrived. However, even without world-spanning pandemics, the simple fact that every industry now has its own share of innovators and disruptors means that those businesses unable to at least keep up, if not lead the curve themselves, get left behind and soon find themselves disappearing into obscurity and bankruptcy.
However, let’s not end this on a note of doom and gloom. Instead, look on the bright side of the same point: Those companies that have invested in digital transformation have seen significant increases in their income. In fact, according to McKinsey, a well-planned and well-executed digital strategy can boost revenues by more than 15 per cent.