A lot has been said about digital transformation: about how critical digital transformation is (85% of enterprise decision makers feel they have a time frame of just two years to make significant inroads on their digital transformation before suffering financially and/or falling behind their competitors), about how technology is taking businesses to unimaginable heights, about how Artificial Intelligence, Augmented Reality and Machine Learning are turning enterprises into smart businesses, about how digital transformation is essential for competitive advantage (57% of organisations believe that digital transformation is a competitive opportunity), about it is enabling organisations to offer exceptional products and customer experiences etc. Although digital transformation is critical, it’s time we stopped talking about digital transformation and started talking about business transformation.
What Exactly is Digital Transformation?
Success in today’s economy is based on an organisation’s ability to drive digital transformation to meet competitive pressures and satisfy customer needs. Organisations that can cope with this pressure stand a strong chance of competitive success; organisations that shy away will struggle to grow. Digital transformation is nothing but the profound transformation of organisational processes and competencies through the adoption of digital technologies. With 89% of enterprises having plans to adopt or have already adopted a digital-first business strategy, businesses across the world are making the most of digital technology to enhance business process efficiency and achieve a competitive advantage in the market.
How is it Different from Business Transformation?
Today, everybody is talking about digital transformation. But very rarely do they explain what they mean; in fact, very rarely do they understand what they are saying! And then, in the midst of all the discussion about digital transformation, some organisations bring in the term business transformation, but they don’t define that either. Here’s what it actually means according to Harvard Business Review, “Business transformation is about making fundamental changes in how business is conducted in order to help cope with a shift in market environment”.
Frankly, digital transformation is just one aspect of business transformation, albeit an important one. According to IDC, by 2019, 40% of all technology spending will go toward digital transformations. Business processes as well as IT backing are equally essential to drive business transformation: from understanding how work gets done inside an enterprise to how processes can be transformed using technology, how customer-facing areas of business can be improved and more – digital transformation is backed by business transformation which involves rethinking the entire company and revamping and restructuring ideas, strategies, and organisation for improved outcomes.
Why Business Transformation Matters More
Many companies that embark on the long, and often the complex journey of digital transformation do so by simply implementing a few new digital platforms – with the hope of dramatically improving business impact. However, unless and until they make certain changes to their current strategies and processes that drive innovation, their efforts will go in vain. Do you know? In spite of the hype around digital transformation, CIOs spend an average of 72% of their budgets on existing IT concerns, and only 28% on new projects and innovation.
According to the Harvard Business Review, leading digital organisations achieve better gross margins, better earnings and better net income than organisations who are slow adopters of digital technology. However, a digital platform has no chance of achieving expected objectives on its own; it requires fundamental changes within the organisation as well as how other channels, touchpoints, and processes integrate with it. Therefore, business transformation is nothing but a strategy that aims to align people and processes with technology initiatives. It is a holistic process that aims to transform processes and outcomes across the business; frankly, it is the only valid strategic process towards achieving digital transformation. It is only when the digital transformation is backed by the business transformation that organisations can increase revenue and cost efficiency and open up new markets.
As technological advances change the face of the business world, organisations across the world are trying to leverage them to accelerate business performance. 56% organisations believe that digital improvements have already improved profits and by 2019, digital transformation spending will reach $1.7 trillion worldwide. Although digital transformation is critical to survive and thrive in today’s dynamic world, it makes sense only when digital technology is integrated into all areas of your business. Digital transformation is not just about leveraging the latest technological innovation; for it to be a success, you need to restructure strategies and align technology with people and processes. Although companies across the world are experimenting with and benefiting from digital transformation – whether it is in the way employees work and collaborate, the way business processes are executed, or the way in which they understand and serve customers – the transformation isn’t easy. Through 2019, 75% of CIOs will fail to meet all their digital objectives. Hence, it is important that you take a holistic approach to digital transformation in order to constantly identify new ways to redefine the way you work in the today’s digital era.