Key Points

• Digital transformation is a process that can help bring a company into the future. 
• Companies that don’t embrace digital transformation are likely to get left behind. 
• There is bound to be pushback when moving into a digitally transformed workplace from executives to long-tenured employees. 

Today’s business landscape is more fast-paced and competitive than ever. As a result, companies are continuously looking for ways to keep up with the latest technological advancements or trying to create them themselves. 

One tactic businesses use to gain an edge over the competition is the concept of “digital transformation,” which is a fancy way of explaining why companies are constantly integrating new technology to remain competitive in an increasingly challenging business environment. 

What Is Digital Transformation? 

If you want to dive a little deeper into digital transformation, it doesn’t require much hand-holding to explain. Simply stated, digital transformation is the idea that companies will integrate new kinds of digital technology into their operations and make them part of their overall business strategy. 

Once digital transformation begins to take place at companies, both large and small, it can and often does change how a business operates. This includes how employers interact with internal systems, how employees and company systems interact with suppliers and vendors, and how a company delivers value to its customers and shareholders. 

The Stages of Digital Transformation

Ultimately, companies must consider digital transformation as something that is more than a one-time event. In other words, they must move through the different stages of digital transformation until it is fully integrated into their business. 

1. Business As Usual

Any company unwilling to move from its old ways believes its tried-and-true business model will continue working forever. Unfortunately, history is littered with companies that thought this way and are no longer around but potentially could have thrived had they embraced changing winds.

2. Showing Activity

A company that starts to show itself as seeing the value of digital technologies will try a test period, likely within a subset of any organization, to see how well digital processes can be integrated and if they financially pay off. 

3. Formal Decision 

When a formal decision about a digital transformation has been reached, this is the stage in which a company’s leadership has determined that the expense of integrating new technologies is best served as it will help drive additional profits in the long term. 

4. Strategy Actions 

If a company hits the strategy stage, we’re now at a place where it has begun rolling out digital transformation technologies and is now cross-functional. This means multiple teams are now seeing these processes roll out, and everyone is moving to a common platform after a trial period. 

5. Converging Technology

When a company hits the converging stage, you know digital transformation is a foregone conclusion. This technology rollout is happening, and there is no going back, as there is now a team solely responsible for integrating new technologies and training those who need to work with new systems. 

6. All About Being Adaptive

Congratulations! If a company hits the adaptation stage, it is now in a period in which all digital transformation technologies have been rolled out, and executive leadership is seeing the results. 

What Are The Challenges Of Digital Transformation? 

Unfortunately, the role of digital transformation isn’t without challenges, and while the benefits are clear, this doesn’t mean everyone will be on board. 

These challenges can and will be pretty broad and can come from anywhere. One example might be that you have no support from leadership. Unfortunately, due to the expense of such a change, the C-Suite might not be on board with fundamentally changing a company’s technology, as it could backfire and cause more harm than good. This is a reality businesses have to face.

Another significant challenge for digital transformation will be compliance, which will likely throw some roadblocks as it needs to ensure that you follow all of the appropriate regulatory and compliance processes. This might be okay in many ways, primarily if your business handles sensitive customer or client information subject to various laws. 

You also may need to consider employee resistance to change. Employees, especially those who have been with a company for years, if not decades, will be super resistant to anything that requires more work or completely changes their processes. While this is to be expected, training becomes a big factor in showing companies can be dedicated to employee concerns. 

One final roadblock to digital transformation is that integration is not as easy as one might think. You can’t just add Dropbox to everyone’s computer inside the organization and believe it will all work out. You have to do the work to set expectations, train your teams, and then show how they can be successful with these changes.

Examples of Digital Transformation 

When you try to explain digital transformation and that it’s all about integrating technology, that’s a somewhat vague explanation. As a result, it’s helpful to go more in-depth around some of the key components of digital transformation. 

Artificial Intelligence 

Right now, artificial intelligence is one of the most discussed ways companies are transforming themselves digitally. Whether automating interactions with customers through chatbots or tasks more efficiently, like analyzing results at a factory to find more efficiencies, artificial intelligence will likely be the top digital transformation tool for years to come. For this reason, new AI tools are seemingly popping up every day, looking to solve problems businesses might not even know exist.

Internet of Things

Before ChatGPT became the hottest startup in recent memory, much of the world around digital transformation was heavily focused on the Internet of Things or IoT. This includes many consumer products, but it also includes heavily integrating and tying together things like security cameras, thermostats, and home alarm systems. 

One example might be when you buy a smartwatch and use it for fitness only to have the watch try and sell you fitness classes. This would be an excellent case for the Apple Watch and its Apple Fitness+ program, which ties together nicely and would add additional revenue for Apple, so it’s a win-win for both customers and the company.

Automation

Anytime a company uses technology to automate repetitive tasks faster than a human can perform them, it’s a prime example of digital transformation. For example, a computer that can create 40-hour work schedules inside a retail store or automate payroll based on punch cards and clock-ins is a prime example. 

Data Analytics

Data analytics is a premium example of digital transformation, as companies can now process terabytes of data much faster than teams of people can do. This can help all companies provide more exact results to their clients and customers.

A strong example is a company that can use a computer to analyze its customer list rather than hiring a marketing agency to do something that can take weeks to receive back. In contrast, a computer system can do it in hours. 

Cloud Computing

The rise of digital transformation and cloud computing has often gone hand in hand. Services that provide cloud computing, like Microsoft with OneDrive or Dropbox, have made it so that you don’t need to be near your physical computer to access file storage or even backups of compromised systems. 

Why Digital Transformation Matters

Considering why digital transformation has become such a hot topic, you can see why it matters so much. 

Opens The Door

The idea of “opening the door” also sounds vague, but the idea here is that digital transformation allows companies to explore new markets and kick those market doors wide open. For example, a website integrating new payment systems may now accept new business from customers in another country. The hope is that by adding a larger digital strategy, you have created a new business market, which can lead to more revenue.

Increases Competitive Advantages 

The biggest reason digital transformation matters is that it can help differentiate one company from another. For example, a company could add a new chatbot to its website to increase customer response time. In that case, word-of-mouth on social media will spread relatively quickly and could draw in new customers. 

Decreasing Expenses

The hope with any scenario that allows for digital transformation inside a company is that it enables the company to reduce its costs. Any opportunity to automate systems will be unfortunate if it means reducing headcount.

However, this could also mean a company that was once on the brink may not just survive but thrive in a new business environment. Cloud computing tools like Dropbox could also allow for remote work, reducing the cost of renting expensive office space. 

Better Customer Experience 

In the same way digital transformation can open the door to new business, it can also open the door to better customer experiences. This means you could integrate new systems into how your customers interact with your company.

It could be as simple as a new mobile app or adding a shopping page to your company’s Facebook page. A few small improvements on the digital transformation side can completely overhaul your customer experience. 

Enhancing Security

One of the more underappreciated reasons digital transformation matters is how it enables increased security. This might involve adding multi-factor authentication to your website or encrypting it, which could make customers feel safer shopping or uploading sensitive data. 

More Agile

Any company focusing on being more agile through digital transformation can move faster than its competitors. This speaks directly to a competitive advantage, as a company that has integrated a digital transformation strategy is more willing to focus on changing market conditions and adapt its business practices accordingly. 

Other Useful Tools and Concepts

If you’re considering what would happen if your company were to start a complete digital transformation, the good news is that a ton of information is available. Many of the processes outlined as part of any initial digital transformation have been well outlined to ensure this process is as seamless as possible. 

Of course, you may also be in a position where digital transformation has already begun and want to learn more. This could be as easy as spending more time with Dropbox or looking more closely at updated data analytics tools to see how to present more data to a potential customer to win their business. 

Conclusion 

In many ways, digital transformation is the future of business and corporate America, whether companies want to resist it or not. The writing is on the wall about whether this process will happen, as far too many studies and data sets show that digital transformation has been the key to thousands of business success stories. 

Whether adding a chatbot or enabling remote work with cloud computing, there is every reason to suspect that digital transformation will carry many businesses well into the future. It’s just a question of how many companies will get left behind. 

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