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Digital Transformation (DT) has become a buzzword if Google Trends is anything to go by. This is no surprise, as most businesses would want to increase their revenues, create great customer experiences, and even cut costs. As a business wanting to thrive in the 21st century, learning how to create an effective digital transformation strategy could be the difference in the competition.
However, according to an Everest Group study, businesses do see initial success in their digital transformation strategies. The biggest challenge is keeping the initiatives sustainable in the long term to achieve the desired goals (cost reduction, increased revenues, and overall better customer experience).
The challenge, therefore, is in understanding how to create an effective digital transformation strategy that is sustainable in the long haul and that can yield you the results that you are looking for in your business.
Salesforce defines digital transformation as the reimagination of businesses in the digital age intending to meet changing market requirements while achieving the above-discussed business goals.
Just because the word ‘digital’ appears in the digital transformation doesn’t mean that incorporating the latest shiny tech into your business is the way to go.
Digital transformation needs to permeate every department and facet of a business for there to be any long-lasting results. This means that a business needs to change its mindset, then its internal processes, followed by focusing on how to serve the customers better.
For your digital transformation strategy to be effective in the long term, the following characteristics need to be present.
Digital transformation is only successful if it is in line with your business goals. At face value, digital transformation may look like all you need is a new digital product to ‘boost sales’ or ‘outdo the competition.’ However, you need to really think through how digital transformation helps you achieve your business goals and the business strategy you will use to make it successful.
An easy part to overlook while learning how to create an effective digital transformation strategy is your business’s current situation. What resources do you already have? What skills do your teams have? What data do you currently have? What technology do you currently use?
Analyzing where you currently are, gives you a more realistic view of a digital transformation strategy. You might realize, for example, that you can build on the software that you already have. It may be more cost-effective, and you will have more financial resources to hire more specialized skills or invest in R&D.
After doing your R&D, you need to identify the market your digital transformation would serve. For example, you may want freight companies to improve fuel efficiency through digital transformation.
In the freight company market, for example, choose what you want to focus on. You can choose areas like digitization, speed, and innovation. You may find that freight companies have traditionally used books to track fuel consumption. Digitizing this data would make it easier to manage it and identify trends.
You may then build a system based on available data that predicts fuel consumption and identifies factors that result in fuel wastage.
Since the system works with real-time data, it can help with the timely replenishing of fuel, reducing delays. Based on factors like poor weather conditions or political environments, it should advise on the need to purchase extra fuel to avoid inconveniences.
A good understanding of how to create an effective digital transformation strategy must include solid goal setting. If you decide that your goal will be a prediction of fuel consumption and wastage, it will be easier to decide on what technologies you need. You may find that you need to incorporate machine learning and AI in your system to learn from existing data.
If the freight companies have smart devices already installed in their cars, it would even make it easier to use AI.
You get to define the scope. You may build the software and hardware if none exists and help freight companies install it too. Or you may choose to only focus on the software and have a partner install the hardware. There is an option to use existing hardware also.
You then need to find a way to measure whether your goals are being accomplished. The KPIs could be the amount of fuel saved per month and how much money it saves the company.
Before you hire people with big titles like Chief Data Officers (CDOs), any business must know the skill set they need for a productive digital transformation strategy. Below are some crucial skills you need:
This is a no-brainer, right? The truth is that you need to ensure that everyone on your team knows how to maneuver their way around the existing software used in your business. This will prepare them for any new changes that digital transformation will bring about.
Many businesses now must deal with copious amounts of data, thanks to the many possible sources. You may have customers who order services via your website, app, affiliate sites, and even partner sites like Amazon. We have not even listed the smart devices that users could integrate.
You need to ensure that all this data is not only being safely collected and transmitted but is analyzed and stored securely. This is where Data Officers come in. Cybersecurity shines here too.
Working remotely has not made data management simpler. It is easier to compromise a business’ security when the workforce is distributed. Users can access insecure sites that hackers can use to attack a network. The following Cisco Networking Solutions Customer Research shows that the most significant security risks in a company come from remote working:
Like we have mentioned above, businesses have access to more data than they can handle. Data analysis is a crucial skill in digital transformation because it helps with getting information from data that can be used in decision-making in the business. This way, you will know what parts of the business to prioritize in your digital transformation journey.
For example, if you analyze your data and find that a significant number of queries have to do with discounts, it should tell you that your customers are on a budget. This means that you can look for partners who can help with that.
If you are a pastries shop, you can partner with a nearby coffee shop to give discounts to customers who make purchases above $50.
A lot of companies have silos within them. Each department has its own culture, data, and software that is inaccessible by other offices and people. For example, finance could be using a particular ERP, while Marketing uses CRMs. These two types of software have no way of communicating with each other. Worse still, the people in the subsidiaries have no idea what goes on outside their division. For digital transformation to succeed, the company needs data and participation from all employees.
Closely related to culture is the mindset that everyone in the organization has regarding digital transformation. If employees feel that digital transformation will replace their jobs, then they are likely to sabotage it. This means that you need to ensure that people in your organization have the correct mindset and understand how to create an effective digital transformation strategy for the betterment of all.
CenturyLink was able to put employees at the center of their digital transformation. The sales team received a boost in the telesales component of their job. It helps them decide the customers to call, the most appropriate time to call, and even makes suggestions about what to say during the call.
It is effortless to bash the technological component of digital transformation. However, there is no digital transformation without technology. The truth is that different businesses need different technological solutions, depending on what their digital transformation priorities are.
Deloitte’s “Future of Risk” report gives some examples of how businesses are implementing technology in their digital transformation journeys:
Warwick Analytics, a company that provides AI-based solutions for Customer Experience (CX), has a system that can predict when company assets need maintenance. Such technology would go a long way in helping companies budget for repairs instead of running into emergencies.
Saia, a freight company based in the US, installed sensors onto its trucks to track metrics like driver safety and fuel usage in real-time. The company has seen a 6% fuel efficiency increase.
The Salesforce Lightning Platform has made collaboration possible, as businesses can combine their data and applications into one more robust one that can access and communicate with the rest.
Better still, the Paas (Platform-as-a-Service) allows for customization and automation. You can easily automate redundant and mundane tasks, freeing your team to focus on other tasks. Salesforce’s Paas is said to have an ROI of up to 478% due to increased business efficiency.
A lot goes into creating an effective digital transformation strategy. We have looked at some crucial components like ensuring that it is aligned with your business goals, putting together the correct skillset, changing the company’s culture and mindset, and getting the suitable technology.
It is important always to remember that as you learn how to create an effective digital transformation strategy, prioritize technology but just as a tool. All the other factors are the techniques that are necessary for the tools to work efficiently.
Businesses are going to spend $7.8 trillion between 2020 and 2024 in digital transformation. You are better off making the investment worth it. Talk to us now for all your digital transformation needs.