Business agility, resiliency, and productivity are the most important factors in determining the success of any organization, irrespective of its size. A well-charted Digital Transformation Strategy is a must to leverage the advancements of technology.
According to McKinsey, 20% to 50% economic gains and 20% to 30% increase in client satisfaction can be achieved with the help of digital transformation. Due to such benefits, the digital transformation market is growing rapidly. It is expected to reach USD 3.3 Billion by 2025, according to a report by Research and Markets.
Digital transformation is a very suitable option for you if you are looking to reform the way you conduct your business and run your operations. The only question here is, how? Like every new technological solution, digital transformation also comes with its pros and cons.
So, how can you ensure that you adopt the best practices while implementing them in your business and avoid as many risks as possible? The answer to these questions is rather basic – Digital Business Transformation Strategy.
What is a Digital Transformation Strategy?
In simple words, a digital transformation strategy is a detailed roadmap of the methods you plan to adopt to digitally transform your business seamlessly and easily tackle any challenges you face on your path toward transformation.
A digital transformation strategy is of extreme importance to ensure:
- Realigning the entire business model with an acute focus on Customer Experience.
- High-value and outcome-driven technological initiatives.
Organizations that have innovation at their core can effectively implement disruptive technologies that are the need of an hour in Digital Transformation. Forming an effective digital transformation strategy requires precision, expertise, and disruption of traditional ways of running businesses.
Hence, there are several components that you must attend to while formulating the business strategy. Let’s take a look at them.
Digital Transformation Strategy – 9 Key Components
Broadly, there are seven key components of an effective digital transformation strategy:
- Evaluate Your Current Digital Landscape
- Business Strategy and Leadership for Digital Transformation
- Culture Change and Communication
- Process Optimization for Digital Transformation
- Data Curation
- Digital Technologies to be Implemented
- Team Structure
- Technology Partners
- Results - Calibrating Success of your Digital Transformation Strategy
Let’s discuss all these Digital Transformation Strategy components in detail.
1. Evaluate Your Current Digital Landscape
Before exploring into new technologies, it's crucial to take a comprehensive look at your existing digital setup. Recognize the systems in place, their functionalities, and pinpoint any existing inefficiencies. By discerning the gaps, you'll be better poised to identify and invest in solutions that truly align with your organizational goals, ensuring optimal performance and a streamlined user experience.
Adopting a meticulous approach in assessing your digital landscape ensures that your technology acquisitions are well-thought-out and strategic. Aim to be among the entities that fully capitalize on their technology investments, rather than the substantial segment that realizes their technology acquisitions don't meet anticipated outcomes.
To gauge the efficiency and completeness of your current digital suite, ponder over the following queries:
- Are there processes that could be refined or automated to enhance efficiency?
- Is there a need to enhance collaboration with stakeholders or involve clients in the work process more seamlessly?
- How accurately can you currently forecast time and budgets? Is there room for more data-driven decisions?
- Can your existing infrastructure adapt to potential rapid growth in user demand or data volume?
- How robust is your infrastructure against potential outages, disasters, or cyber-attacks?
- Can customer data management be improved? Are there opportunities to automate specific customer-related workflows?
2. Business Strategy and Leadership for Digital Transformation
An effective game plan seems to be the obvious but often overlooked component of a digital transformation strategy. However, “how and who” formulates the strategy is what makes it important.
A basic business strategy along with the fitting technologies can help you digitize or digitalize your business, but transformation requires the correct mindset and guidance. Hence, strategy combined with the right leadership is the first and most crucial component of an effective digital business transformation.
Visionary leadership with the correct digital transformation strategy can lead to a better, smoother, more cost-effective, and time-effective plan to transform your business while keeping your business’ North Star in mind.
The North Star of your company defines the purpose, products, and potential clientele of your business. It is imperative to ensure that your company’s north star is clear while drafting the strategy so that your goals can be achieved without any hurdles in the later stages of the digital transformation process.
Therefore, you must ensure you form or hire the right team with courageous leaders helmed by disruptive executives to formulate your business’s digital transformation strategy. Some qualities that transformational leaders have are:
A. Change-agile Leaders
With the digital landscape changing so rapidly, a successful leader must be willing to try new technologies and become more adaptable and flexible in their approach. Leaders must nurture a culture that embraces the change.
B. Purposeful Changemakers
Leaders who can answer the question “why" of digital transformation are more apt to bring their businesses along. Successful digital leaders must have all the reasons ready why they should be rethinking the way they do business. It shouldn’t be like that, ‘we are adding technology just to say we have new technology’ instead it should be ‘we are utilizing technology to remain competitive and push us towards innovation’.
C. Forward-looking Vision
The most successful leaders must not just have a clear vision about the future of the company, but also, they would be proactively willing to commit the resources and implement the changes needed to make the vision happen. This is possible with a clear, coherent digital transformation business strategy that outlines the organization’s need of the hour and forward-looking vision.
D. Risk-takers and Experimenters
Risk-taking is quintessential for a successful digital leader. The biggest risk is not taking risks at all. In this ever-changing world, digital innovation of any kind is impossible if leaders are incapable of taking risks. Change-agile leaders and risk-takers or experimenters are the ones who establish opportunities for experimentation and innovation.
E. Striving for Partnership
Alone we can do so little; together we can do so much”. - Helen Keller.
Yes, it is indeed very true while developing your digital transformation strategy. An agile leader proactively embraces partnership. You can have people and the most innovative technologies working for you but without partnership and collaboration, your competitiveness will suffer.
Possessing these five traits is not an easy feat. However, leaders having mastery over these attributes will be head and shoulders above the competition. Wouldn’t it be great if you hired a team of professional technocrats to strategically plan your Digital Transformation journey who can take your company to the future?
Well now, let’s move on to the next and most important component of digital transformation strategy that often determines its success or failure.
3. Culture Change and Communication
Be ready for a massive culture shift. Usually, clients and employees of a company are reluctant towards major changes, which makes it difficult to execute any transformation. Culture is the key cornerstone of any successful digital transformation program. Hence, it will be helpful if you prepare your employees for it in advance. Effective communication can help you achieve this.
- Talk to your employees about the digital transformation business strategy and how it will benefit every stakeholder.
- Conduct training sessions with your employees to prepare them beforehand.
- By showing how necessary it is to align culture with new initiatives you will be able to prepare your employees ahead of time.
Form clear training schedules, provide regular updates, and be consistent with your efforts to reassure them. Communicate as much as you can even at the risk of over-communication!
4. Process Optimization for Digital Transformation
How many times have you found yourself in the middle of a task, hoping that you could find a simpler way to do it? Every business involves numerous processes and operations that can be transformed to make workflows smoother and easier.
Hence, you must keep business process optimization in mind while formulating the digital transformation strategy.
The business strategy must ensure business process optimization while meeting the goals set for customers as well as for the internal team. All interconnected business processes must be covered in the digital transformation strategy so that maximum output can be achieved.
Along with business process optimization, you must also make good use of the data-driven analysis you have gathered over the years. Let’s see why.
5. Data Curation
One of the main reasons behind adopting digital transformation is to eliminate your business’ pain points for your team as well as your customers. But how will you know what these pain points are?
Data-driven analysis and integration can help you to identify them. Many times, people select their preferred technologies before analyzing their data while creating transformation strategies.
This is not how it should work. If you don’t perform data-driven analysis, you may know what loopholes to cover at your internal team’s end, but you may still miss out on the loopholes that your customers have to deal with regularly.
According to HBR, consumers will always choose simple solutions over burdensome ones, especially in today’s generation as they have multiple options for everything. Hence, companies that don’t focus on simplifying things for their customers may end up losing their clientele.
Data-driven analysis and circulation of its results can help your team identify the best solutions to problems, thus leading to drafting a better digital transformation strategy and making the best of the transformation process.
6. Digital Technologies to be Implemented
Identifying fitting technologies for your business is one of the most crucial steps while drafting the digital transformation strategy. Implementing digital technologies into your company will require a lot of financial investment. Hence, to avoid the need for extra funds, it must be done correctly.
Any effective digital transformation strategy will always include some options along with their budget requirements to make the best decision.
Whether you are dealing with updating legacy systems, application modernization, or implementation of entirely new digital systems, you must find the most fitting technology.
Some new-age technologies that must be embedded in your digital transformation strategy are:
A. Cloud and Distributed Platforms
Cloud and Distributed Platforms will be prevalent digital technologies in forthcoming years. Gartner predicts By 2025, most cloud service platforms will provide at least some distributed cloud services that execute at the point of need. The time is now to up your game to NoOps which is achieved through hyper-automation across your entire SDLC. With NoOps CIOs can now invest the surplus human capacity in developing other value-added capabilities that can vastly improve your time to market and efficiency. MarketsandMarkets, a B2B competitive research firm, projects that the value of the serverless architecture market will reach US$14.93 billion by 2023.
Also, companies are making strategic choices by embracing technological solutions based on API. Preparing both culturally and strategically, to create and consume APIs is essential to achieve business agility, accelerate the new ideas to the market, and unlock new value in the existing assets.
Furthermore, the pandemic has accelerated digital transformation in many areas, especially via the use of next-gen technologies such as blockchain or distributed ledger technology.
B. Data Analytics & Artificial Intelligence
Data has taken center stage in any digital transformation strategy as it helps us eliminate assumptions and deal with facts. With ML assuring to overhaul enterprise decision-making and operations these digital tools and techniques are helping organizations turn growing volumes of data into a future-ready foundation for a new era in which machines will not only augment human decision-making but will make real-time and at-scale decisions that humans cannot to remain nimble.
With core pillars of AI engineering — DataOps, ModelOps, MLOps, and DevOps, a robust AI engineering strategy facilitates the scalability, performance, interpretability, and reliability of AI models while delivering the full value of AI investments.
C. Digital Experience and Digital Reality
The world’s largest unplanned work-from-home experiment continues. An intelligent composable business will pave the way for redesigning digital business moments, automated operational activities, new business models, and last but not least new products, services, and channels.
By unleashing the power of these next-gen interfaces, smart displays that are enriched with intelligent algorithms and digital technologies like IoT, organizations are optimizing individual and team performances, and customize the customers’ experience through personalized recommendations. Such intelligently woven organizations are becoming better decision-makers by accessing better information and responding more skillfully.
Being clear about your technology implementation in the digital transformation strategy will help you to:
- Smoothly carry out the transformation process
- Ensure that you invest within your constraints
- Overcome flawed processes and build a future-ready business
7. Team Structure
Digital Transformation is not about tools, is about people says Harvard Business Review. Hence structure of the team is a determining factor in delivering outcomes according to your Digital Transformation Strategy.
The team structure should be decided according to the size of your project. Your digital transformation initiative should be well-balanced and must comprise of:
- Pack of Leaders: The digital business model in mind and a well-thought implementation plan, your team must have an agile leader as a torchbearer who can be Chief Digital Transformation Officer or Chief Digital Officer or Chief Digital Innovation Officer or Chief Technology Officer or Chief Information Officer, etc. for accountability.
- Business Ninjas: The core digital experience team is the hands-on practitioners of different technologies and business verticals. A few designations that come under the core digitalization team are Product Managers, Program Managers, Customer Experience Leaders, Customer Success Engineers, Solution Architects, and Senior Managers of Business and Technical teams.
- Cast of Coders and Designers (CoDe): Having the proficiency and skills in areas of development, designing, coding, and data science and to provide finesses to the DT program, your team must have contributions from all the stakeholders be it developers, designers, visualizers, data scientists, AI and ML engineers, etc.
The methodology you choose will also influence your team structure. For example, if you opt for the agile methodology, then you would need a bigger team with several smaller sub-teams with specific objectives. You must ensure that you form a team from within your existing talent pool / hire a team with experienced members for seamless transformation.
Your end goal is to create high-performing teams where everyone is accountable for the team’s and organization’s success. The leader and project managers must be effective, promote teamwork, and be good communicators. The role of the leader is to remove the bottlenecks so the team marches towards the common goal.
Agile methodology is important for any transformational change including Digital transformation as it ensures that your Business, IT, and Dev are on the same page and vigorously executing your forward-looking vision.
8. Technology Partners
When examining options for technology and technology partners, bear in mind the future vision. Key questions to ask:
- Will the technology and vendor support scaling?
- Does the vendor and team share a similar vision for digital transformation?
- Will they be able to support you in your long-term business strategy?
- How does it integrate with your existing technology?
- Do they have the right technology and expertise for your specific use cases and industry?
- What results have they achieved with similar use cases/applications and with similar companies?
“You can have the most perfect technology but not the right partner to implement it,” says Lynch. “If the people helping you don’t have the experience, knowledge, and background in your application, there will be struggles. Those with expertise have learned from previous clients all the things not to do – and that’s very valuable as you execute your digital transformation strategy.”
Another aspect of this step is avoiding “spot solutions” – in other words, a technology that solves one department’s pain point but is not the right technology or solution to scale across the enterprise. Having CXOs involved in DX tech decision-making helps ensure the company-wide strategic vision is not lost.
9. Results - Calibrating Success of Your Digital Transformation Strategy
The results of your company’s digital transformation will be strongly influenced by the way you outline your digital transformation strategy.
Results will always differ according to the practices you choose and the technologies you implement. You must take initial results into account and plan long-term strategies to scale the digital transformation as well as meet new ends as your business grows.
Your team must be flexible enough to look at the results and undertake changes if required. The KPIs help you identify if all your requirements are being met.
Agility is the key to the success of your digital transformation strategy. You must follow the detailed strategy you have formulated, but you must also be open to changes if it doesn’t work out the way you expected it to work.
Tracking KPIs and other metrics, aggregating and normalizing data with real-time dashboard capability is all you get with Qentelli’s home-grown AI-infused framework, TED – The Engineering Dashboard. It enables better decision-making by offering detailed insights across your value stream.
Digital Transformation Strategy - Way Forward
Digital transformation strategy is about taking care of the pre-requisites. By formulating an effective, clear, and robust digital transformation strategy, you will be able to ensure that your company undergoes digital transformation as seamlessly as possible. A digital transformation strategy is like a personalized map to bring about huge modifications in your business operations. It requires a lot of financial investment, time, and technical expertise. It always helps to ensure that your teams are being led by highly qualified and experienced technical leaders to reduce risks.
To begin your company's digital transformation journey, get in touch with our Digital Transformation Consultants and discuss your requirements.