Digital transformation now sits atop the strategic agenda for a majority of companies, according to a recent Forbes Insights survey of 573 C-suite executives worldwide. The urgency of digital transformation is the real headline:
Half of the executives surveyed believe the next two years will be critical for their organizations in order to make this transition and prepare for future opportunities…[Now] more than ever, every industry and company faces the pressure to transform before it’s too late.
But what exactly is digital transformation? It’s worth asking, because it’s one of those buzzwords that can mean very different things to different people (and companies).
Forbes Insights defines digital transformation as “an evaluation of business processes,” and notes that:
Real business transformation, made possible by digital transformation, is only achievable when organizations realize the interconnectedness of people, processes and technology.
Does that sound familiar? It sure does to us. Replace the term “digital” with “business” or “enterprise,” and this particular transformation study can seem like it could have been released in 2010.
What companies face in the coming years, whether they realize it or not, is a transformation imperative that is both rooted in the past and required for the future.
Customer experience and expectations are paramount (for both B2C and B2B organizations). These expectations include ease of use and more intuitive customer experiences, easy and anytime access to information and tools, and better digital channels.
Organizations need to think, organize and act differently to deliver their products and services, or they will be left behind.
If digital transformation is “essential to corporate survival,” as Forbes Media Chief Insights Officer Bruce Rogers says, the next question is how you achieve it and measure progress against this most ambitious – and important – goal.
The report, titled “How to Win at Digital Transformation: Insights from a Global Survey of Top Executives” highlights a few reasons for digital transformation. These reasons also serve as the levers companies have to achieve such transformation, as well as ways to measure the success of initiatives.
How to Achieve – and Measure – Digital Transformation
New Business Models Are the Blueprints of Innovation
According to the report, 41% of respondents believe that new business models are the top drivers of digital transformation. Shifting business processes can open up exciting avenues of opportunity, especially when data analytics are involved, even though only 44% of those surveyed saw themselves as leaders in the field.
If forward-thinking business models are the blueprints, then new technologies are the foundation. Researchers found that 56% of those surveyed said that technology was “the top contributor to a successful digital transformation.”
Technology proliferates at such a rapid rate that sometimes it is hard to keep up with its pace. And the influx of connected devices on the burgeoning Internet of Things (IoT) means today’s businesses need to stay as up-to-date as possible to handle the inevitable data flood.
Yet keeping up with new developments is precisely what is needed to stay on top of the market and generate the most ROI. As customers adopt new technology and their preferences change, organizations need to do the same.
Innovation Is the Best Disruption
The ability to innovate is also key to successful digital transformations. In fact, 46% of respondents claimed that the ability to innovate was one of the top measures of an organization’s success.
Changing processes and methods of thinking not only opens up new avenues of business, but transforms the way that consumers interact with your organization.
For instance, most companies have plenty of innovation opportunity by tackling some integration tasks to unleash the power of data-driven marketing. Similarly, there are some clear dots to connect when it comes to innovation and implementation.
Transforming Your Way to Revenue Growth
Of course, revenue growth is also an obvious way to measure the success of a transformation.
46% of those surveyed believe that revenue growth is one of the top measures of success. And a full 91% of respondents reported revenue increases directly tied to upgraded data analytics processes.
The correlation lies not in the technology itself, but in how it is applied to processes and the customer experience. More focus on data and analytics drives better insights, which in turn means knowledge of who your customers are, what they want and how they prefer to interact with your business.
Consequently, cost reduction is also an indicator of whether a digital transformation is successful. However, cost savings are not a primary goal, but more of “a given.”
As the study’s authors state, companies “no longer see straight cost reductions as the sole purpose of digital transformation.” Innovation and efficiency naturally lead to lower costs. It’s just a matter of balancing the cost of developing new technologies and processes with the potential ROI.
In the end, digital transformations are increasingly data-driven and analytics-enabled, both of which should be considered as accelerators for “bending the curve on productivity, time to market, deployment of new business models and revenue generation.” Successful digital transformations, however, also require sufficient strategies for end-user adoption as part of a holistic approach.