‘Digital transformation’ is a phrase that is widely used by many businesses today, who are attempting to upgrade their technology to accommodate for the increasingly mobile and flexible workforce of the twenty-first century. It has become one of the main factors driving the need to innovate and change the way that businesses perform, compete, and operate across the globe. For many technology resellers, system integrators or value-added distributors (VAD’s), this new phenomenon has also become synonymous with augmented profits.
However, while many of us almost certainly came across the term or even used it in the not-so-distant past, are we completely aware of what the ‘digital transformation journey’ entails before communicating it to our end-customers? Are we fully aware of the potential pitfalls associated with an unsuccessful ‘transformation’, and which obstacles our end-customers will need to overcome to make this fundamental transition a seamless one? And finally, what are the potential benefits that are enticing so many businesses to inquire about this new trend?
Depending on the nature of the business that they operate in, if you were to ask ten different CEO’s what they thought were the answers to the above questions, you would more than likely get ten completely different answers to each. That’s why, below we have provided you with some useful information regarding this essential change and have consolidated some of the key information available on the subject into one easy-to-read document.
Having read this document, you will be in a better position to successfully promote and guide new and existing end-customers throughout their own digital transformation journeys and to educate them on the benefits and caveats associated with the process, from start to finish.
To begin with…what exactly is ‘digital transformation’?
While many of you reading this may have your own understanding of what the term actually means, the sad reality is that many of us are confusing ‘digital transformation’ for ‘digital business optimization’. For example, when many of the C-level executives that we deal with describe how they are taking so-and-so action to digitally transform their company, what they are actually referring to is ‘digital business optimization’. In other words, they are simply looking to introduce new digital capabilities such as artificial intelligence (AI) powered chat-bots or sophisticated data analytics software to help augment existing services and stimulate revenue growth.
‘Digital transformation’ on the other hand is much more radical, as it involves the foundational change of the business model. While it does to some extent involve the adoption of a new technologies to help streamline certain processes, it exceeds this as it prescribes a much more structural, customer-orientated organisational shift. Even though it is often hard to find one concrete definition that perfectly encapsulates the true meaning of ‘digital transformation’, we believe that the following definition makes a pretty good attempt:
‘Digital transformation [is] the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers.’
Perhaps a better way to illustrate the distinction between both forms of transformation, would be through the use of a couple of real-life examples.
Shake Shack – the American fast food joint – is a perfect illustration of a company that is in the process of undergoing ‘digital business optimization’. Recently, they released a mobile application to help reduce customer waiting times by enabling them to order through a Shake Shack dedicated app. While this development will almost certainly help them increase profits by having a quicker customer turn-around time, it does not represent a fundamental change to their operating business model, and should subsequently not be considered ‘true’ digital transformation.
The New York times, however, is a perfect example of a company that has successfully managed to embark on a ‘digital transformation’ journey. While twenty or thirty years ago the majority of New Yorkers would have rushed to their local newsagent to purchase a physical copy of the New York times, these days those same people now look to their smartphones for the latest news and updates.
Fast realising that their business model was becoming outdated and no longer sustainable, the New York times quickly decided to introduce a completely different, digitally-orientated pricing model that involved online subscriptions. This new approach catered to the needs of those readers who preferred to view the news on their smartphones and tablets, as opposed to conventional newspapers. This radical change in their operating model, not only enabled their customers to view the same content that their readers trusted from the past 167 years, online, but more importantly it kept them operational.
So, to recap, ‘digital business optimization’ merely refers to the adoption of new tools and technologies to help augment productivity and boost specific workflow processes. ‘Digital transformation’, however, refers to a comprehensive change in a business’ operating-model to accommodate shifting customer attitudes and behaviours. Given how many of your clients will look to you for advice on how to begin their digital transformation journeys, it is imperative that you understand the distinction between the two. Resellers, partners, or VAD’s who fail to realise this distinction, may unintentionally encourage their clients to unnecessarily adopt new technologies which may result in temporary improvements in specific processes, but which will ultimately not yield success in the longer term.
Makes sense. But, how should I advise my customers on how to embark on this journey?
Just like with any change process, the first thing that you need to do is to encourage them to identify that there is an issue in their organisation. You need to help them try and pin-point exactly what the problem is and to understand why it has prompted them and their team of executives to ask you for advice on how to digitalise their business. Once identified, you also need to be brave enough to sometimes encourage them to forego long-lasting business processes (which you may very-well have sold them) in favour of relatively-new practices that are less-clearly defined.
While doing this, one thing that you’ll realise is that the process of preparing the groundwork for any digital transformation journey, is actually on par with undergoing a massive audit of existing processes. That’s because in doing so, you and your customers will simultaneously take the opportunity to also assess your operating models, organisational structures, products, and services to see what changes could be made.
Once you’ve successfully been able to help your customer identify the pain-points within their businesses, you should then advise them to extend that assessment to outside the scope of their business and to benchmark the performance of their company, relative to that of their competitor(s). This will give both of you a good idea of how other businesses within that industry are faring, and how far along they are on their own digital transformation journey. You’ll be able to learn directly from their experiences and see what technological changes have worked for them and which ones haven’t, thus permitting you to hone in on the ones which have resulted in positive changes, and which ones haven’t. Your priority should at first be on identifying which technologies have resulted in increased sales and revenues as opposed to reducing operational costs, which comes later in the process.
With these technologies in mind, you will then need to work with the customer to generate an implementation plan that prioritizes which changes to make first. Work with each of the relevant stakeholders involved, to discuss factors such as resources, budget, and capabilities to develop a realistic roadmap for the changes that should be implemented. This process should involve people at all levels of the business to ensure that you get input from every department to avoid any last-minute slip-ups.
The penultimate stage requires taking the above roadmap and commencing the implantation process. It will involve the customer acquiring the agreed budget, identifying who is responsible for the implementation, assisting them in the re-design of their operating model to accommodate for the agreed changes, and beginning the technical implementation process.
As soon as the tested applications are ready for deployment, the next and final stage is to get them ready for production usage. Part of this step should usually entail that the customer communicate extensively throughout their organisation to ensure that everyone is aware of what changes are being made and why they are necessary. However, you should advise them that they should be prepared for the inevitable questions and concerns that will arise, and perhaps help them to pre-formulate appropriate response to these, to be able to more efficiently address these concerns as they come up. You should stress how important it is that they get as many people on board with this transformation project, as any objection down the line could cause unnecessary and costly delays to both your business and theirs.
With both the new and old system running simultaneously, and having obtained the consent of all key stakeholders, they will now be in a position to deploy the strategic teams that had previously been arranged, and to implement the new system throughout the businesses. Gradually start depreciating the old system – making any necessary iterations along the way – and replacing it with the new one.
An important consideration to take into account is that once they have finished all of the above steps and the new system is working perfectly (we hope), the job is not over. That’s because the digital transformation process is an ongoing one that evolves over time to meet the changing needs off all stakeholders involved. Rather than being considered as a once-off initiative, it should instead be regarded as a process of continuous improvement that enables the business to incrementally introduce new digital practices and to make iterations when and where needed. In doing so, this will considerably improve the experience for both the business and their customers in the long-run. Therefore, you should hold regular (bi-weekly, monthly, quarterly etc.) retrospectives with the customer to see how the new processes are operating, and where improvements can still be made.
Sounds good, but what could go wrong?
When undertaking any project of this scale, the possibility for something to go wrong is always present. That’s why one of the first things that we tend to recommend to our partners to ensure that they don’t encounter any problems while assisting their customers on this massive undertaking, is to make sure that the customers board of directors is ready for the challenge. While this may come across as a surprise to some of you readers, a recent Russell Reynolds survey found that only four percent of all global 500 companies have a board that is truly digitally-ready. What this means is that many of them still function with the outdated mindset of operating a legacy business and, therefore, do not see the need to challenge the status quo and venture into the lesser-known digital world.
While most of these types of projects tend to originate from the top and trickle down the hierarchical ladder to the lower echelons of the customers organisation, it is imperative that everyone is in alignment throughout the organisation. Failure by any one of these teams to realise the importance of this comprehensive task will more than likely result in bottlenecks, disagreements, and the eventual failure of the overall project. While it is almost inevitable that certain parties will always object to this type of transformational change for fear of being made redundant, you should advise your customers to always remain consistent in terms of how they address these concerns and to do so with a sense of urgency.
Another very common issue that arises during the digital transformation process is that many companies tend to lose sight of their final objective. At some point during the transformation journey, they start to lose focus of what they would like to have achieved when they are ‘digitally grown up’. Even though they may have spent many months or years beforehand establishing a feasible transformation-roadmap, there are several reasons for why this loss of focus could have occurred.
Now, whether those reasons included an overestimated budget, unexpected resistance from a key department, or simply due to a change of heart by management, the key is that you are there to help them regain focus and to make the crucial decision of whether to continue their transformation journey or to end it out-right. Companies that have successfully undergone digital transformations haven’t done so by accident, they had developed a clear vision and have stuck to it religiously.
While there are obviously several obstacles that one could encounter while conducting such a comprehensive organisational change, it would be almost impossible (and let’s face it, boring for the reader) to list all of them here. Therefore, other than the above examples, we thought that it would perhaps be a bit more appropriate to end-off this section with the outcome of a recent survey carried by IoT For All. As part of the survey, they asked over 300 technology and business stakeholders what the challenges were that they faced during their businesses’ digital transformation journey, and here are the results (not in any specific order):
- Employee Push-back
- Lack of Expertise to Lead Digitization Initiatives
- Organizational Structure
- Lack of Overall Digitization Strategy
- Limited Budget
What’s interesting to note is that none of the above challenges related to the lack of technological availability or technical-know-how, but rather arose due to a myriad of internal factors. This has made it even more evident that the main obstacle for many businesses attempting to digitally transform themselves, is the actual business itself. This is why we stress the importance of ensuring cross-departmental buy-in and alignment from the get-go, to help predict and plan for easily-avoidable issues such as the ones mentioned above.
Seems like more hassle than it’s worth. Why should our customers bother?
While some of the obstacles mentioned above may seem quite off-putting, the reality is that the benefits of a successful digital transformation process far outweigh the cons – which is why it has become such a hot topic today. More and more businesses have started to realise that to remain competitive in today’s increasingly digital marketplace, they need to begin and progress their transition towards digital transformation. They need to start putting the foundations in place to ensure that their technologies, skills, and processes meet the requirements of today’s world, while also thinking about the future and future technological developments. And what does this mean for you? Simple – more customers, and more revenue.
Of the benefits, the first and perhaps most obvious reason for customers to embark on a digital transformation process, is so that their business remains relevant and able to compete in the 21st century economy. As mentioned earlier on in this article, part of the digital transformation process involves looking for more ways of adding value to the customer. With more and more businesses using new and innovative technologies to interact with their customers, failure to do so by your customers will result in an unsustainable amount of lost business for them. Brands such as their own can no longer rest on their laurels but should rather embrace the potential of the digital transformation process to forego old methods of operating in favour of pushing the boundaries of customer engagement. In the words of Jason Brewer, CEO of digital agency Brolik:
“By investing in a digital transformation, customers will notice and appreciate that you are focused on their needs and experience. By transforming for the digital age, companies are saying, ‘we value your time and want to make your life easier.’ Customers will respond positively to that.”
While the recent digital transformation trend will inevitably lead to more business for you – the valued technology reseller – it also has the potential to open new horizons for your customers. For example, not only does it help improve the way that your customers engage with their clientele, but it can also completely redefine their entire business model. In other words, it enables their business to expand its offering beyond just physical products and services and provides them with the opportunity to explore other, perhaps online avenues for revenue growth. For example, in a recent survey carried out by KPMG it was established that 83% of high-level auto-executives agreed that they’ll be able to derive a considerable amount of revenue in the future from data shared by vehicle owners. No longer are they simply relying on car-sales from their brick and mortar shops as the main source of revenue but are now exploring more potentially lucrative online means that, until recently, could never have been fathomed.
Not only can digital transformation expose businesses to new industries or verticals, but it can also help businesses enhance their own internal practices. When a business replaces legacy process in favour of more modern ones, they can then successfully identify and eliminate any existing bottlenecks, or obstacles, thus improving efficiency. They can ‘evolve’ their outdated infrastructure by looking to you to help replace them with best-of-breed technologies that can seamlessly integrate into existing work processes. The result for them – the automation of mundane tasks, faster decision making, and quicker goal attainment.
Previously manually-intensive tasks which required employees to perform repetitive activities, now have the possibility of being automated, thus enabling those employees to adopt more strategic responsibilities that deliver real value to the business.
In essence, there are a number of benefits associated with digital transformation, not just for you but also for your customers. Companies who openly embrace ‘digital’ within their systems and business models will be able to significantly increase revenue and company valuation. They will be able to enjoy a multitude of benefits such as increased market share, improved customer engagement, higher employee morale, and augmented customer revenue. Companies who neglect it or who operate under the false assumption that it is a once-off process that doesn’t require regular iterations, risk profitability, customer-loyalty, and over-all success.
With an extensive list of readily-available technologies that can help you support your customers throughout their digital transformation journeys, the reality is that you have no excuse not to explore this option and to commence a dialogue with your customers immediately. However, as with any comprehensive organisational change, there are obviously certain hurdles that need to be overcome first. What we hope you’ve achieved by reading this article is that the benefits of doing so, far outweigh the cons. To be able to effectively cater to the needs of your customers (and for your customers to be able to cater to their customers) and remain relevant and competitive in today’s economy, it is imperative that you actively promote and champion this game-changing process. Over to you!