What Is Digital Transformation? A Beginner’s Guide for Businesses

Digital transformation is the process by which businesses use technology to drive change. As we transition from paper and spreadsheets to smart apps, we have the opportunity to transform our businesses with the support of digital technology. However, although digital transformation increases productivity and growth, only 30% of organizations successfully implement it. Therefore, when embarking on digital transformation, it is critical to have a thorough grasp of the technology and a plan in place to ensure success. But how can you ensure you get it right? So, in this blog, we’ll talk about some excellent practices.

1. What Is Digital Transformation?

Digital transformation occurs when a business integrates digital technology into all parts of its operations. As a result, it changes how a company serves customers and manages internal processes. Moreover, it is more than just a technology upgrade—it requires changing company culture. Businesses must think differently, question old habits, and continuously improve. Ultimately, digital transformation helps companies stay flexible and respond quickly in a digital world.

2. Why is digital transformation important?

First, improving operational efficiency: Digital tech in everyday operations makes work go faster and smoother. For example, automating those boring, repetitive tasks saves time and cash, which ultimately boosts profits.

Second, driving business growth: Businesses get ahead of the competition through digital transformation. As a result, they figure out what customers want better, respond to market shifts quicker, and whip up new products or services without all the hassle.

Third, improved decision-making: With tools like big data and analytics, companies can see info in real time. This helps them grasp customer journeys more clearly, improve outcomes, and decide things with solid info behind them.

Fourth, keeping up with customer expectations: Digital tech has shifted what customers expect. They want personal touches, quick service, and smooth experiences across platforms. Thus, a good digital plan helps companies deliver that and keep folks happy.

Finally, unlocking new revenue streams: Digital transformation opens up fresh ways for businesses to earn. For instance, companies might use data to get customers, build tailored products, or add on digital services that bring in extra money.

3. Core Components of Digital Transformation

Individuals

Humans are the focal point of the digital era. Without a doubt, customers benefitting the business, clients favoring the business, and employees supporting the business drive every meaningful piece of information. But small companies bank on experience, but with increasing size of the company, it won’t do. Hence, data in a structured format and technology take precedence.

Data

To understand individuals in a large business, you need access to information at ease—histories of transactions with customers, employees, and clients. Technology, as such, helps turn human action into digital format, converting actions and preferences into structured information. The benefit, as such, is not only lower costs but better insights.

Insights

Information is useless by itself. But with the right tools and ability, information is insight—stories or designs that allow for forecasting  the future. So, the goal is to be better, not best.

Action

Insights are useful only if they trigger action. For example, forecasts are useful when used by humans for the purposes of employee hiring, product design, or customer retention. Therefore, skills, process, and change management are necessary to facilitate action.

Results

Outcomes are measured and cycled back into data, and a feedback loop is created in order to refine insight and prediction. This also increases the ability to integrate human brain power with technology.

4. The Key Benefits of Digital Transformation

Reduce Costs with Digital Solutions

Firstly, one of the highest reasons companies embark on digital transformation is cost reduction. Digital solutions make assets more efficient and enable employees to work smarter. As a result, they minimize overhead and manufacturing costs and improve after-sales service.

Starting with cost reduction is likely to bring about further benefits. Consequently, companies consume less energy, have less downtime, and suffer fewer service problems.

Boost Quality with Technology

Quality services and products distinguish a business. Digital transformation eliminates errors, rework, and scrap. Moreover, it increases traceability and data consistency throughout the value chain.

For example, Product lifecycle management (PLM) tools accelerate development. Thus, they offer stakeholders the right data to work on. As a result, this improves first-time fixes and overall quality.

Speeding Up Time-to-Market Through Digital Tools

Business is happening at a fast rate. Consumers desire fresh products frequently. Therefore, digital transformation speeds up product development, production, and supply chain realization.

A digital thread creates one source of truth for product and process information. As a result, that information is communicated across the company, its suppliers, and customers. Moreover, cloud-based systems such as Onshape and Arena combined with agile practices enable collaboration.

They help remove barriers and take products to market faster. Thus, teams of individuals can operate more quickly and deliver products to customers more quickly.

Drive Growth with New Revenue

Digital transformation can drive growth by finding new sources of profit. These could be new products, new business models, more production capacity, or greater efficiency.

In other words, it is not minor tweaks. Rather, it is about finding new ways to generate more revenue and expand the business.

Enhance Customer Experience

Digital transformation is focusing mostly on internal benefits. But customer experience is crucial. For instance, it can deliver faster service, improved quality, new offerings, and speedier delivery.

Handling customer feedback allows businesses to gain a better understanding of needs. Meanwhile, real-time product information allows designers to improve products rapidly and more accurately.

5. Common Mistakes in Digital Transformation

Thinking that digital is the end

Many companies make the mistake of thinking digital transformation is the end goal. However, it is not. Digital solutions can optimize processes and deliver outcomes, but they will not fix all of the issues of the company on their own.

The most crucial factor is understanding that digital transformation is a process. It makes the business run better, but does not fix everything overnight.

Confusing digitalization 

Digital transformation is a long-term process. It includes both digitization (transitioning from analog to digital) and digitalization (using digital enablers to improve processes).

Executives should understand the difference. That way, they can formulate the right long-term goals for their digital transformation.

Thinking digital transformation is a single project

Some companies treat digital transformation as a one-off project. That is a huge mistake.

In reality, the real intent is to make a company that can keep on changing. Leaders need to encourage experimentation and curiosity; therefore, the company is at the forefront of upcoming trends and disruptors.

Expecting Instant Results

Digital transformation doesn’t happen overnight. It involves work, learning through failure, and a measure of risk-taking.

In reality, expecting outcomes on day one is unrealistic. Consequently, companies have to care about the bigger picture, not instant success.

Choosing the Wrong Digital Partners

Having the right digital partners is imperative. Don’t follow the cheapest price or return to friends.

Therefore, right partners are on your long-term vision and facilitate successful transitions. Take time and reflect on decisions objectively before arriving at one.

6. How to Build a Successful Digital Transformation Strategy and Roadmap

Assess Your Current Digital Capabilities

Assess your company’s digital skills to know what you’re doing right, where you could improve, and what’s missing. For example, do a SWOT analysis (strengths, weaknesses, opportunities, threats) to guide your DX strategy and to create the DX roadmap for focused enhancements.

Define Clear Objectives 

Create SMART goals for your DX roadmap aimed at improving CX, operations, and innovation.  Ensure verify that the DX strategy is consistent with the business priority.

Engage Stakeholders in Your DX Initiatives

Gain the commitment of C-level executives, employees, and partners to underpin the DX strategy. Moreover, ultivate a digital-first culture to shape the DX roadmap and overcome resistance with transparent communication.

Prioritize Projects for Impact

Leverage with an impact/effort matrix to lead to high-impact low low-effort projects for the DX roadmap ( for examples: automation) for quick wins and momentum to come.

Develop a Phased Roadmap

Develop a phased DX roadmap with timelines, budgets, and KPIs that align with the DX strategy for organized execution.

Leverage Technology 

Take advantage of scale-out platforms, such as cloud solutions, to underpin the DX strategy. Collaboration with vendors to set fast on the DX roadmap.

Execute, Monitor, and Refine Your DX Strategy

Execute the DXP roadmap with cross-functional teams, monitor KPIs, and adjust DXP strategy based on feedback and changes in the market.

Foster Continuous Improvement 

Continuously evolve the DX roadmap and refresh the DX strategy to keep agile and ensure future success.

7. Real-World Examples 

Netflix

Netflix is the best way to keep up with the latest movies and TV shows. Their mission is simple: entertain the world with movies, TV shows, and documentaries.

The company is valued at $149 billion. Moreover, much of its success comes from anticipating trends and transforming early.

To improve customer experience, Netflix CEO Reed Hastings approached Blockbuster with an offer. Blockbuster was a video rental service, but by 2007, technology was changing, and people were ready to watch movies differently.

Netflix’s online system solved problems customers had with Blockbuster, like late fees. They created new value through digital transformation. This changed how people buy and watch movies forever.

Xem thêm: Netflix Evolution Timeline: History & Digital Transformation

Nike

NIKE, a leading sports footwear brand, is now focusing on mobile technology. It uses machine learning and recommendation algorithms to offer smarter shopping experiences.

For example, one of its mobile apps helps customers pick the best shoes using a leg scan. The app creates a 13-point map of the feet and provides valuable data for future footwear designs.

The NIKE+ loyalty program rewards active members. After launching this program in Japan, sales grew significantly. The Nike SNKRS app also saw a 100% increase in sales.

Innovation has also improved NIKE’s internal operations. Design teams can work faster by digitizing 6,000 footwear materials. This speeds up their response to market demands.

Xem thêm: Nike’s Digital Transformation Efforts Continue to Win Big

Starbucks

Starbucks is a well-known coffee chain with over 32,000 stores in 80 countries. Coffee lovers everywhere recognize the brand.

In 2017, Starbucks started its ‘Digital Flywheel’ initiative. The program focused on rewards, personalization, payments, and ordering, all guided by customer feedback.

Cloud-based platforms helped Starbucks manage orders, give tips, and track inventory more efficiently.

The company also uses artificial intelligence in its app. AI personalizes product recommendations and rewards based on customer preferences. According to the CEO, As a result, Starbucks will continue using new technologies, which keeps it the world’s most famous coffee brand.

Xem thêm: Starbucks: A Masterclass in Digital Transformation

8. Wrapping Up

Digital transformation isn’t a trend—it’s the key to growing your business and staying ahead.

By adopting new technology, upending the status quo, and creating a digital-first culture are all necessary for success.  Therefore, taking action now keeps you ahead of the competition, regardless of whether you’re starting from scratch or updating your approach.

At BII Innovation, we assist companies in bringing their digital concepts to life.  Explore our services and see how we can support your journey via CONTACT US

Begin building your company’s future with us now.