Other results indicate that when companies achieve transformation success, they are more likely to have certain digital-savvy leaders in place. Less than one-third of all respondents say their organizations
have engaged a chief digital officer (CDO) to support their transformations. But those that do are 1.6 times more likely than others to report a successful digital transformation. No matter what digital transformation services mean to your organization, they will always require taking an enterprise-wide approach.

what digital transformation means for business

For instance, a company might deploy a new tool that offers greater visibility into customer metrics in order to build a personalized marketing strategy. When it comes to data, many industries also have to follow strict regulatory requirements. Another data-focused benefit of digital transformation is helping teams meet process requirements by alerting them when there are gaps in the information collected. Adopting a digital-first approach benefits businesses internally and also creates a better customer experience.

What is BPM Software & How Can it Help Businesses

For example, during massive growth through acquisition, expansion, or the launch of a new product line or service, most growing companies choose to digitalize their paper-based processes from the moment spend is captured to expense reimbursement. However, they can benefit more from a cloud-based system that connects all expenses and invoice spending in one system and shares that information https://www.globalcloudteam.com/ with a business-wide ERP. SAP Insights research data underscores the increasing role of digitalization and business transformation. Two-thirds of surveyed leaders from midsize companies have either transformed some planned areas or have completed their journey as initially conceived. That could be why only 38% of enterprise businesses have digital strategies, compared with 55% of startups.

what digital transformation means for business

Moreover, as we have reported, “Digital transformation efforts are ongoing and evolving, which can render traditional business value calculations and financial governance approaches less effective.” Mattel EVP and CTO Sven Gerjets says leading transformation starts with empathy. Rather than focusing on cost savings, IT has become the primary driver of business innovation. Embracing this shift requires everyone in the company to rethink the role and impact of IT in their day-to-day experience.

Great Examples of Digital Transformation

Gartner also reports that tech spending will increase across the board for most IT organisations through 2022 and beyond. The analyst projects global IT spending will total $4.4 trillion in 2022, an increase of 4% from 2021. Avon also started to develop a stronger e-commerce platform, such as via mobile and web. Sales through e-commerce channels grew by six times in the first three weeks following lockdown. The company also started to produce digital brochures that could be updated far more easily and shared through social channels.

what digital transformation means for business

Studies from thought leaders like McKinsey and Harvard Business Review have shown us that up to 70% of business and digital transformation initiatives do not succeed. But if you dig a bit deeper, you learn that it’s not really the new technologies or the business innovations that are flawed. The weaknesses lay in poor planning, poor communication and change strategies, and the general failure of leaders and project managers to include and seek buy-in from all teams impacted by the change. In other words, of the three main areas of digital transformation mentioned above, “cultural transformation” is often the least talked-about but in reality may be the most crucial of all. Digital transformation involves integrating digital technologies and solutions into every area of a business. This is as much a cultural change as a technological one as it requires organizations to make fundamental shifts in the ways they operate and how they deliver customer experiences and benefits.

The anatomy of digital transformations

But that model was all-but-impossible to continue during the coronavirus crisis and lockdown. In fact, experts say data — and the ability to access and analyze data — has become an essential component of transformation today. Typically, the TO enables results through what digital transformation means for business weekly, action-oriented meetings. Attendees can include a sponsor for each work stream and other key initiative owners, plus representation from finance and the CTO. Yes, there will be challenges along the way, but the potential benefits make it all worthwhile.

  • “When determining how well digital transformation investments are performing, it’s best to take a portfolio view and not a project level view,” says Cecilia Edwards, partner with digital transformation consultancy and research firm Everest Group.
  • As Enterprisers’ Stephanie Overby has reported, digital transformation took on new urgency during the pandemic.
  • Digital transformation is a foundational change in how an organization delivers value to its customers.
  • When it comes to tech, the chief information officer typically focuses on improving the inner workings of the company with technology.
  • For many managers, the best way to find these answers is by adopting Agile methods.
  • Digital transformation empowers the business to adopt the widest possible range of solutions and services from ecosystem partners, industry solution leaders and multiple cloud service providers.
  • This shift allowed it to successfully compete with digital-native food delivery platforms, streamline operations, and foster innovation.

Most organisations do not have a problem generating new ideas, but many firms fail when it comes to implementing fresh business models or turning good ideas into organisational objectives, according to research from Cass Business School. At the same time, the survey revealed that executives are scrutinizing their investments, with 61% of respondents saying they expect to see impactful return on investment from digital investments by 2024. “One of the biggest challenges is getting internal alignments on the outcome you’re trying to achieve on the investments you’re making.

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When it comes to widespread results, generous and specific financial incentives are one of the most effective tools to motivate employees. According to McKinsey analysis, companies that implemented financial incentives tied directly to transformation outcomes achieved almost a fivefold increase in total shareholder returns compared with companies without similar programs. In tandem, a well-crafted program of nonfinancial incentives can create a higher level of energy and excitement across the organization and boost employees’ discretionary efforts. The key to avoiding the “chaos trap” of digital progress is using a business-wide governance framework that enables connectivity, integration, and flexibility. And with a cloud ERP, growing businesses can pair industry-leading best practices with modern technologies to pursue ideas that can result in better business performance today and stronger competitivity in the future. After the assessment, discuss the biggest challenges your company faces with your team and how technology can help solve them.

It sounds simple but digital transformation can be a long, expensive and complicated process that doesn’t always go according to plan. Executives see the ability to continuously engage in digital transformation at an ever-quickening pace as a critical component of success. But it doesn’t matter who owns the digital imperative, as long as someone is competent using technology to drive revenue growth — and is capable of bringing together all the elements. There are no shortcuts to a digital transformation, but ultimately it will make your business more efficient, effective, and resilient.

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IT business transformation often means leveraging technology to reduce the time employees spend on routine tasks and increase accuracy. For instance, businesses might improve the speed and reliability of operations by installing a robotic process automation (RPA) solution to streamline large-volume, checklist-driven tasks. Additionally, implementing a performance monitoring tool can help ensure teams stay on task and give leaders more visibility into workflows. Two other keys relate to engaging the specific roles of integrators and technology-innovation managers, who bridge potential gaps between the traditional and digital parts of the business.

what digital transformation means for business

Digital transformation is critical for organizations to not only compete but survive. If leaders can’t be clear about what a digital transformation is—and align their organization around a specific program—they can’t expect to be successful. Organizations then determine how they must transform the digital business from end-to-end, including infrastructure, product development, operations, and workflows. And finally, they bring the customer experience to life and improve it continually in response to opportunity and change.

What Is Digital Transformation? Definition, Strategy, and Examples

In a globally and digitally connected landscape, this type of transformation is more than keeping up with the rest of the world and your industry—it’s about continuing to innovate and seek new, better ways of doing things. When it comes to tech, the chief information officer typically focuses on improving the inner workings of the company with technology. The chief technology officer usually works on improving customer offerings with technology. Chief digital officers, in many cases, act as coleaders of the transformation and typically work with digital and AI technologies to create new digital experiences for users. Finally, the chief risk officer needs to direct the integration of risk checks into the development process, and understand how to respond to new risks, such as data privacy and cybersecurity, that a digital and AI transformation may generate. A successful digital transformation touches a broad range of an organization’s functions so they can work together in new ways.