For years now, many businesses have been moving towards a more digital model. With the frequency of new technological discoveries, the digital sphere holds many opportunities for companies of any industry. Yet, the digital transformation for a business is not necessarily easy.
It can be extremely intimidating for companies with little experience in the digital sector. It is hard to know where to begin and how to proceed. But like it or not, digital transformation is the direction in which the world – and the workplace – is moving.
With increased globalization comes the increase in digitalization – across all sectors and industries. As such, it behooves organizations to embrace digital transformation early so that they are not scrambling to get in the game later.
In addition, it creates many business opportunities. As such, it has been proven to:
- increase your financial health in organizations
- improve customer experience and employee satisfaction
- strengthen product quality
In this article, we will first discuss what exactly digital transformation is, and what the process of undergoing it entails. Then, we will delve into how digital transformation benefits businesses – and more specifically, the financial aspect of businesses.
What is Digital Transformation for Business?
Taking digital transformation initiatives can mean different things for different companies or individuals. For some, it might mean undergoing sweeping operational changes. And this would come with re-evaluating your entire digital strategy, and creating new business processes.
For others, it might simply mean making a few changes to the digital tools and digital technologies that your business already employs. Since it can cover such a broad spectrum of meanings, definitions for digital transformation are usually fairly general.
Essentially, digital transformation refers to the changes that a business undergoes to strategically integrate more digital technologies and processes. A company would do this to improve efficiency and functions across the board.
These changes often occur across all levels of the company: culturally, operationally, and organizationally. But digital transformation requires the incorporation of some sort of cutting edge technology, and – importantly – a strategy.
Strategy is Key to Implement a Digital Transformation for a Business
Like anything else in the business world, going digital requires forethought, planning, and effective implementation, aka a strategy.
The first thing a company needs to do when considering its digital transformation strategy is to have an accurate and in-depth understanding of its current business operations. And not only that, but of how its current business operations will benefit from digital innovation.
These specific end goals will be different for each organization. But finding the answer to how any business will benefit is to go through strategic analysis and planning.
A business must have a good idea of where it currently stands, and where it would like its digital transformation process to take it. Next, it is time to turn those goals into specific, manageable, and achievable objectives. These goals must have timelines, checkpoints, and detailed plans for how they will be achieved.
Another very important step in the digital transformation process is to identify and analyze the potential risk factors of digitalization.
Anything as new and evolving as digital transformation has its risks:
- Perhaps aspects of it are too costly
- Maybe a certain artificial intelligence software you are looking into hasn’t been sufficiently vetted
- Maybe a program you’re looking into has the potential to adversely affect customer experience
A thorough examination of digital risk factors will help you to consider which aspects of digital transformation are worth pursuing sooner. It will also help you develop processes and systems to help correct and manage any potential issues. These issues may arise when you implement your digital transformation strategy.
Patience is part of strategy
One important thing that we encourage all of our clients undergoing digital transformation procedures to remember is that this process takes time. The goal here is for your business to achieve digital transformation success, and you just can’t rush that.
Oftentimes employees have a hard time learning and adjusting to new digital procedures. Before you begin, make sure that everyone is on the same page when rolling out your new digital strategy.
If you cannot achieve buy-in from all parties: employees, stakeholders, customers, your board, then you probably need to reassess team members. One way to avoid any friction is to show the benefits unique to each team that will be affected. Explain to them “what’s in it for them”.
It is absolutely worth taking the time to get the digital transformation process right – when done correctly, it can reap huge benefits for your company. And that is exactly what we will discuss next.
What are the Benefits of Digital Transformation for a Business?
Now the question is: how does it contribute to better financial performance?
Companies develop digital maturity through enacting policies, processes, and strategies that result in a wide range of benefits that in turn translate into improved financial outcomes.
One of these key areas of improvement is efficiency. There is no way around it: digitalization is more efficient than non-digitalization. You may have to put some time in upfront to learn new digital platforms and train your employees on them.
But once you are familiar with new digital technologies they are vastly more efficient than the alternative. Increased digitalization also tends to foster improvements in customer expectations and satisfaction. With unified, company-wide customer databases, your customers will receive reliable, coordinated attention. Consistent customer service is something that can be hard to accomplish without a digital platform.
Improvement in data analytics
The data analytics side of digital transformation is an extremely important area of improvement that can result in improved financial outcomes. Data analytics opens so many doors to businesses.
It enables them to better keep track of financial data. As a result, it allows them to use that data to make informed decisions that often result in revenue growth and improved financial performance.
A more intangible, but nonetheless important, area of improvement from increased digitalization is a company culture more centered around growth and innovation.
The excitement of being a part of a new frontier and the feeling of having endless opportunities to make improvements and optimize performance is possible through digital transformation. This innovative spirit can also do wonders for employee engagement and morale, which of course leads to improved employee performance across all spheres.
Some Ways to Approach Digital Transformation for Your Business
So, what are some substantive ways to go about your company’s digital transformation process? The following “digital pivots” are a great place to start.
Digital transformation requires a precise coordination and integrated approach that takes into account how new technologies fit into other aspects of the company. The Deloitte analysis identified seven pivots from last year’s survey on digital transformation. They provide an effective summary of the areas in which technology can successfully integrate into your business model.
Below we discuss a few of them:
This means that digitalization can assist you in creating a secure company-wide technical infrastructure that emphasizes privacy and digital security.
2. Look for Strategic partners
Fourth is engaging with not only your specific industry but an entire ecosystem. Expand your partnership network and you will vastly increase your digital resources.
3. Ways to improve workflow
And next is placing an emphasis on intelligent workflows. You should constantly be reevaluating and revamping work processes to be as efficient and intelligent as possible.
Be ready to keep transforming your business
And last, ensuring that your business model is adaptable. If there is one constant in the digital world it is that it’s always changing. Thus you must ensure that your business model is prepared to grow and thrive along with those changes.
We Can Help with the Financial Aspects of Planning a Digital Transformation for Your Business
We know it’s hard work to own a business, and we’re here to help. Our team of business financial advisory experts are ready to work with you to figure out the best plan for you.
At Saddock Advisory, we can help determine if your business is financially healthy. Get in touch with us here to find out more.