Adopting latest technologies can help businesses realize new efficiencies that provide a competitive advantage
Most executives have heard the phrase "digital transformation," but not every one understands what it means – or what it can do for their business.
In simplest terms, digital transformation is a deliberate approach to innovating and improving business performance or government services through careful application of technology. By applying data analytics, cloud computing and even social and mobile apps, companies can advance performance in operations, customer service and, most importantly, sales. It can even serve in creating brand new businesses or setting up new product lines within existing businesses.
Tony Olvet, IDC Canada's group vice-president of research, spends much of his time studying technologies associated with digital transformation and how forward-thinking businesses apply them. "They are powerful instruments of transformation," he explains, adding that they have the potential to create value and competitive advantage through new offerings, new business models and new relationships.
One of the keys to making digital transformation work, according to IDC Canada studies, is to think of data as a strategic asset. Digital technologies have existed for years, and in some cases even decades. What's changing now is how businesses are amalgamating them – combining the power of analytics, cloud computing and mobile apps – to create new efficiencies, which are beneficial to both the company and the customer.
"Think of Starbucks’ Mobile Order & Pay functionality that brings together mobile payment capabilities, location-based services, inventory information and customer loyalty programs into one app that enhances the customer experience," says Olvet.
The change in how businesses think about applying technology must start at the top. A bold executive within the organization needs to commit to creating a strategic plan for transformation that considers how the business fits within its industry or sector and how digital technologies can be used to help the business grow.
"Leaders need to become more sophisticated in their knowledge of how digital services impact markets and customers," says Olvet. "They need to anticipate and develop product and operational innovations that extend market share and increase revenue by creating shared digital experiences that serve the needs of mobile and socially connected customers and partners."
It's also important to ensure that everyone is on board. "Leaders who embrace the notion of digital transformation are able to socialize change in an organization, getting 'buy-in' from all levels to create new processes and business models," says Olvet.
In other words, everyone needs to believe in the project. Those leading digital transformation initiatives need to seed the idea with all involved that these technologies can improve processes and create better experiences. This includes not just employees and partners, but in some cases, also customers.
Once a unified vision is in place, goals need to be set so that everyone involved can begin working toward them. "Leaders need to set targets and communicate them with all stakeholders in the company," says Olvet, citing as an example a major Canadian financial institution that is working towards achieving specific percentages of growth within its digital channels, including mobile and online products, over a three-year period.
Using technology to transform your business takes work, but companies that choose to ignore digital transformation do so at their own peril. They lose out on opportunities to increase market share, reduce operating costs and even create entirely new lines of business of which they may not have been aware or thought possible. They also risk falling behind their competitors and disappointing their customers.
And, as Olvet points out, in some cases the consequences could be even more dire. "They could risk going out of business."