Digital Transformation: How Technology is Changing Business

Digital Transformation makes a business more efficient and profitable – when executed correctly. Technology can expedite processes, provide new ways to reach customers, and make it easier to adapt to market changes. Unfortunately, few companies realize these benefits as a majority of enterprise digital transformation projects fail. 

Companies spent $1.3 trillion on digital transformation in 2019, and nearly 70 percent of it was wasted, according to research published in Harvard Business Review.

In this guide, we’re taking a closer look at the urgency behind digital business transformation and how you can succeed in each phase of your digital transformation journey. We’ll cover:

• What is digital transformation? 
• Why does digital business transformation matter? 
• What are the benefits of digital transformation? 
• Why do some digital transformations fail? 
• Digital Transformation Business Processes
• How do you build a digital transformation strategy? 
• What needs to be in your digital transformation change management plan?
• What tools are available to support your digital transformation journey? 
• How do you measure and track your digital business transformation?
• Digital Business Transformation: Key Takeaways

What is Digital Transformation?

Digital transformation is harnessing technology to change the way you do business. It’s a fundamental cultural shift in how you interact with your customers.

Companies that take up a digital business transformation initiative will: 

• Integrate digital technology into every aspect of their business,
• Change the way they operate by modifying or creating new processes and customer experiences, and
• Foster a culture that embraces innovation and change. 

Many companies confuse modernization or digitizing with transformation. Digitization is just introducing a tool. Examples of digitizing include:

• Switching from typewriters to word processors and personal computers
• Replacing manual cash registers with point-of-sale systems
• Introducing email (or more recently collaboration tools like Slack)

Yes, these technologies changed the way people worked, but they did not fundamentally change the way businesses operated. Digital transformation initiatives are rooted in changing and improving customer relationship first. 

Companies need to focus on more than just the tools they use; they must also consider an overall digital business transformation. In 2021, every business is a digital business. No matter what you sell, you’re using a digital channel to reach your customer or conduct a transaction.

Salesforce Chairman and CEO Marc Benioff put it this way:

“Every digital transformation is going to begin and end with the customer, and I can see that in the minds of every CEO I talk to”

What is technology transformation?

The complete change in the organization’s technology stack encompassing hardware, software, cloud infrastructure, network architecture, and data storage methods.

Its focus is solely to improve the tech stack of the organization to improve the overall efficiency and create an economy of scale. The aim is to modernize the tools that can hinder the efficiency of the organization and help create a technology transformation roadmap.

Related read: The ultimate digital transformation roadmap for CIOs

Companies must define a clear vision of what technologies they want in the near future and how it will help the company to generate desired outcomes. Technology transformation makes the organization agile, fast, and helps to cut costs by optimizing the time to output.

Technology transformation is a subset of digital transformation however not all digital transformations require tech transformation as sometimes optimizing exiting processes does the trick.

Why does digital transformation matter?

Companies started digitizing decades ago, so why is transformation such a buzzword in 2021? Thirty years ago, companies had the luxury of taking things slowly. That’s no longer the case. Technology is rapidly changing, so companies need to be agile enough to adapt.

Enterprise digital transformation is not a once-and-done deal; it’s a continuous process and mindset for organizations. CIOs and IT teams should be continually evaluating and testing new technologies and digital transformation trends to see what could add value to the company throughout their digital transformation journey.

The pervading school of thought used to be that a digital transformation gave you a competitive advantage. That’s no longer the case. Companies need to change and adapt for survival, let alone competition. The best examples come from retail. Look at the collapse of Sears. Throughout most of the last century, Sears was the leading retailer in the United States.

In the 1970s, the company began to face increasing competition from discount chains like Walmart and Target. Walmart would replace Sears as the largest retailer in the 1990s, but that’s not what doomed the retailer. The business began to collapse as more shoppers moved online around the turn of the century. Customers made the transition to digital, but Sears did not. By the time it invested in eCommerce, it was too late to compete with Amazon.

It’s important to note that Sears’ collapse is not solely related to a lack of an eCommerce strategy. Other retailers also surpassed Sears in their use of technology to run their business. Walmart and Amazon invested millions in building the logistics and infrastructure to support their changing business.

The COVID-19 pandemic continues to accelerate the necessity for driving Digital Transformation across companies of all sizes. Organizations are embracing remote work & quickly modifying their day-to-day business operations to match the new normal and keep up with new digital transformation trends. 

The key takeaway is that if you don’t develop a digital transformation strategy, your business will fail.

What are the benefits of digital transformation?

Efficiency and productivity are the main benefits of digital transformation, but changing the way you do business unlocks the potential for positive impacts on your customer experience, operations, and employee engagement.

Why do some digital transformations fail?

Mckinsey estimates that 70 percent of digital transformations will fail, and recent history provides plenty of examples. 

One of the most prolific failures was GE. The company began its digital transformation in 2011 by being an earlier innovator in IoT (internet of things). GE added sensors to products and modified its business model for its industrial products.

Its downfall would be the creation of a new business unit GE Digital in 2015. The company spent billions and hired thousands of people but could never produce any value – eventually leading to the ouster of the CEO.

Digital Transformation challenges need to be addressed in order to sustain in the long run. Not only GE but also many other big players in the market fail to get positive outcomes from their digital initiatives. 

With the evolution of technology, the CIO’s role has drastically changed. Today they are strategic partners who play a significant role in decision making. Here is the ultimate guide for CIOs who are struggling to build an effective Digital Transformation strategy. 

So what are the most common reasons transformations fail? 

• Lack of executive leadership – Transformation begins at the top. The entire executive team must not only buy in to the plan, but actively promote and implement it. If executives dismiss digital transformation as merely an IT project, the company will struggle to make changes. 
• Poorly defined goals– Before you can achieve a goal, you need to define it. Digital transformation can mean a lot of different things. If you lack a consensus for what it means for your business, it will be hard to execute. 
• No roadmap- You need a vision and a roadmap for how you’re going to get there. Many companies recognize the need for transformation but struggle when it comes to defining what and how they’ll do it.
• Resistance to change- Like any significant organizational change, humans’ natural resistance to change will be challenging to overcome. Companies that don’t develop and execute a change management plan are more likely to fail.
• Poor talent development or recruiting- New technology means you need workers with different skills. Mismatches between your talent skillset and your technical needs can derail a project. You’ll need to think about retraining workers or hiring people with the skills you need. 

Digital Transformation Business Processes

Digital transformation is the combination of various efforts across the organization. Digital transformation is an umbrella term that encompasses digitization, digitalization, and other facets of transformations.

All these aspects help an organization to stitch a business process that helps them accomplish their digital transformation goals.

These business processes can be put into 3 buckets that is digitization, digitalization, and digital transformation

Digitization: It is the digital process of changing analog records or forms to digital. It helps the various software to read the data to take necessary action. It is one of the minuscule parts of the overall digital transformation process.

Digitalization: It is the process in which organizations use digital technologies, and platforms to enhance customer experience, ensure employee efficiency, create new solutions and revamp their business models. It is the process of using digital tech stack in a different way to solve the problems of both employees and customers.

Digital transformation: It is the combination of multiple projects, changes initiatives, and business processes that occur across the organization to enhance the overall digital capability. In a digital transformation process customers and employees are at the center of all strategies.

Pro tip: Digital transformation is driven by business processes and to achieve the success you should be able to measure the digital adoption rate across the organization. A Digital Adoption Platform is the ideal solution that can help you to measure the efficacy of the defined processes and help you gauge the state of your transformation initiatives. It also empowers to make on-demand training and onboarding content that goes beyond regular training and enables users to use the digital applications and new business processes to the fullest extent.

How do you build a digital transformation strategy?

Author, entrepreneur, and Harvard Professor, John Kotter’s 1996 book Leading Change is one of the most used frameworks for how to navigate change in business.

When developing a digital transformation strategy consider following Kotter’s 8-step process:

1. Create a Sense of Urgency
2. Build a Guiding Coalition
3. Create a Strategic Vision
4. Communicate the Vision
5. Enable Action by Removing Barriers
6. Generate Short-Term Wins
7. Sustain acceleration
8. Anchor Changes in Corporate Culture

Step	Who’s Involved	Objectives
Step 1: Create a Sense of Urgency	Executives  Managers  Other Leaders	Explain the importance of transformation. Why is it essential for the business? Focus on not only why you need to change, but what you need to do it now. What harm will come from waiting too late?
Step 2: Build a Guiding Coalition	Executives  Managers  Other Leaders  Technology Specialists  End-users/Front-line employees	Assemble a team that can spearhead the transformation. This is not a one-person job or something just for IT. It involves every level and department.   Make sure your coalition includes different levels and departments to build buy-in across the entire organization.
Step 3: Create a Strategic Vision	Executives  Managers  Other Leaders  Project Team	Align your efforts into a clear vision and roadmap. Companies often use the term digital transformation with only a vague idea of what it means.   Your guiding coalition needs to be able to describe the vision in a couple of minutes. Your vision should include what the company will look like in the future and why it’s crucial.
Step 4: Communicate the Vision	Executives  Managers  Other Leaders  Project Team	Repetition is your friend when it comes to change management communication. You’ll need to use every communication channel you have to keep employees informed and motivated.   Be sure to talk about your vision and give updates on the project.
Step 5: Enable Action by Removing Barriers	Executives  Managers  IT  Project Team  Learning, Training, and Development Professionals	You can accelerate your transformation by making it as easy as possible. That means leadership needs to clear any barriers, including:   Budget  Training  Staffing  Procedural
Step 6: Generate Short-Term Wins	Executives  Managers  Other Leaders	You won’t transform overnight. It will be a long process. Break the transformation up into smaller milestones and celebrate when you achieve them.   Mini-milestone celebrations help build momentum for the project.
Step 7: Sustain acceleration	Executives  Managers  Other Leaders  Technology Specialists  End-users/Front-line employees	You need to build momentum and keep going. Monitor your transformation and modify your plan based on the data. After each rollout, have a debrief.   Talk about what worked and what can be improved. Inspire teams to continually improve their processes as they learn more about the new system.
Step 8: Anchor Changes in Corporate Culture	Executives  Managers  Other Leaders  HR	Digital transformation is about changing your culture as much as changing the way you work and do business.   Many organizations abandon new processes or systems before they can see the benefits of the system. Promoting change and digital adoption as a part of your culture ensures a faster and more fruitful transformation.

With the evolution of technology, the CIO’s role has drastically changed. Today they are strategic partners who play a significant role in decision making. Here is the ultimate guide for CIOs who are struggling to build an effective Digital Transformation strategy.

Related read: Important digital transformation questions to ask

Top Technology Transformation Examples

A. Capital One

In 2012 Capital One, a credit card giant from Virginia started its transformation efforts to provide personalized experience and banking service to their customers.

The company invested in modern technologies like Machine learning and prioritized gathering data to make sound decisions. So, big data was at the heart of the project which will eventually help them to understand the customers better.

They even opted for cloud computing, the project was so big that it took them 8 years to close their 8 on-premise data centers. This approach helped them to focus more on their customers rather than maintaining monolithic infrastructure. Also, they were powered with real-time data which was then interpreted using machine learning

B. Domino’s Pizza

In 2008 Domino’s faced a setback as its stock price took a hit. They planed to sell pizza via the e-commerce route. This demanded the adoption of new technologies and applications. The aim was to engage customers and increase flexibility by using tech-stack.

Domino’s launched an application that enabled customers to check what is happening with their order in real-time.

They also used modern technologies like AI and ML to improve the consistency of their product and improve the overall service. They focused on providing Omni-channel experience across all platforms which boosted their revenue and helped them to scale their business further.

Delve deep: Top digital transformation examples to get you started

What needs to be in your digital transformation change management plan?

You can’t transform your business overnight. You’ll likely complete this journey in several phases or projects. For each stage, consider drafting a change management plan that will define:

• Change Scope
  • How big is the change?
  • Who does it impact?
  • What is and is not going to be a part of this rollout?
• Timeline
  • When should the change be fully implemented?
  • What dependencies are there in the rollout plan?
• Responsibilities
  • Who is responsible for each part of the rollout?
  • Who is responsible for ensuring compliance with the changes after rollout?
• Training
  • What training will employees and managers need for this change?
• Analysis
  • How ready is the workforce for this change? A readiness assessment will help identify training deficiencies and common objections to the change.
  • What metrics will be used to determine if the change was successful?
  • How and when will the metrics be collected and reviewed?

What tools are available to support your digital transformation journey?

If you want to improve your technology adoption rates, you’ll want to invest in a digital adoption platform. DAPs are a growing category of SaaS products that help users navigate and adopt web-based applications.

The features of each digital adoption solution can vary, but most of them include: 

• On-screen guidance,
• Integrated support or help content, and
• Step-by-step guidance.

A software adoption tool shows users where to click and what to do next. They can help users complete their work instead of just reading how they should do their job.

Advantages of a Digital Adoption Solution

Digital Adoption Platforms offer several benefits when implementing new technology. They can help you realize the advantages of your new technology sooner.

Accelerated Adoption	By making new technology easier to use, Digital Adoption Solutions can help you decrease the amount of time it takes to adopt new technology. Apty clients report they can fully adopt new software 2-3 times faster using Apty’s adoption tools.
Decreased Training and Support Costs	When adopting new technology, training and support costs can quickly spiral out of control. Digital Adoption Solutions reduce training and support costs by providing on-screen guidance.   Users are less likely to open a support ticket when they can use the adoption tool to show them where to click and what to do. Some Apty clients report up to a 70% decrease in support tickets after implementing Apty’s guided workflows.
Improved Employee Onboarding	Employee onboarding is another area when companies struggle when adopting new technology. Not only do you have to onboard your entire userbase during implementation you also have to onboard new hires as they join.   Digital Adoption Solutions make onboarding easier. On-screen guidance allows users to be productive on their first day – even if they’ve never used the technology before.
Usage Analysis	You can’t improve your software adoption if you don’t know what the problem is. The analytical tools in a digital adoption solution like Apty can help you identify where users are struggling so you can deploy extra help to overcome the challenges.

How do you measure and track your digital business transformation?

One of the biggest challenges with transforming your company and the way you do business is keeping track of your progress. 

What metrics should you use? How do you know if you’re succeeding or failing? Based on vast experience helping companies, both large and small, change their operations, processes, and customer experience, Apty recommends clients implement OKR (objectives and key results) strategy to ensure their projects are successful.

Former Intel CEO Andy Grove is credited with introducing and popularizing the OKR approach. The idea is relatively simple. You need objectives that are clearly defined goals. For each objective, you need key results which you will use to track the achievement of the goal.

The key results need to be measurable. Key results should be numerical such as percentages and dollar amounts. Companies that use this approach report better focus, alignment, and engagement – which should lead to a faster and more successful business transformation.

After defining your objectives and key results, you’ll lay out your initiatives detailing your plans for how to achieve the desired results. The strategy and change management plans discussed above are examples of the initiatives you’ll create to complete your transformation objectives.

The success of technology transformation relies on technology adoption

Businesses are always looking to update their technology stack as it helps to improve the overall bottom line. But technologies are complicated and employees might find it difficult to grasp the intricacies of it.

Lack of understanding may lead to poor adoption and in turn, the overall enterprise technology transformation will fail.

Organizations create training strategies to boost their technology adoption but that is where the overall adoption fails. Training and adoption strategies are different, as technology adoption is an ongoing and recurring event while training is a one-time event or happens periodically.

The business landscape is changing drastically because of competition, external disruptions, and internal roadmap shifts. This demands employees to be ready at all times to adopt new techs or applications.

Going the training route consumes time and may not be an ideal way to ensure immediate adoption of the tech. On the other hand, when you create adoption strategies you not only take into account the current requirement of training but also create a comprehensive plan that will make the employee better on daily basis.

To achieve this, organizations invest in technology adoption tools that not only help them create bit-sized knowledge content but also allow them to gain insights into user behavior.

This way businesses can optimize their training content regularly and also improve the business process by understanding where the employees are struggling.

Training strategy should be a subset of your overall adoption strategy and not an afterthought. If organizations take this route only then the business technology transformation will result in success.

Digital Business Transformation: Key Takeaways

If you haven’t done so already, it’s time to start planning and implementing your digital transformation. Remember these key points: 

• The need for change is urgent. Your competitors are likely further along their journey. You risk falling behind or no longer being viable by not optimizing your business for the digital revolution.
• Transformation doesn’t happen overnight. It’s a journey. Align your leadership behind common goals and make a plan to achieve them. 
• Focus on more than just the tools you’ll use. Think about how you can improve your customer experience and relationships. 
• Equip your company and associates for success. Invest in the right technology, training, and talent to complete your business transformation.
• Measure and track your progress. 

One last tip – don’t be afraid to fail. Part of creating a transformation culture is learning to take risks. Not every initiative of your transformation will be successful, but if you can learn from your mistakes and modify your next effort, your overall business transformation will be a success.

FAQs on Digital Transformation