Digital Transformation by the Numbers
Digital transformation can be a fairly nebulous term. However, at the end of the day, the goal is the same: It’s making information available, accessible and usable —anywhere, anytime and from any device.
According to the MIT Sloan Management Review, companies that have embraced digital transformation are 26% more profitable than their average industry competitors and see 12% higher market valuation. Yet the same report found only 25% of organizations report as digitally mature enough to build digital innovations and drive enterprise-wide transformation.
For many organizations, the foundational pieces are already in place to adopt three important technologies driving digital transformation: cloud, process automation and advanced analytics.
Digital Transformation Driver 1: Cloud Computing
Cloud technology is allowing organizations to rethink IT services and how they are used. In a recent IDG Cloud Computing Study, 71% of enterprises are looking to cloud to improve the speed of IT service delivery. Gartner has said that "Cloud-first strategies are the foundation for staying relevant in a fast-paced world.” And worldwide spending on cloud services and infrastructure is expected to grow from $229 billion in 2019 to nearly $500 billion in 2023, according to IDC.
Digital transformation is driving organizations to use cloud technologies to create a more agile and cost-effective IT environment. There are significant benefits to consider when pursuing both digital transformation and cloud strategies in tandem. As an example, if your IT organization moves applications into the cloud, they won’t be focused on solely managing your infrastructure. Instead, they could help the business focus on innovating on other parts of your organization, or on implementing new technologies.
Digital Transformation Driver 2: Process Automation
When you start using software as a service or cloud, you begin rethinking not just infrastructure and operations, but also your processes and the roles of employees, both in IT and in your lines of business. In a recent McKinsey Global Survey on automation, a majority of respondents (57%) said their organizations are at least piloting the automation of processes. The same survey reported that organizations that have been successful with automation efforts are more likely to identify automation as one of their strategic priorities.
Automation should be a priority in digital transformation strategies because it streamlines operations. Automation can also help mitigate the impact of IT staff shortage; reduce outages and downtime; improve security; and prepare your organization for robotic process automation, an emerging, cost-effective technology that is playing a significant role in transformation. Data from Gartner finds that the RPA market grew more than 63% in 2018.
Related Article: Why Process Automation Is Not Always Process Improvement
Digital Transformation Driver 3: Advanced Analytics
One of digital transformation’s aims is to eliminate silos, enabling the business to react quickly to key signals about customer needs, regardless of where in the organization they’re originating. Organizations are utilizing data analytics not only to gain new insights into customer behavior and preferences but into the health of processes. This data enables organizations to respond in real-time to changes. This can result in a more positive experience for employees, and customers, and has a real impact on the bottom line.
According to Gartner, almost 50% of CEOs have no digital success metrics. If you don’t already have digital success metrics, build them focusing on data that will help you to understand something specific to your operations, like customer behavior.
For many organizations, traditional KPIs and dashboards may not have changed for decades. With more data at your fingertips, think about the measures you use to evaluate individuals, teams and the wider organization to drive real change. To get started, think through questions like: What is “digital” for our business? What kind of growth do we seek? What's the most important metric to track, and which KPIs must change for us to track it?
Related Article: When Digital Transformation Transforms
Driving Differentiation with Digital Transformation
According to a report from Forrester, only 5% of organizations say they have mastered digital to a point of differentiation from their competitors.
Organizations that have made the most progress in digital transformation have responded aggressively to changes in their competitive landscape to seize an advantage. Some key recommendations for those who are leading their organization’s digital initiatives:
- Engage with executive-level leadership in order to advocate for digital transformation, and don’t forget about the cultural change needed to spread adoption.
- Have a clear vision to mobilize the entire organization and get everyone moving in the same direction.
- Be willing to take risks, but also solicit feedback and iterate.
- Identify third-party solution providers and partners who understand your strategies, can help to navigate change and implement new technologies.
The best transformational strategies are integrated into strategic goals. All of these techniques require consistency, strong leadership, grassroots efforts and an understanding that digital transformation is a journey and not an overnight success.