Digital Transformation Benefits and Challenges | What Do They Mean to your Business?
Learn about the benefits and challenges of digital transformation illustrated by success stories from various industries.
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Digital transformation is no longer a buzzword, it’s a fact. A recent survey revealed that 70% of companies are aware of digital transformation benefits and already have a strategy in place (or are developing one right now).
If you don’t want to stay behind on this trend, you should start thinking about crafting your digital transformation roadmap right now. It’s smart to approach this task with a clear vision of what your company can gain by carrying our digital transformation programs. And this is the focus of our article.
Read on to learn about the key benefits of digital transformation illustrated by success stories. We also show you a few challenges that you should know before embarking on your digital transformation journey.
Quick recap: What is digital transformation?
Digital transformation comes in different shapes and sizes depending on the unique needs of the business and the industry requirements shaped by disruptive technology startups.
The financial services sector is a great example of this. Once fintech startups gained steam and successfully delivered new products to increase customer bases, the entire sector was forced to reshape its approach to customer service. New financial products, the rise of mobile banking applications, and hyper-personalization are just a few of the many trends that appeared since then.
But let’s focus back on digital transformation itself. What does it mean for your business?
Digital transformation refers to the process of integrating digital solutions in different business areas. Ultimately, the goal of digital transformation is changing how your company operates and delivers value to your customers.
The essence of digital transformation isn’t digital tools and technologies. It’s not about sprinkling new solutions across your company. It’s a cultural change that allows companies to experiment, challenge the status quo, become nimbler and more responsive to the constantly evolving customer needs.
If you want to go deeper into the meaning of digital transformation, check on these articles:
6 key benefits of digital transformation
One survey revealed that the top benefits of digital transformation are increased operational efficiency (40%), faster time to market (36%), and meeting customer expectations better (35%). Moreover, 60% of companies that embraced a digital transformation journey managed to create new business models. Research shows that digitally mature companies are 23% more profitable than their less mature competitors.
To help you understand what your business stands to gain from digital transformation initiatives, let’s take a closer look at the most important benefits of going digital.
1. Accelerating business processes with automation
One of the most significant advantages of digital transformation is eliminating the tasks that waste the time of employees by automating them. Software such as Robotic Process Automation (RPA) tools can perform tasks that previously required the time and attention of your staff.
A software solution can automate a manual process to complete a diverse range of tasks such as collecting customer data, sending emails (for example, regarding service or status updates), procurement tasks, invoicing, time tracking, and payroll.
Business process automation is a stepping stone to building a holistic process of digital transformation. Automating tasks doesn’t have to be costly thanks to innovative software solutions, helping companies to reduce the risk of their investment in digital transformation. Many businesses start their journey at this point.
To unlock the true value comes of these tools, consider how you can connect them so that they work together to streamline processes for high-volume repeatable tasks. Automation is definitely worth your investment. It brings greater accuracy, lowers the error rate, and reduces the cost of completing tasks as there’s no need for your employees to get involved. Instead, you can engage your staff in mission-critical tasks that require high-level decision making or creativity.
Success story: Droids on Roids automation project
Our client – a German manufacturer of braking systems for commercial and rail vehicles – was looking to improve business processes at their factory. In particular, the company wanted to streamline the process of filing continuous improvement requests. Each employee was encouraged to come forward with their ideas about process improvements.
Before the implementation, such requests were made on paper. We created a system that allowed for filing requests in the electronic form, automating several request processing tasks. The company now enjoys a streamlined process of continuous improvement and delivers a better experience to their employees who get rewarded for coming up with process optimization ideas. Here you can check out our digital transformation app development services.
2. Improving the customer experience
Did you know that 92% of leaders who develop digital transformation strategies do that specifically to improve the consumer experience? Automating tasks can improve customer and staff experiences in many different ways. For example, by automating the process of responding to support tickets, customers will see much faster turnaround times.
What’s even more important, digital transformation enabled customers to access your services and support using their preferred method of interaction. Software solutions can bring truly omnichannel support and allow customers to reach you via phone, live chat, email, mobile app, or support forum easily. Since you’ll be keeping all of these channels digital, you can offer customers multiple touchpoints, track interactions easily, and improve feedback gathering to provide even better service.
You can also use digital tools and processes to help customers access your services in the most convenient way: through e-commerce sites, mobile e-commerce applications, social media (via social selling features), and other digital channels. You can use the functionalities of these channels to provide personalized recommendations using the data attached to customer accounts.
Success story: Target
In 2011, Target brought their web presence back to its business from Amazon and decided to focus on it as their main business channel. The company invested in stores to create new designs that blurred the line between physical shopping and e-commerce experience. Target also introduced online ordering and in-store pick service and invested in increasing its social media presence to help customers discover new products (and even make purchases through social media).
Target’s holistic digital strategy allows for deeper customization of all the different touchpoints that were now part of the customer experience. Since launching its digital transformation program, Target has seen a steady growth of revenue and is planning to expand in the future with a massive store remodeling worth $7 billion.
3. Better decision-making thanks to data
Processes powered by software solutions open the doors to greater visibility into what works well and what should be improved. Since digital tools can collect and process data in real-time, they enable managers to recognize patterns and identify opportunities for improvement easily.
For example, you can mine your centralized data repository to pinpoint bottlenecks in your workflows, check employee performance, learn more about customer behaviors and preferences, and many more areas. Once you implement digital tools and build your business processes around them, you’ll enhance your reporting capabilities. Moreover, you won’t have to rely on costly and time-consuming manual feedback collection, surveying, or sampling. You’ll have access to the right data at any time and from any device.
There’s no denying that more relevant and real-time data leads to faster and more accurate decision-making.
Success story: Hasbro
The toy and game company, Hasbro, has invested a lot in its digital transformation and data strategies. In late 2012, the company realized that instead of focusing on children, they should be addressing their parents. After all, it’s the parents who make the purchases. Hasbro took advantage of data to create a smooth experience for customers and recommend the most relevant products to parents. The company created targeted marketing campaigns on multiple channels, focusing on social media. T
The data Hasbro collected helped them to understand customers better and meet their needs proactively. The focus on data and digital marketing helped Hasbro face rapid changes in the industry during the last decade.
4. Greater agility, flexibility, and scalability
Another advantage of digital transformation is the ability to break free from legacy systems and embrace innovative, scalable alternatives. Many existing business processes are based on old technologies that require manual input. When teams have a lot of work, these points become process bottlenecks. Some manual processes simply aren’t scalable as an increasing number of people need to process claims and service requests or complete other functions.
Modern software is easier to integrate so companies can connect different parts of the business and avoid the mistake of siloing data by department or function. Once a task is complete, your solution can connect the data to push the task forward – all completed without any manual intervention. This example illustrates how digital transformation allows organizations to become more agile and responsive to the evolution of customer preferences.
Success story: Honeywell
The US-based international conglomerate, Honeywell, chose a new direction for its strategic operations a few years ago. The idea was to concentrate on quality and take advantage of digital solutions. To determine the smartest moves for the company, Honeywell used data analytics tools and launched its transformation.
To help its customers benefit from these new digital capabilities, the company introduced new technologies to its offer, including data-centric and IoT-enabled devices. By setting up their own digital transformation unit, Honeywell is helping other companies to reinvent industrial process control and become more agile despite the sector restrictions.
5. Reliability and security
As companies continue to expand and grow, the technology and processes they’ve relied on for years may not be enough. Backing up, maintaining, and protecting data locked in legacy systems is difficult and costly. Such systems are also prone to failure and more susceptible to cyberthreats.
The report from 451, Managing Risk through Digital Transformation, revealed that almost half of respondents (49%) pointed to securing customer data as one of their main digital transformation objectives.
According to a McKinsey report, Digital risk: Transforming risk management for the 2020s, innovative digital risk initiatives can reduce operating costs for risk activities by 20 to 30%. By upgrading to modern tools, you’ll be able to choose from a larger pool applications who have the experience to support your systems properly.
Success story: Schneider Electric
The global energy solutions company Schneider Electric made cybersecurity the core of its transformation strategy. Because of the complexity of acquisitions and company operations, gaining visibility of the entire organization was a challenge. The company created a cybersecurity practice and then embedded professionals like digital risk managers in each practice. Throughout the company, the group works as a community of cybersecurity leaders who have received proper training and focus on specific risks.
6. Creating a productive digital workplace and culture
Another perk of digital transformation is that it provides a great experience not only to customers but employees as well. By introducing innovative digital tools, you can help your workforce become more productive. Task automation is the most obvious example here.
By investing in digital transformation programs that focus on company culture, you can make your employees fully engaged in the evolution of your business processes, without risking that they feel overwhelmed or disconnected from them.
Success story: SAP
Company culture plays a critical role in a company’s digital maturity. Managing the human aspect of digital transformation tends to be more complex than implementing the technologies themselves. But investment in culture pays off in a big way.
The transformation at SAP is an excellent example of that. The company was suffering from two issues:
1) The company relied on the input from external experts instead of adopting a hands-on approach to its future. Instead of hiring consultants, SAP took the time to introduce internal changes and gave its workforce the tools for changing, adapting, and enhancing their skill sets.
2) Considering failure as something negative. To encourage experimentation and innovation, the company needed to embrace failure as a necessary step. SAP focused on building an environment where failure was key to learning and evolving. The idea was to stop people from blaming each other for their shortcomings.
To sum up:
4 challenges of digital transformation
Let’s make this clear:
Here are the key challenges that stand in the way of digital transformation:
- Employee resistance – some employees may resist change because they feel their jobs might be threatened, or their skills won’t be relevant anymore. It’s hard to implement a digital transformation in such an atmosphere. It also has a negative impact on team morale and productivity.
- Solution: To handle employee pushback, concentrate on building a customer-centric culture where business processes change to match the evolving needs and preferences of your customers. That will help your employees understand that new skills will help them deliver higher value to customers.
- Lack of a clear vision and strategy – successful digital transformation programs start from a business perspective.
- Solution: Always set clear business objectives for your projects and make sure that they serve your overall digital strategy.
- No data management strategy – another frequent issue is the lack of a strategy for gathering and leveraging customer data. Many companies still rely on siloed systems that keep data about customer interactions in separate boxes.
- Solution: Pull your customer data together through a connected system of analytics tools and create a coherent picture of your interactions and relationships.
- Inflexible app development processes – if your development process is rigid and based on quarterly release cycles, you’ll have a hard time implementing digital transformation tools and processes.
- Solution: Implement agile processes and technologies that support frequent integration and product release. Iterate product development using the build, measure, learn model. Instead of rolling out a large update once every few months, you can release new features every few weeks. That way, you can measure and adjust them based on usage data and customer feedback.
To sum up:
Conclusion: Digital transformation benefits are undeniable
Digital transformation benefits both small and large companies and is unavoidable for businesses that want to survive the next decade on the market. You can only optimize internal processes and deliver a great customer experience with the help of modern digital tools that work seamlessly together – and alongside your employees. This synchronization is the core of digital transformation.
Are you looking for a team to help you jump-start a digital transformation project?
Get in touch with us. We help businesses make the most of technology for automating and optimizing business processes.