According to the World Economic Forum, digital transformation has the potential to create as much as $100 trillion in value by 2025. It’s no surprise, then, that business leaders are leveraging digital technology to boost productivity, transform customer experience, and increase revenue.
Although many businesses — regardless of size or industry — are reaping the plethora of benefits resulting from a successful digital transformation strategy, many more are not using digital technologies to their full potential. In this article, we’ll help you understand what digital transformation is, how to leverage a digital transformation strategy, and what challenges you might expect.
- Digital Transformation Definition
- Digital Transformation Benefits and Opportunities
- Industry Examples of Digital Transformation
- Key Digital Transformation Drivers
- Digital Transformation Framework
- Digital Transformation Challenges
- Digital Transformation and the Cloud
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What is digital transformation?
Digital transformation is the adoption of digital technologies to improve productivity and process, manage business risk, and enhance customer experience. By implementing digital technologies, businesses can keep up with ever-evolving business environments and meet their unique goals. Additionally, digital transformation can aid in customer engagement and provide a seamless customer experiences time after time.
Why digital transformation: Benefits and opportunities
A successful digital transformation can open up the doors to various benefits and opportunities for all types of businesses.
1. Improved customer experience
Since the main focus of digital transformation is using technology to enhance customer experience, it can enable businesses to pay more attention to what customers want and consistently improve services across all channels and touchpoints as a result.
2. Reduced costs
Digital transformation can reduce costs by optimizing technology and operations. Digital technologies assist businesses in acquiring, retaining, and helping customers while reducing marketing spend simultaneously.
3. Increased agility and innovation
Digital transformation has the potential to increase agility and innovation as it allows businesses to eliminate their dependence on legacy IT systems. It also makes organizations more aware of and responsive to current market demands and trends.
Digital transformation in 3 industries
Digital transformation has a positive impact on a range of industries. Let’s take a closer look at how it affects three big players.
Digital transformation in E-Commerce
Domino’s Pizza, one of the largest pizza companies in the world, uses digital transformation to its advantage. Using digital technology, Domino’s collects and integrates data from its point of sales systems, 26 supply chain centers, and all channels including: Twitter, Android, texting, and Amazon Echo. With a single, trusted source of data, Domino’s has the right data in place to improve its logistics, financial forecasting, customer experience, and virtually every other aspect of its business.
Digital transformation in finance
Crédit Agricole Consumer Finance, a company which grants credit to customers in Europe, recently launched a digital transformation project. The project objective centered on improving customer experience across all digital channels and make data available to employees, customers, and partners. Crédit Agricole Consumer Finance can now process data in less than an hour as opposed to several days on past platforms.
Digital transformation has also made it possible for Crédit Agricole Consumer Finance to monitor website performance, enable a detailed analysis of internet users’ clickstream patterns, and expedite online credit simulation and issuance with customer social network data.
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Digital transformation in utilities
Veolia Water France specializes in the distribution and treatment of water in France. The company launched a digital transformation initiative to help customers make the most out of their water resources.
This digital transformation initiative established a real-time view of the company’s water pipeline network in a single and shared view. With information on all its 11,000+ customer contracts and 4,500+ production and processing units in one place, Veolia Water France’s technicians can respond faster to incidents and meet community service level agreements (SLAs).
Key drivers of digital transformation
Most businesses are realizing that digital transformation is necessary for them to stay relevant in the current market. Key drivers of digital transformation include the following.
Often resulting in increased automation and efficiency, digital transformation can save businesses a significant amount of money and resources. According to a study by McKinsey, digitizing processes that are full of information can cut costs by up to 90%.
Digital transformation allows businesses to find out what their customers want and need, and improve their customer experience so that customers return and refer others. With digital transformation, companies can tailor content to individual users and focus on providing value.
Businesses that are not using digital technologies are simply behind the times and less likely to survive in today’s competitive world. Digital transformation can help these companies stay ahead of market trends and gain a competitive advantage by improving customer experience and operational efficiency, increasing agility, and better managing risks.
Digital technologies drive innovation, which can spark creative ways to improve current products and create new ones, leading to increased revenue opportunities. It can also help reduce wasted spend and leave more money in their pockets.
A framework for a successful digital transformation
With the right plan in place, businesses can enjoy the benefits of digital transformation. A successful digital transformation begins with a management team who understands the value and fosters a sense of urgency to make it happen.
Then, it moves on to designing an infrastructure that supports digital transformation. This involves determining which existing resources can help with digital transformation and performing a gap analysis to figure out which new tools can support upcoming changes.
In addition, it’s wise to address skill gaps that can stall transformation efforts. Gaps may be addressed by hiring a leader to lead the digital transformation strategy, hiring new employees who are digitally-savvy, or creating a new position such as chief data officer, who would be responsible for data storage, analytics, and other aspects related to digital transformation.
Successful digital transformation also involves changing behavioral and cultural norms. By making the use of digital tools a new norm, a business is more likely to enjoy success.
How to Lead a Digital Transformation
There are a number of strategies that can help leaders successfully navigate a digital transformation.
- Empower change: Leaders must let go of old practices and empower employees to work differently and keep up with market trends and demand.
- Attend training: Leaders should enroll in a leadership development program to help their business make the right shifts in behaviors and mindsets.
- Facilitate communication: Leaders should gravitate toward interactive communication platforms that enable dialogues and promote the new changes that digital transformation requires. Information should be clearly communicated with employees from all levels and departments about where the business is headed, why the change is happening, and what makes it important.
The truth is that digital transformation is about people just as much as it is about innovation and technology. To ensure success, leaders must effectively communicate their initiatives and encourage individual employees at all levels to get involved.
Challenges and risks of digital transformation
Just like any business endeavor, digital transformation comes with several challenges and risks. One of the most noteworthy challenges is employee pushback. Employees, especially those who have been at a business for a while, may not be open to change and unclear as to why digital transformation is necessary.
Also, while digital technologies are helping businesses thrive, they also pose security risks such as data breaches that can be a significant concern. Additionally, digital transformation may require changes in roles and departments, or a complete overhaul of organizational structure. Lastly, budget constraints can get in the way of a successful digital transformation.
The good news? There are solutions that can resolve each of these risks and challenges.
The role of data in digital transformation
Data plays a vital role in digital transformation. Every decision related to a digital transformation strategy is data-driven. Whether a businesses goal is to reduce supplier lead times or design an effective marketing campaign using digital technologies, data is essential.
It is the key to understanding the way customers, suppliers, and others think and act. With data, businesses can optimize their sales and marketing strategies to meet the needs and preferences of their customers.
Data can also give engineers, product developers, and others insight on how to improve and innovate products and services. In addition, it can lead to operational efficiency and reduce costs.
The cloud and the future of digital transformation
The future of digital transformation revolves around the cloud, which involves storing and accessing data and programs over the internet instead of a physical computer or network. If a business would like to embrace digital technologies, it will need a secure platform like the cloud that makes it easy for them to update services as business and customer requirements change.
By increasing speed, efficiency, transparency, and cost reductions to business operations, the cloud allows businesses to spend less time focusing on IT-intensive tasks and more time on managing the essentials, like digital transformation strategy and other business functions
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Getting started with digital transformation
To be competitive and successful in today’s business world, digital transformation is vital as it offers businesses a wide variety of benefits. With Talend Data Fabric, businesses receive the support they need to implement a successful digital transformation and meet their business goals.
Talend Data Fabric is a single suite of apps for data integration and data integrity to help businesses collect, govern, transform, and share data in real-time. It can integrate seamlessly with any digital transformation initiative and provide clean, quality data. Try Talend Data Fabric today.