Pablo Castagnini cuts through the hype to explain what digital transformation is, and looks at the role each and every department can play to maximise success
There’s an awful lot of discussion about digital transformation at the moment, but there’s also a great deal of confusion about what it actually means. Digital per se is nothing new. For 40 years or more, businesses have been using digital technologies of some description, and therein lies the confusion. The act of digitising a business isn’t the same as digital transformation, but understandably, the terms have become interchangeable, causing many businesses to assume they are already in the throes of what is being billed as a digital revolution.
The easiest way to help define the concept of digital transformation is to define what it’s not. So, whereas digitisation involves applying technology to existing processes, using tools to automate and expedite processes, digital transformation is about doing things differently to carve out new markets or add value to existing propositions.
Digital transformation means adapting the entire business, transforming processes, procedures, skill sets, organisational culture and businesses models to create new business models, markets or opportunities which can be exploited through technology.
So, what does this all mean in practice? In most digital transformations every department is affected and therefore has a role to play. But while the goal remains consistent, the roles involved vary significantly.
Undoubtedly, the board plays the lead role in a company’s digital transformation.Most importantly executives must understand how technological innovation underpins the exploitation of new opportunities, how it can facilitate new business models, products or service offerings and ultimately drive growth.
Having established a strategy to achieve this, it is vital that all board members fully understand the goals and what is required. They need to engage with the relevant teams from across the business, and continually evaluate where the project is against objectives. In contrast to digitising processes which are typically led by the department they support, digital transformation is a business-wide initiative commanding vast levels of investment and therefore must be led top-down in order to succeed.
Once seen as simply a support function for employees, HR is taking a lead role in digital transformation. By driving new management practices, nurturing a working environment that’s conducive to digital transformation, attracting new skills and the right talent, and making full use of new technologies to help create a digital culture, HR is crucial to any business transformation, and digital is no exception.
While typically not responsible for digital transformation projects, IT departments obviously have a crucial role to play, particularly when it comes to implementing technology and executing digital strategies. Again, as with other departments, by fully embracing the breadth of capabilities now available via technology, facilitating those tools or processes that allow the organisation to pursue different models and/or ways of working, IT departments are instrumental in achieving transformational goals.
Customers, be they B2B or B2C, are almost without exception, digitally-enabled in their personal lives, and fully expect their business lives to be follow suit. With this in mind, marketing and sales functions need to embrace digital transformation, reorganising the way they work to fully revolve around the customer journey and optimising their own digital capabilities. As such, both sales and marketing need to ensure they have a 360° view of the customer, using insights to gain a unified view of prospects and customers to create a tailored buying experience. In doing this, the team can help to ascertain potential new ways in which they can forge closer relationships or expand revenue.
For the finance and accounts teams, the impact of digital transformation varies, but typically involves welcoming increased automation, AI and machine learning, making full use of the available technologies to take on the mundane, time-consuming processes, leaving them free to focus on more strategic, value-add tasks. Rather than just crunching numbers, finance and accounting professionals will be in a position to deliver in-depth financial insight in a timely manner, readily identifying cost-saving opportunities and underpinning business strategy.
Digital transformation on the shop floor has made a real difference to willing businesses. The advent of Industry 4.0 and the industrial Internet of Things has meant that businesses are more and more recognising the benefits that can be derived from digital transformation, using data and the resulting insight to streamline processes, boost efficiency, reduce errors and ensure compliance. And, by digitally syncing the shop floor with the back office, timely and accurate manufacturing data takes its rightful place at the heart of decision-making.
Digital transformation has the potential to increase the efficiency of R&D within a business, incorporating technologies and innovations into everyday R&D activities to save money and time. With all business functions brought together under a digital transformation project, R&D is no longer seen as an isolated activity, with customer data and forecasting information underpinning the direction of R&D activities, with R&D results informing future business direction and expansion opportunities.
Technological innovation has changed the face of the procurement function, with process automation and advanced analytics taking care of day-to-day but time-hungry procedures. Moving to a paperless, streamlined environment has meant that purchasing, like finance and accounting, has more time to add real value to the business, improving the service they provide to the rest of the organisation, more than proving its worth as a vital business function and deriving the best value possible for the business.
For any businesses considering embarking on digital transformation, our advice is to do it now. The recent wave of retailers going into liquidation is proof that in order to move forward, doing what you’ve always done is simply no longer an option in the fast paced and tech-savvy world we now live in.
It’s only by embracing change, underpinned by software solutions and new technologies, that you can expand beyond traditional boundaries to use new found levels of business agility and flexibility to launch new products, deliver new services or add value through enhanced ways of working.
You can guarantee that your competitors will be having the same thoughts as you when it comes to digital transformation, and if you haven’t already, now is the time to consider which direction your digital transformation will take you in order to drive innovation in your industry and ensure a healthy market share.
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