6 Things to Know Before Embarking on Digital Transformation

Running an organization in the 21st century is radically different from the one before. Business is easier in some respects, but also far more complex and challenging. 

In the 20th century, a small business could only operate locally. Today, one can leverage modern technology to potentially serve an entire global market.

Playing a larger role in the marketplace is made possible with digitalization and digital transformation. The two terms are used interchangeably, but there is a subtle, important difference between them. 

In this article, we look at the bigger, more comprehensive concept of digital transformation, but first, let’s explore the difference between the two terms.

What’s the Difference Between Digitization and Digital Transformation?

The stages of digitization

The biggest differentiating characteristic between digitalization and digital transformation is the purpose. Digitization is simply a process of modernizing an existing business with new, current technology. 

On the other hand, digital transformation is about integrating technology into a business, with the explicit goal of maximizing—or even innovating—what that technology can do for the company.

For example, a digital transformation of the expense process means leveraging everything current technology can do to radically improve the process. 

So, online expense account software means users can use their phones to submit a receipt so that business travelers no longer have to hold onto every piece of paper. While the finance department can get automatic notifications as soon as an expense is filed, look over it, and approve or decline it in real-time. 

From a business perspective, leaders can look at the expense metrics over a year to see where inefficiencies can be addressed. 

Now that we have a better idea of the difference between digitization and digital transformation, let's progress to the things to be aware of if your business is on the cusp of, or just started with digital transformation.

1. How Would You Start Your Business Now?

This is the most important question and one that can elicit fear and groans. Everybody agrees that digital transformation can make huge gains for a business, but to see how much things would change, your organization needs to ask this question:

If you were starting your business today, how would your technology be different? How would you incorporate it?

For example, a business just starting out and keeping records of financial transactions is likely to use modern financial software, with cloud storage options, and online access for relevant staff, thus keeping records digital, flexible, and easily accessible.

On the other hand, a company with a massive, existing archival room may be reluctant to undertake the expense of getting rid of these systems. In many cases, decisions might be made to try to preserve the value of that early, 20th-century investment, at the expense of making the company more efficient.

In the same way, people with established telecommunication channels, point-of-sale methods, or even just inter-office communication protocols might forgo new technologies that would improve their operations by orders of magnitude, in an attempt to preserve what’s already there, bought and paid for.

As difficult s this question might be for traditional and established businesses, one of the best ways to see what kind of digital transformation options are available is to play a hypothetical game of imagining your business. 

See what technologies would be put into place for maximum efficiency, not to preserve the value of older investments. Change can be crucial to survival, as some analysis suggests companies that don’t digitally transform themselves are at peril from companies that are 'born digital.'

2. KPIs Are Gold

KPIs for digital transformation

Key Performance Indicators (KPIs) are one of your organization's most valuable metrics for improving your business. 

In order to find out where digital transformation can best help your business, you must look at the right KPIs. Every business is going to be different, with different staff, departments, and work methods that have unique strengths and weaknesses.

You need a custom solution fitted for your business needs, not a generic one. The only way you will know what you need is if you find the KPIs that are relevant to you, track them, and then see where you stand, so you know what you want to improve or fix. 

3. Always Look to the Competition

No business operates in a vacuum. Whatever you do, there are going to be other businesses that are doing the same thing, and they may be friendly rivals or serious competitors. 

But they are also using technology in their own unique ways, so what are they doing right?

Being able to analyze how the competition operates can be an excellent way of finding out where to start a digital transformation. 

L?ook at your business objectives and list what could be improved. Armed with information about your brand's weakness, you can then look to competitors to see what makes them more efficient in the areas that matter and how can you adjust to match or surpass them?

4. Pay Attention to Technology

Apple Music

Keeping your finger on the pulse of technology before a digital transformation seems like a no-brainer, and yet ignoring what’s out there is a fundamental mistake that even the biggest, most successful businesses can make. If your business isn't aware of technology, its innovations, and what it can do, you may be the architect of your business’s demise.

Imagine a world where Borders Books didn't scoff at Amazon's online ordering technology and took them seriously as a threat. Imagine how different things would have been if Sony had paid more attention to the digital music format, rather than letting Apple pioneer a revolutionary journey with the iPod and iTunes.

People who stop paying attention to emerging technology will let opportunities for growth pass them by. Always remain open to what new technologies can do to improve the day-to-day operational processes, the efficiency of your business, and the productivity of your staff. 

5. Watch Your Market

In a rush to integrate the latest cloud computing system into your company’s infrastructure, you should not forget to track changes in your industry. 

It’s not enough to watch the KPIs for your staff and their performance; you should also be collecting data about your market itself, and more importantly, how your customers and prospects are behaving. What are they looking for? How are they getting it? What is preventing them from doing business with you? What new pain points do they have? 

Market data is vital, and without good data, you won’t successfully transform in the digital age.

Data analytics is something that should be shared across your entire company, and every department can benefit from more access to better data. The old adage about knowledge being power is truer in business than ever.

6. IT is not Isolated

Technology and digital transformation

To make the most of a digital transformation, companies have to get out of the mindset that Information Technology (IT) is its own distinct department or section within the company that has no relation to the rest of the business. 

IT is a fundamental part of the operations of every department in a company, or at least it is in the most successful companies.

There’s a big difference between a company that quarantines IT as just a tech support department when something goes wrong with the office network, versus a company that from the ground up integrates IT as a part of every department. 

A company that views information technology as an everyday part of operations will more effectively use that technology when given the opportunity.

Final thoughts

Keep an eye on the market, including competitors, customers, and innovations in technology. Compare what you know about the strengths and weaknesses of your company with the technological solutions available. 

Once your business knows its goals and the systems that can help you achieve them, you’ll digitally transform your brand for the better. 

Clodagh O'Brien
Senior Content Specialist