In the 2024 State of the CIO report (CIO.com) survey, the majority of respondents listed “leading digital business and digital transformation initiatives” as their top priority. But what exactly is digital transformation? It’s a phrase that has been referenced so often over the past several years that it now borders on business jargon.
To put it succinctly, digital transformation happens when a business uses emerging digital technologies to replace inefficient manual processes. In doing so, the enterprise aims to enable the delivery of new products and experiences. The ultimate goal and chief benefit of such an initiative is competitive advantage.
As Amazon Founder Jeff Bezos said: “In today’s era of volatility, there is no other way but to reinvent. The only sustainable advantage you can have over others is agility.”
Unlocking Opportunities
Digital transformation—when done right—can unlock enormous opportunities. Here are just some of the many top-level benefits:
Operational efficiency: One of the biggest drivers for organizations to push ahead with technology and process modernization is increased efficiency. This can take shape in several different ways. The first is related to cost efficiency. Deprecating outmoded systems and consolidating duplicative technologies can help organizations trim licensing and maintenance costs. Transformation initiatives typically also focus on increasing task and process automation through system integration and by leveraging artificial intelligence (AI) models. Finally, by embracing technologies like cloud computing, enterprises can quickly scale computing resources on demand, without investing in expensive IT infrastructure.
Improved customer experience: Rapidly evolving technologies, including AI, predictive modeling software, and advanced data analytics have forever changed consumer expectations with regard to personalization. Yet, many enterprises are still lagging far behind. Those companies that embrace available technologies to engineer uniquely personalized experiences for their customers are poised to gain a huge advantage in loyalty and lifetime value.
Data-driven testing and learning: Digital touchpoints generate massive amounts of information, including through first, second, and third-party data sources. Analysis of this data enables enterprises to gather insights on business performance, customer preferences, and overall market trends. Leveraged correctly, those insights can earn them a real competitive edge.
Overcoming Obstacles
Change is never easy. Enterprise leaders looking to make significant investments in technology transformation initiatives should expect and plan for challenges.
Here are some of the most common obstacles they are likely to confront.
Organizational culture and resistance to change: One of the most difficult challenges has less to do with technology and more to do with people and organizational culture. Without a widespread belief in the strategy at every layer of an organization, digital transformation efforts are doomed to fail. Employees may not understand the larger vision and goals, disagree with the need to revamp business processes, or feel anxiety or uncertainty about their role in a changing environment. Leaders need to anticipate these kinds of risks and address them head-on with a detailed change-management plan.
Technology integration: New technologies play an instrumental role in increasing the efficiency of key revenue processes, improving customer experiences to build brand loyalty, and expanding an organization’s access to data and insights. Many of these benefits can only be fulfilled through careful integration of new and legacy systems. This reality emphasizes the importance of crafting a thoughtful digital transformation strategy with a clear plan for legacy system integration. The plan needs to include a detailed roadmap for how and when each system will be modernized to enable bidirectional data flow for critical business processes.
Learning curves and digital skill gaps: The implementation of new technology systems can often result in steep learning curves for employees. Depending on the scale of the change to an organization’s operating model, it can expose significant gaps for specialized types of skills. For example, many large businesses are adopting AI to automate accounting and financial reporting processes, enhance marketing personalization efforts, and scale customer support operations. Leaders need to critically assess whether they have the internal resources to meet the demands of the rapidly changing digital landscape.
Every enterprise business should chart its own path to digital transformation success. Avoiding or delaying this initiative will only increase the cost, complexity and risks associated with it. Not to mention, increase the risk of missed opportunities while updates are delayed.
While the challenges are very real, there are significant benefits to embracing and incorporating digital technologies to drive greater efficiency, personalize customer experiences, and leverage the power of data to uncover fresh insights. Want to get our team’s take on your current tech stack? Request a free marketing assessment. We’d be happy to take a look.
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