Why digital transformation is the most important trend in business today
Over the last year, companies in all industries have experienced unprecedented change – and as we move towards the end of the pandemic, Business Leader has delved into the world of digital transformation (DT) and how it will influence the future of everyday working life.
It is no secret that innovation and its implementation into working environments, in all sectors, has happened at unprecedented levels in recent years – and with no sign of it stopping – CEOs and entrepreneurs need to understand the importance of introducing the correct digital strategies. So, why is getting the correct digital transformation for your business key to future growth?
What is ‘Digital Transformation’?
The coronavirus pandemic has accelerated many changes to working culture – and perhaps the leading example of this is digital transformation.
According to Statista, from 2020 to 2024, direct investments into digital transformation are projected to surpass $7.8tn for businesses around the world. Further research from the International Data Corporation stated that due to the pandemic, up to 65% of the world’s GDP is set to be digitalised by the end of 2022.
Dr Zeynep Hizir led the digital transformation at MetLife Investment Management, and is now the Head of Strategic Development at SS&C Technologies. She explains what DT means: “At its simplest, it is the replacement of non-digital or manual businesses processes with digital processes. DT is achieved by adopting specialist technologies that ‘digitalise’ operations, which in turn helps save money, improves efficiency and reduces risk; digital transformation also enables companies to work smarter, and means human staff can better focus on the more enjoyable, less mundane tasks.
“It is disrupting businesses in all sectors; from investment management and food production to insurance and aviation, technology is helping create many innovative new markets and processes.”
Hizir believes that the pandemic has accelerated the need for DT: “Whereas once it was perhaps seen as a luxury or a fad, the reality today is that those businesses that don’t digitally transform will be left behind. The pandemic has had a devastating impact on many sectors’ revenues, and as a result, many businesses have been forced to accelerate their DT process to help increase efficiencies and reduce costs. When we talk about DT, it is a continuous, ongoing, organic effort – it isn’t a destination to reach!”
Deb Hetherington, Head of Innovation for Bruntwood SciTech in Leeds comments: “Digital transformation has become a buzz term, with offerings and solutions springing up all over the market. So, it’s important to understand the true meaning of the term digital transformation and how it can positively benefit your business. For me, it is a holistic approach to the integration of technology into all areas of your business. Improving processes, procedures and systems to add value to your customers. It is also a cultural piece, in that people are probably the most important element of the transformation process. You can have the best technology on the market, but if your teams don’t know how best to utilise it to its potential, it’s wasted.”
Good examples of digital transformation
It is for this reason, that for DT to be successful, a blend of ongoing implementation involving employees at all levels is vital. However, introducing the correct technology is obviously just as key.
Paul Rhodes, Co-founder and Director of Perform Partners explains: “Transformation is really talking about making good change stick and enabling a company to benefit from the outcome. It doesn’t matter if you are changing technology, embedding, or iterating a process. Real transformation is effective, sustainable change that leaves things better than when you started and still provides the options to improve continuously in response to new information.”
The primary examples of DT are when a company moves away from its legacy systems to cloud-based technologies. However, there are many other examples.
Martin Taylor, Deputy CEO and Co-founder of Content Guru said: “Enforced lockdowns across the globe forced organisations, big and small, to accelerate their digitalisation strategies at pace. One place that has seen clear benefits in moving from outdated on-premise systems to cloud technology is the contact centre industry, which previously stood defiantly as one of the last mill-style working environments.
“As we entered the pandemic, research showed that only 27% of contact centres had systems in place to utilise home-based agents as part of their workforce mix. Now, whether out of choice or necessity, businesses and public sector organisations with contact centres are rolling out cloud technology at record pace.”
Suhas Sainath, Managing Director at J.P. Morgan Private Bank continues: “DT was the defining market trend of 2020. Businesses, consumers and families learned how to live in an online world. Yet we are at just the beginning of a long-term shift to digital. To understand why, consider the implications of the 5G infrastructure upgrade, just one of many transformations underway. In 2021, we expect the number of 5G smartphones purchased by consumers to double to 450 million. But, as significant as 5G is for the consumer market, the real opportunity could lie in enterprise applications. Manufacturing is expected to account for 19% of 5G-enabled revenue opportunity by 2030, the second-largest contributor behind healthcare.
“Imagine a 5G-enabled factory of the not-so-distant future. Products could be designed virtually, assembled by 5G-connected untethered and collaborative robots. Employees could use 5G-enabled augmented reality capabilities to quickly learn and execute assembly tasks. Production processes could be digitally supervised. Artificial intelligence might predict when a product needs maintenance.
“The factory’s output might be customized. Real-time customer order data could inform the manufacturing process. A consumer may be able to order the right colour or perfect size, and the producer might not have to charge a fee. The factory of the future could also be local. Technology could reduce the barriers imposed by labour force skill mismatches or costs.”
Dr Hizir concurs: “One example of a matured technology tool that sits within a DT strategy is the use of Robotic Process Automation (RPA). RPA essentially mimics humans in completing a process. RPA is not smart and is not itself considered an artificial intelligence, but recently it has been combined with AI to create intelligent automation (IA). Automation such as this streamlines processes and improves efficiency, enhancing both the employee and client experience, whilst also reducing risk.”
Due to the nature of DT and the wider tech sector, innovation is evolving at a rapid pace, and so many iconic businesses have had to adapt to the new world of working.
Dr Gordon Fletcher of the University of Salford Business School comments: “Many traditional brands are re-blossoming through digital transformation. LEGO is one of the world’s powerful brands because of its digital transformation. This transformation has been comprehensive and involved, detaching the company’s operations from the iconic physical brick to encompass games and films that still retain a DIY sentiment and a feeling of ‘blockiness’. The evolution of Disney from a production company to its own network to challenge Netflix, reflects how digital transformation can change the business model of a traditional company and at the same time enable consumers to engage directly with the company and, as a result, cutting out the channels and cinemas in the process.
“Newer and more innovative companies are pushing the possibilities for digital transformation. Most evocatively, Tesla’s ability to deliver a software update is the first time a car manufacturer has delivered a post-sales upgrade to all of its customers. This is a sign of a digital mature company that is able to maintain a relationship with its customers throughout the lifetime of the product.”
Implementing the right tech for your business
It is clear, that digital transformation is an unstoppable force that will change the business landscape, but it is vitally important to ensure the correct technology is introduced for your business to successfully scale.
According to a survey by Deloitte in April, digital transformation is crucial for organisations to ‘win’ in a post-pandemic world.
More than three-quarters of the leaders surveyed said their organisations’ digital capabilities significantly helped them cope with the challenges triggered by the pandemic, and nearly two-thirds of respondents believed that companies that don’t digitise in the next five years will be ‘doomed’.
Companies that have already embraced digital transformation performed better than lower-maturity companies during the past year, as they were about twice as likely to generate net profit margins and annual revenue growth significantly above their industry average.
Hetherington comments: “DT is not a switch you can flip overnight. It’s an intense and ongoing process which, if done right, can positively impact your entire business. Not only that, it will ensure that in this entrepreneurial world, where the next upstart is sat waiting to disrupt every sector out there with technology, you won’t get displaced. I would engage with a DT consultancy that you can trust, and work with them on a partnered basis. Set the goals and timelines early on and allow for a period of discovery. If you rush the process, or try and fit it into your normal procurement framework, the project is likely to fail. Ongoing communication, and ensuring your full team are on board and provide feedback is also key.”
Taylor continues: “My advice to any organisation looking to embrace digital transformation is to choose an agile cloud solution that can grow with your organisation at a pace that suits you. For SMEs, your provider should have a ‘light’ offering which is cost-effective and suitable for your size, but which will enable you to scale quickly as business expands. Selecting a solution with different ‘modules’ enables you to choose a tailored bundle, which can be augmented as and when you require. Scalability is an essential ingredient for delivering excellent customer service.”
DT is clearly important when growing a business, but it is always important to keep sight of what your customers will come to expect.
Fletcher comments: “Picking the right technology solutions is a continuous and perennial problem for all organisations, no matter how big or small. Perspective comes from being familiar with the technologies that are on the market, understanding what technologies are emerging on the horizon and talking to others who are further down the digital transformation road. It is also important to make sure that existing legacy systems and processes are still genuinely supporting the business’s needs and, if they are, that they are being maintained and in good shape. Using a metaphor for the challenge of generating digital transformation success. It is like refurbishing an old car without touching the engine. The car is not going to run any faster although it will look better. Choosing the right technology requires identifying the nature and scale of your existing gap. Define your current situation, and then agree with staff, customers, clients and other stakeholders what your future situation is planned to be. Then plug that gap.”
It is important for all businesses, regardless of the sector, to embrace DT and make sure it is a scalable solution that can satisfy customers and help employees perform better in their roles.
However, with the constant evolution of DT and how it impacts on the business, should a new permanent role be introduced for someone to look after the transformation? Or should a business look for a third party to help them adapt to the latest DT innovations?
Taylor comments: “For many businesses, it might make things easier to employ a stakeholder who is totally committed to digitally transforming your organisation. However, if you work with the right technology provider, this tricky hire is not an essential step to achieving success. Choose a cloud provider consistently at the forefront of innovation and suitably experienced, preferably in your sector. This way, you benefit from a trusted advisor, who keeps abreast of the latest cutting-edge developments, and who can tailor your digital transformation journey to your business goals.”
Tom Crump, Head of Sales at Sync concludes: “Working with an IT consultant or solutions provider can help to keep things on course. The initial excitement and enthusiasm can lead to leaders wanting to rip up the rule book, implement completely new ways of working, and replace legacy systems that have been there, embedded in the company for years. This expensive initial investment is too much of a sudden change and fails to consider the long-term nature of transformations. Further, this radical change is going to confuse and demotivate staff who were happy with the way things were. To avoid this companies must start small, involve staff, and provide a detailed, long-term roadmap that implements fundamental change gradually – this ensures everyone is on board and the ROI on new tech systems will be a positive one.”