Digital Transformation: The Ultimate Guide

What is Digital Transformation?

Digital Transformation is a strategic, data-driven initiative that reimagines how an organization uses technology, people, and processes to deliver value to its customers. But it isn’t as simple as digitizing your existing processes with a new technology.

Digital Transformation is a long-term commitment to:

• Streamline your processes
• Eliminate manual work
• Create a better customer and employee experience

What is Digital Transformation - Explained in 60 Sec

But a successful digital transformation cannot occur without effective change management. All parties must be able and willing to adapt rapidly and communicate freely. As a result, organizations must create and nurture an innovative digital culture that isn’t afraid of change or failure. With everybody on board, your digital transformation will empower your employees to work in new, better ways. It will also radically improve overall enterprise performance.

What’s the Purpose of Digital Transformation?

• Operate with exceptional speed, efficiency, accuracy, and even save you money
• Improve your customer experience
• Make your organization future-proof
• Support digital revenue streams or tap into new ones

Change is inevitable in business operations, from customer expectations and market trends to technological innovations. As a result, businesses across industries must have the resources and an agile mindset to scale and adapt as needed. This reality became undeniable as COVID-19 has created substantial, unavoidable challenges for businesses across industries. Some organizations were able to maintain business as usual in the face of this challenge, and others who were less technologically prepared had to scramble to catch up.

In this ever-evolving digital age, it’s a matter of survival. Organizations that pivot and embrace change in this digital economy see success. Companies that resist may find themselves falling behind. But while new technology may threaten old business practices, it can also create unprecedented growth and innovation opportunities. There’s no better time to set off on your digital transformation journey than now, and we’re here to help.

How to Make Your Digital Transformation Journey Successful

What are the Key Components of Digital Transformation?

Digital Transformation is a broad term that encapsulates so much it can feel overwhelming. Let’s start with the digital transformation key components. Although their implementation will look different between organizations, there are the four key elements that every successful digital transformation needs to consider and prioritize.

The 4 Digital Transformation Key Components:

1. Transform Your Customer Experience
2. Change Management: Culture in the Digital Age
3. Transform Your Operational Processes
4. Transforming Business Models

1. Transform Your Customer Experience

Customer Experience Evolution - How Technology Drives Customer Service

Although digital transformation can potentially impact every aspect of organizations, it often makes its most significant mark on the customer experience. A Harvard Business Report survey found that 40% of respondents named customer experience their top priority for their digital transformations. Many of the hottest recent digital transformation innovations reflect this priority. In recent years, we’ve seen an increase in new communication channels, self-service portals, e-commerce shopping, and personalization across industries. Each of these advancements aims to create unique, better digital customer experiences.

But don’t start your digital transformation journey with your heart set on a specific feature or system. A common mistake is placing too much energy on the technology itself and making it the primary focus. Having the smartest, cutting-edge technology is fantastic. But nobody wins if you lose your customer’s favor in the process. As a result, you must understand your customer before anything else.

Understanding Today’s Customer

Technology is continually evolving, and so are your customers’ expectations. Specifically, a key focus of any digital transformation initiative is on serving your digitally savvy customers. The modern customer has become accustomed to experiencing fast-paced, personalized service in virtually everything they do. Studies have found that 81% of consumers prefer doing their research online before contacting a company or finalizing a purchase. This increases the urgency of expanding self-service options. And customers want all of this to be delivered seamlessly on their chosen device.

What Makes Your Customer Unique?

Besides considering the modern consumer’s demands, investigate what else your customers desire and expect. Many organizations explore this question by building analytics capabilities to get to know their customers. Another common initiative is driving customer behavior by organizing analytics-driven experiments. Creating customer personas or talking to your customers to hear more about their experiences, likes, and dislikes are also great strategies.

Keeping in the future-focused digital transformation mindset, recognizing what your customer’s current expectations are is critical. Whatever tactics you used to initially secure them as customers may not be enough to keep them around in the future. But if you grow and evolve along with your customers, those relationships are likely to flourish.

2. Change Management: Culture in the Digital Age

Address the Elephant in the Room

Your talented employees are full of potential. But they must understand that digital transformation isn’t just another IT project that won’t affect them. It’s going to radically change how they do their daily jobs for the better.

You’ve likely heard the age-old concern, “Robots are going to steal all our jobs.” The fear of being replaced is real and can lead to resistance. Don’t be afraid to address it head-on. Make your digital transformation effort an open conversation. Clearly communicate to your employees why you’re pursuing digital transformation in the first place- understanding the why behind the change can help employees feel invested in your digital transformation, lowering resistance.

Let Employees Know How the Transformation Will Directly Benefit Them

Above all, help your employees to understand how digital transformation will directly benefit them. Emphasize that with digital transformation, technology doesn’t make them obsolete. It’s an opportunity for them to upgrade and develop their expertise to become even better at their jobs and thrive in the long run. It shifts their role to be responsible for higher-value tasks. They can say goodbye to the dreaded tedious, manual tasks that used to slow them down. Everybody wins. But the win is only as big as cooperation is widespread.

However, this communication must go both ways. Listen to your employees’ concerns and feedback. Ensure that they feel heard, as this will help to build critical employer-employee trust. Ultimately, this bond can positively impact employee engagement and loyalty, as well.

Emphasizing the positive changes from digital transformation is also a pivotal step to fostering a change-positive culture. For more on change management and how to promote a healthy organizational culture, go to our “Be an Agent of Change” section below.

3. Transform Your Operational Processes

You can’t have a digital transformation without transforming your operational processes. From reimagining a business process to enabling collaboration between employees using technology, your process transformation can have a significant impact.

Process-First

At the core of any transformation initiative, your organization’s unique requirements and processes should be the driving force. Whether your goal is to go paperless or boost specific digital process’ efficiency, closely investigating your processes will produce a better outcome in your digital transformation.

Assess your processes as they currently function step-by-step in detail. How do your employees engage with them? You can then focus on bringing the right technology to enable your team to be more efficient and do more with less. Examining your processes is a detailed process. You cannot effectively automate or optimize your processes without understanding how they’re truly working. This will help you determine what modifications and redesign you will need to address. With greater transparency into your operations, you’ll be better prepared to make the right choices when it comes to choosing technology down the road.

Change Management - Why It's Critical to Focus on the People Side of Business to be Successful

Worker Enablement

A sustainable digital transformation relies on happy, engaged workers. Specifically, every percentage increase in employee satisfaction increases a company’s market value by nearly 5%, according to Harvard Business Review. As we’ve discussed, healthy company culture and effective communications with employees can help employee morale. But building a digital work environment that empowers your employees to feel and perform their best is also critical. This concept, known as worker enablement, is vital to keep in mind as you formulate and implement your strategy.

With remote workers on the rise, there’s no better time to invest in technology that empowers this workforce. While remote workers enjoy benefits like time flexibility and no morning commute, they also face setbacks. They may have difficulty finding the information they need to do their jobs without the proper infrastructure. Additionally, they may lack the appropriate technology to keep them connected with their peers. This may not only inhibit collaboration, but it can leave employees without a sense of connection, which can also affect focus and productivity. Addressing these problems is to your advantage as well as your remote and in-office employees.

Other examples of employee enabling technologies can include:

• Automated notifications that alert workers that it’s time to perform an action
• Single-click actions to accelerate processes for greater employee productivity
• Empowering workers with data-driven performance insights

Whether you’re assessing your digital transformation strategy or considering technology investments, worker enablement is a valuable element to keep in mind.

For example, ask questions like:

• How can I make my in-office and my remote employees’ jobs more enjoyable and efficient?
• What’s the best way to communicate with my in-office and my remote employees?
• How can I strengthen in-office and remote employees’ connection with each other?

4. Transforming Business Models

As we discussed before, digital transformation isn’t just about technology. A core component is rethinking and reshaping business models. If your business model is outdated, it doesn’t matter if you have all the hottest new technologies at your fingertips. Problems will arise.

Here are three of the ways businesses encountering a need for a business model refresher have responded:

• Using Digital to Extend Business: For example, traditional retailers like Target and even grocery stores still operate under their standard business model. However, they’ve also used digital to offer online shopping experiences as a convenient option for customers.
• Going Global: Other organizations are beginning to leverage . Digital globalization is the latest phase of globalization driven largely by flows of data and information. Many have successfully transitioned from multinational to global operations using technology and integrated information.
• New Digital Product Opportunities: Companies that have traditionally offered low-tech products have found success in introducing additional digital products. Others have caught the time and attention of their customers by providing end-to-end digital experiences. For example, an airport authority has introduced an integrated multichannel experience. It gives customers a one-stop-shop for all things air travel, from airplane traffic updates to reservations and shopping coupons.

5 Steps to Start Your Journey:

Now that we’ve covered the reasons businesses are prioritizing digital transformation, you might be wondering, Where do I start? How do I start? Let’s get into it.

1. Find Your Starting Point

No two digital transformations will look alike. They are unique to the needs of each business and its customers. When it comes to the technology that makes up a business’ digital transformation, the possibilities are virtually endless. New advancements and updates are continually appearing. But it’s not time to choose your tech yet. The critical first step of your digital transformation journey is determining what it will mean for your organization.

Assess your business’ current maturity, industry trends, competition, customers, and challenges.

It’s time to answer the big picture questions, including:

• Why does your organization need digital transformation?
• What overarching goals are you trying to achieve?
• Are there any apparent inefficiencies that you want to address?
• Where are we losing out to competition?

Use the responses to these questions to help you to figure out what digital transformation means for your business.

Additionally, you must assess the capabilities you already have. Consider how your organization is operating already. Don’t leave a single stone unturned. Examine every available resource that drives your organization. These capabilities can include anything from technology investments to your most valuable assets, your employees.

Digital transformation is more than finding a catchall tech solution and calling it a day. While implementing new solutions will likely come into play, digital transformation often means finding new innovative ways to use your current technology investments. Having a clear picture of where you’re at now and defining your expectations will set you off on the right foot in your journey.

2. Build the Business Case

Turning your digital transformation strategy into a reality requires a rock-solid business case. In this stage, you will start to establish firm objectives and collect essential data. The information that you include will be used as selling points when you seek executive buy-in later.

For starters, here are a few key markers you’ll need to explore:

Metrics

First, determine the value metrics. These numbers will help to demonstrate the value your digital transformation will bring to your organization. Identifying this information is not only helpful in a business case, but it’s a key dataset you’ll need as you implement your strategy and begin to measure results. Factors to cover may include:

• Staff Retention
• Productivity
• Branding
• Customer Experience & Satisfaction Impact
• Conversion
• Revenue

Digital Roadmap

Now it’s time to create a plan of action. Some actions on your digital transformation roadmap will be short-term, and some will be long-term. The short-term plan will be highly detailed, as it will outline the first steps occurring in the project’s first month. The long-term plan can be broader, but it should schedule checkpoints where you will refer to your set metrics to ensure you’re on track. Additionally, be sure to highlight key milestones along the way to keep a visual focus on the bigger picture goals of your project.

Provide Proof of ROI

Organizations rely on ROI to identify the best way to use a financial resource. However, calculating ROI is no easy task, especially in today’s fast-paced digital world. There are many ways to calculate ROI that depends on your specific goals. Complex as the process may be, ROI is undoubtedly a key confidence-booster for every party involved in the transformation journey.

Another method for measuring your progress is the return on time invested (ROTI). Specifically, ROTI operates under the idea that successful technology investments should help you accomplish more with fewer staff members involved. To find your ROTI, divide your total revenue by the number of employees in your organization.

Identify an Executive Sponsor

When delivering your business case to executives, it can be helpful to have a senior team member on your side who can advocate for you. This individual should be well acquainted and involved with your initiative.

Finally, don’t forget to communicate effectively and thoroughly at each stage of your journey. And, we mean everyone, all staff, not just the digital leaders in your organization. Everybody must remain on the same page throughout the process. Regular communication will also build momentum that will further amplify the excitement when you hit project milestones.

3. Get Buy-In from Executives

A crucial step after you have a solid strategy and business case is getting your top-level executives on board. To guide your executives in the right direction, focus on the bigger-picture plan, and your “Why.”

This is where your business case will come in handy. Help your executives understand the immense value that digital transformation can offer your organization.

• Explain your strategy plan and any data backing your decisions.
• Emphasize what specific problems your strategy is designed to solve and what your long-term project entails.
• Share your future vision for your company’s digital transformation.
• Specify how committing to digital transformation and an agile mindset will serve the company now and for years to come.

Having executives on your side is not only necessary to get your project off the ground running, but it can be helpful during implementation stages, too. When you inevitably hit bumps in the road on your journey, you’ll have an upper-level executive at the ready with the authority to sign off on necessary changes. Additionally, getting buy-in and building enthusiasm from company leaders is a great way to begin building a change-positive company culture that embraces technology.

4. Select the Right Tools

You’ve assessed your processes. You’ve built a solid strategy and a strong team. Now, it’s tech time. But with the sheer volume of technology vendors, solutions, and tools to choose from, this step can be daunting. How do you find the right tools for your organization?

While there is no “one size fits all” solution for every organization, here are some common technologies that organizations use as a part of digital transformation:

• Content Management
• Business Process Management (BPM)
• Process Mining
• Cloud
• Predictive Analytics
• Workflow and Case Management
• Customer Communication Management
• Robotic Process Automation (RPA)
• Optical Character Recognition (OCR)
• Artificial Intelligence (AI)
• Reporting Dashboards

All these tools work together to provide robust business solutions. To learn more about how these tools function individually and together, check out our webinar “Solutions to Enable Digital Transformation.”

5. Be an Agent of Change

Change is difficult. Whether consciously or unconsciously, people are resistant to change. But fostering a healthy, change-positive culture can help.

Building and maintaining this culture isn’t something you can coast through. According to research from McKinsey Digital, culture is the most significant self-reported barrier to digital effectiveness. Based on their experience with organizational culture, McKinsey Digital warns that executives who allow cultures to change organically will experience this change at too slow of a pace. Instead, they assert that it’s all about deliberate action. For example, companies BBVA, General Electric, and Nordstrom have found success in supporting their digital initiatives with efforts to make their cultures “more responsive to customers, more willing to take risks, and better connected across functions.”

Maintain Perspective

It’s easy to get caught up in the details, which can be exhausting. And while details are imperative, don’t lose sight of the bigger picture. Keep your end vision top of mind and work towards setting your business up for success and growth now and in the future. It’s essential to note that the most successful digital transformations aren’t just reactive, quick fixes. They’re preemptive investments. This is where the competitive advantage truly lies in the long run.

Start Your Digital Transformation Journey Now

Don’t let “digital transformation” intimidate you. See it as the opportunity that it is rather than a threat. Digital transformation offers many valuable benefits to your organization and your customers now and into the uncertain future.

If you still feel unsure of where to start or have more questions about digital transformation, know that we will be there as your consultant to guide you towards your goals. Contact your Naviant account manager to learn more and get started on your journey.

And don’t forget to subscribe to the Naviant YouTube channel to catch regular Digital Transformation Talks with Industry Experts and other informational videos.