Digital Transformation - Goals and Challenges
Digital Transformation is a process through which technological advancements are adopted for enhancing productivity, altering business performance and value creation (Vial, 2019). It is a necessary disruption that plays a decisive role in considering how an organisation should utilise technology, its people, and various processes to boost its performance level.
In the 21st Century, almost all firms pertaining to any industry have adopted new digital technologies to pave the way for digital transformation. This transformation comprises an alteration in major business operations, management concepts and organisational structures within a company or a firm (Ebert & Duarte, 2018).
An important aspect to bear in mind while opting for digital transformation is developing a digital transformation strategy. This transformation strategy is responsible for integrating prioritisation, coordination, and the implementation of digital transformation in an organisation (Matt, Hess, & Benlian, 2015).
For instance, let us take the example of a business firm named Fisher-Price, a top-notch toy company. They transformed their business model by adopting a digital transformation strategy. Their strategy was based on foreseeing an expected shift in consumer demand from concrete products to digital entertainment. As a result, Fisher-Price went through a successful digital transformation. Now, they have launched a catalogue of digital films, video games, and mobile apps to meet digitally-oriented consumers expectations. Hence, digital transformation led to a boost in productivity and profit.
This article will mainly focus on the recent and prevalent digital transformation trend, its main areas, its primary goals, and the challenges to a successful digital transformation.
Digital Transformation and Covid-19:
Separating the discussion of digital transformation in the most recent time and Covid-19 is absolutely impossible. The covid-19 situation has brought a massive amount of change in which almost every company or business operates. Most of the firms have successfully integrated the digitisation of internal operations and supply-chain interactions. Digital transformation has been playing a crucial role in staying competitive and economically strengthened at the time of crisis.
According to Global Mckinsey Survey, almost 72% of the companies have invested in digital technologies and have successfully navigated their companies during Covid-19 (LaBerge & Laura, 2020).
Main Areas of Digital Transformation:
While opting for a digital transformation, there are a few key areas that should be considered. These main areas are as follows:
- Establishment of Key Objectives: The most critical area to be focused on while initiating digital transformation is to define clear objectives aligning with the company’s primary goals and strategies. Transforming to digital sales production while sustaining a data-driven mindset is necessary. In this process, Key Performance Indicators can play a crucial role (Harris, 2020).
- Defining Digital Process: Another vital area of the digital transformation process is identifying and refining the digital revenue process. For this purpose, paying attention to customer reviews can help identify loopholes in the digital sales process within a company (Harris, 2020).
- People and Support Team: Digital transformation is primarily dependent on the people and the support team within an organisation or a firm. To establish a people-driven digital transformation, collaboration and alignment among multiple business units, departments, and sales organisations are necessary. Most importantly, communication is the key to mitigating the challenges of digital transformation (Harris, 2020).
- Effective Utilisation of Technology: The core of digital transformation is not limited to adopting the latest technology and creating automatic responses. However, technology would not be responsible for fixing processes on its own or mitigating the role of trained people within a firm. Hence, using technology effectively to enhance processes and people is the major area of digital transformation (Davenport & Redman, 2020).
Goals of Digital Transformation:
The goals and objectives of digital transformation are quite diverse. Some of the key goals or major impacts of going digital are as follows:
- Social Goals: Digital transformation can be a great source of establishing a collaborative and innovative environment within organisations and industries. Through digitalisation, digital communication can flourish, which can ensure the quality of services and digital accessibility. Most essentially, it paves a path for innovation in establishing business models (Ebert & Duarte, 2018).
- Economic Goals: Economic goals of digital transformation include enhancement in the economy, productivity, and generation of income. It also helps in improving technical standards and digital regulatory frameworks (Ebert & Duarte, 2018).
- Organisational Goals: Organisational goals of digital transformation are primarily based on operational performance and efficiency. Broadly, this comprises cost savings and better business processes. For example, if an organisation opt for cloud computing, it will get flexible resources that require no maintenance on the part of IT staff (Vial, 2019).
Barriers to Digital Transformation:
Although digital transformation is hugely beneficial when used appropriately by companies and organisations, digitalisation is also a barrier. Some of the everyday challenges and barriers are as follows:
- Lack of Digital Transformation Strategy: As the importance of making a digital transformation strategy is discussed in the intro, the lack of such a strategy can be a crucial barrier. Most of the times, the digitisation of a firm does not align with its business strategy. This leads to poor customer experience (Vial, 2019).
- Lack of Recognition and Labor: Many organisations and firms do not go for digitalisation since they are unaware of its benefit to their business. Companies also lack a skilled labour force, along with insufficient consumer protection and a shortage of funding that is required for digital transformation (Vial, 2019).
- Lack of leadership: A company or a business organisation cannot undergo a digital transformation successfully if it is not be supervised and supported by the key executives. The leader or key executive is responsible for implementing a digital transformation strategy and ensuring all departments’ collective effort. Mostly, executive leadership is missing, which creates a considerable barrier (Reche, 2020).
Conclusion:
Nowadays, digital transformation has become a megatrend almost among every firm in an industry. However, digital transformation is a challenging process as it requires versatile range of competences, including technology-based system along with effective processes and people’s support. If done efficiently, it can open new doors for businesses and technological innovations. But first, there is need to identify potential barriers on the way to digital transformation.
References
- Davenport, T. H., & Redman, T. C. (2020, May 21). Digital Transformation Comes Down to Talent in 4 Key Areas. Retrieved from Harvard Business Review: https://hbr.org/2020/05/digital-transformation-comes-down-to-talent-in-4-key-areas.
- Ebert, C., & Duarte, C. H. (2018). Digital Transformation. IEEE Software, 35(4), 16-24. Retrieved from https://www.chcduarte.com/dx2018.pdf
- Harris, T. (2020, January 16). The 5 Essential Components of Digital Transformation. Retrieved from DialSource: https://dialsource.com/blog/five-essential-components-of-digital-transformation
- LaBerge, & Laura. (2020, October 5). How COVID-19 has pushed companies over the technology tipping point—and transformed business forever. Retrieved from McKinsey: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever#
- Matt, C., Hess, T., & Benlian, A. (2015). Digital Transformation Strategies. Business & Information Systems Engineering, 57(5), 339-343. doi:10.1007/s12599-015-0401-5
- Reche, A. (2020, March 13). Main barriers to digital transformation. Retrieved from Retain Technologies: https://retaintechnologies.com/en/main-barriers-to-digital-transformation/
- Vial, G. (2019). Understanding digital transformation: A review and a research agenda. Journal of Strategic Information Systems, 28(2), 118-144. doi:10.1016/j.jsis.2019.01.003
