Digital transformation may have been happening for decades – organizations first transitioned from analog to digital processes over three decades ago, and have gradually scaled up digital operations and strategies ever since – but it looks like digital transformation is just as important now, if not more than ever.

Industries and organizations lacking the foresight to digitally transform, may find themselves left behind in the wake of a pandemic that left so many grappling with digital transformation just to survive. Is this the new digital age? 

Let’s take a look at digital transformation, the benefits and challenges for organizations, and the digital trends shaping 2021.  

Table of contents

Defining digital transformation

Digital transformation copy

Digital transformation (sometimes abbreviated to DX) seems straightforward enough on the surface, surely it’s just the transformation of any action or process from a non-digital method to a digital or computerized one? Well it can be, but digital transformation as a term encapsulates a lot more than this. So, what is digital transformation?

The adoption of digital technology by a company to improve business processes, value for customers and innovation. 

This digital transformation definition includes the adoption of digital technology, but also the strategy that drives that adoption as what makes up digital transformation. And in the digital world that we live in where every organization already operates with digital technology, the transformation instead is in the innovation and development of that technology and its value. 

The path to digital transformation is also often referenced in relation to two other processes: digitization and digitalization. 

Digitization

Digitization refers to the technological conversion that happens when a process is converted from analog to digital, for example scanning a physical photograph into a digital copy. 

Digitalization

Digitalization is the process of using digitization to change a business strategy or process in order to find added value and pursue business goals.

Digital transformation

Digital transformation is the effect of the digitalization process, encompassing the technological changes themselves as well as the business process that results in the overall transformation. 

Digital transformation examples

  • Marketing: print advertising to email and social media campaigns are cheaper, more targeted, and trackable.
  • Customer service: phone helpdesks to AI chatbots and social media messaging helps customers find the information they need and get a quicker response to their query. 
  • Collaboration and productivity: manual project management to digital collaboration tools enable colleagues to share project information and updates, and collaborate on documents seamlessly.

Digital transformation: benefits vs. challenges

Pros and cons of digital transformation

Digital transformation is a given for most businesses and will be built into their overarching strategy given the benefits to business operations, value and profitability. However with great power comes great responsibility, and with all the good that comes with DX there are some challenges that businesses also need to mitigate in order to achieve success. 

Let’s break down some of the benefits and challenges of digital transformation.

Benefits of digital transformation

Growth

With consumers engaging with new digital processes more and more, the businesses that look to scale up their digital transformation and add value for their customers will 

see increased profitability, a better ROI and more opportunities for growth. 

The power of data

Digital data provides valuable insight into all areas of a business (marketing, productivity, transactions, customer service) to enable companies to make more informed business decisions.

Flexibility

Adoption of SaaS (Software as a Service) enables businesses to operate much more flexibly with digital, cloud-based tools and applications that can be accessed from anywhere. This reduces the limitations on their workforce and opens up the ability to source a diverse range of skill sets from all over the world. 

Productivity

Similarly, collaborative SaaS business tools make project management and team collaboration much more seamless and accessible, helping to improve workflow and increase productivity.

Read more about SaaS applications in our blog post here. 

Challenges of digital transformation

External pressures

In the digital age we live in, technological development and processes move at a fast pace that can be difficult to keep up with. In order to stay relevant and ahead of competitors, businesses need to be ready to scale up and adapt. 

Consumer behavior

Similarly to changes in technological processes, consumer behavior is constantly changing based on trends, needs, and societal shifts (for example Covid-19). As all organizations are seeking to provide value for their consumers through their products and services, this is a big challenge that has to be tackled in order to succeed.

Security

With digital transformation implementing many cloud-based processes and tools, the security of a company’s data may not be 100% under their control. Businesses will have to ensure that they are operating in line with data protection standards at each stage of the digital transformation process. 

Digital skills

It goes without saying that successful digital transformation requires a specialized skill set. Businesses that don’t invest in the right people to develop, deliver, and drive their digital transformation strategy will struggle to keep up. 

What drives digital transformation?

Digital transformation drivers

In a competitive world where businesses need to be providing the latest in customer service, product updates, experience, and technology just to stay in the game – digital transformation can often be seen as a need, not a want for a lot of organizations. 

So what is it that drives this need for digital transformation?

Growth and longevity

In order to grow a business in the 21st century, the need for a digital transformation roadmap is essential. Businesses are looking to digital transformation to drive their growth and become market leaders, and innovation in digital is the way forward for diversifying processes and adding value to the customer. 

A focus on digital innovation and an openness to adapt will benefit a business long-term and give them an opportunity to drive revenue as they meet the digital demands of their customers. 

Survival and Covid-19

“Digital transformation is more important than ever.”

As a result of the dramatic shift to a reliance on technology and digital tools during the Covid-19 pandemic, if digital transformation wasn’t the top priority for a business before then it certainly is now. Results from a Harvard Business Review Analytic Services survey shows that for 95% of global leaders, digital transformation has become more important in the last year. 

This unprecedented and instantaneous change to global societies and economies is the perfect example of why businesses have to be adaptable today – it’s a matter of survival. It’s the businesses that were able to integrate digital solutions that adapted and continued to grow in a world reliant on digital. 

As digital transformation is defined as the adoption of technology to improve value for customers, it follows that consumer habits and trends will be a big factor in influencing digital transformation. 

Businesses are investing more and more in omnichannel experiences in order to increase their engagement with customers. Social media has become a go-to for customer service, while online shopping has been accelerated even more by the pandemic. 

A 2021 report by Shopify demonstrates just how much consumer habits can change. Before the pandemic only 12% of consumers shopped mostly online for non-grocery items, however the changing habits over the past year and a half have caused this figure to more than double, with 25% of consumers saying they will mostly shop online after the pandemic. This figure also peaked at a whopping 61% during lockdown. These kinds of statistics are clear evidence of why habits are driving digital transformation – businesses need to go where their customers are.

Technological developments 

Technological development is another factor that pushes digital transformation as a means for survival, growth, and longevity. Such rapid developments in new technology force businesses to create an innovative and adaptive digital transformation strategy that keeps them relevant in the digital age. 

Of course early digital transformation will have seen organizations integrating email and other purely computerized processes, while now they look more to innovation and developing technologies they already have. Think how email customer support has been superseded by social media and AI, while consultations and tours can now be delivered virtually.  

Digital transformation success stories

So what does a successful digital business transformation look like? Let’s review three businesses that developed their digital transformation strategy at the right time, with some really innovative solutions that are producing great results for themselves and their customers. 

SpaceNK

Space NK digital transformation

As an established retail brand, SpaceNK has a successful bricks and mortar presence and global online reach, creating an omnichannel experience that streamlines their customer journey. Adapting early to virtual retail and providing alternative services during Covid-19 has resulted in SpaceNK seeing a 360% increase in makeup related enquiries. Embracing digital and adapting when they needed to has given the business more flexibility and allowed them to maintain meaningful engagement with their customers. How did they do it?

  • Online consultations
  • Online events 
  • Virtual masterclasses 
  • Appointment scheduling for safe in-store services

Mamas & Papas

Similarly to SpaceNK, creating an omnichannel experience for their customers is at the heart of Mamas & Papas’ digital transformation. Focusing on the customer journey and experience, Mamas & Papas created an online booking service for their in-store personal shopping appointments that bridged the gap between online and offline service. This helped to streamline the whole customer journey and maximize conversions with a 43% increase in online bookings. Here’s what they did:

  • Online booking for personal shopping appointments
  • Evergreen tech infrastructure
  • Digital training for the Mamas & Papas team
  • Data analysis 

V.Ships

As a global recruitment team, efficiency is key for V.Ships and a priority in their digital transformation framework. By adopting new digital processes V.Ships were able to improve business operations and processes, streamlining recruitment for their team and candidates. Not only have they increased bookings by 46% but have also saved 143 days of work on manual scheduling in just three months, as a direct result of implementing a digital recruitment process. What did they do?

  • Quicker candidate scheduling process
  • Automated communication touchpoints
  • Self-scheduling options online 
  • Mutli-timezone appointments
Digital transformation trends

Looking to the future, how can organizations stay ahead of the digital game? A recent report from MuleSoft outlines the trends shaping digital transformation in 2021. Here are eight trends to drive your digital transformation forward:

1. A drive to meet digital demands

Businesses will be under pressure to digitize services to meet increasing consumer demands, most likely in light of changing habits as a result of Covid-19. 

2. Democratization of innovation

As businesses look to develop digital customer experiences as efficiently as possible, IT needs to empower businesses to self-serve in order to deliver solutions quicker.

3. Composable enterprise

A shift to composing digital capabilities from existing applications using APIs as a more agile solution to building from scratch every time.

4. Automation

Automation will be utilized by organizations to drive operational efficiency and improve business processes. 

5. API security

Robust API security will be essential as enterprise applications increase in popularity – on average an enterprise has 900 applications! 

6. Microservices

Microservices (a single application composed of many loosely coupled and independently deployable smaller components, or services) will help organizations to rapidly build new customer experiences. 

7. The data divide

Opportunities for growth can be found in data. The organizations that harness the power of their data will separate themselves from their competitors. 

8. Data analytics

Investing in data analytics will enable organizations to transform customer experiences. 

In a fast-paced, ever-evolving digital world, what’s trending now might not be trending for long. But it is vital to recognize that each new digital trend offers a solution for businesses to create added value for their customers and seize new opportunities for growth. 

Trends may come and go, but digital transformation is here to stay – and what’s more, it is essential if you want to ensure your business is future-proofed for the long-term.

 

 

Amie McKenzie

Amie is a freelance copywriter with experience creating a variety of content across multiple channels.

Published on 23 July 2021