Entrepreneurship in Digital Era – Digital transformation and its impact on business strategy
Everybody seems to be talking about digital transformation these days. But what exactly is digital transformation and how does one go about implementing it? For this post, we have looked into the concept of digital transformation, its impact on businesses; the implications of ignoring its implementation; and the benefits of incorporating digital technologies into current business operations. Learn about the stages of digital maturity and draw inspiration from companies who have transformed into digitally competitive businesses.
What exactly is Digital Transformation?
Our reliance on digital technologies is only increasing each passing day. In order to ensure your business doesn’t lag behind, it is crucial that you understand what it means to be a digitally progressive company.
Digital transformation is a dynamic evolution of a business and its Organisational processes, strategies, product development, and models. This transformation allows a business to take full advantage of the many digital technologies that seek to improve current Organisation systems and prepare for future shifts, to reap long-term profitability.
Digital transformation is a strategic process where a company incorporates innovative digital technologies that take into account the current and future shifts in the market to redefine operational models for an improved outcome. Digital transformation is a part of digital entrepreneurship that seeks to embrace a transformative approach to redefine current business models using up-to-date digital technologies.
What is Digital Maturity?
Digital maturity defines how far you have come in terms of leveraging the power of technology to make your systems and product offering as optimized, automated and advanced as possible. Digital maturity gives you a substantial competitive edge over your competitors. Digital maturity can be defined in four stages: active, engaged, competitive, and mature.
Digitally active companies usually take advantage of transactional digital solutions like e-commerce. These companies heavily rely on web-based solutions to derive revenue and utilize beginner-level software practices to develop and track key performance indicators.
Digitally engaged companies implement digital solutions across all departments. As compared to digitally active Organisations, these companies use advanced analytics and automation systems to make strategic decisions. Many online retailers are digitally engaged and use technological advancements and the right opportunities to develop activities that help them become competitive in the market.
Digitally competitive companies are focused on using advanced digital solutions to not only generate more revenue but also predict the future shifts in the market. This generally involves creation and use of their own predictive models and big data analysis techniques. This enables them to identify gaps and create solutions for a quick and timely response.
Digitally mature Organisations are the most advanced business entities and usually incorporate AI and machine-learning based solutions in their businesses. They understand what it takes to drive revenue through AI embedded products and services and hence are the leaders in the market with revenue-driving products and services. Companies like Apple, Google, Amazon, Microsoft, and Facebook are some of the few digitally mature companies in the world.
Why digital transformation is essential for your business
Transformation is perpetual, regardless of your company’s size. In order to fulfil growing and changing customer requirements, you need to take into account the digitally transformative tools and processes that can bring about the necessary change for improved productivity, reduced resource expenditure, and competitive advantage. It doesn’t matter if you are a corporation or an enterprise; an online store or a brick and mortar warehouse, digital transformation applies to all kinds of businesses.
This transformation is an Organisation’s cultural change that requires consistent rethinking and exploring in all areas of the company to find unique ways of delivering value to the customers.
The benefits of digital transformation
- Improved operational efficiency
- Enhanced product quality
- Better team coordination
- Timely product delivery
- Increased customer retention
- New products and services
Companies who ignore digital transformation lack the improvements that can bring increased revenue and as a result lose customers, brand value, and the chance to innovate for improved products and services. The sooner you adapt to the digital change, the closer you can get to the success factors responsible for your company’s growth.
Understand the barriers to digital transformation
In business, no transition is simple. With digital transformation, there are a number of hurdles that keep business managers from fully embracing Organisational culture change. Here are some of the barriers you must overcome to successfully transition into a digitally active corporate entity.
- Lack of skills to handle or scope digital implementation
- Lack of experimentation to test new systems
- Lack of proper budget for new technologies
- Choosing cheap IT outsourcing companies that do not deliver user-friendly products and lack adherence to code quality standards
- Risk-averse company culture
- Inability to handle cybersecurity issues
How to create a digital strategy for your Organisation
Benjamin Franklin once said, “If you fail to plan, you plan to fail.” If you don’t plan your digital transformation, you are only setting yourself up for failure. There are numerous ways to transition into a digital-first firm. However, you need to choose tools and processes that will make sense for your specific business. Here are a couple of things you can introduce in your company’s culture to transform digitally:
- Start with company and competitor analysis to understand your position in the market and identify what changes are required in order to beat the competition. Outline your needs before introducing digital upgrades in the company’s overall system. Create a new strategy for the transformation and incorporate it into your company’s vision and mission statements. Company and competitor analysis will allow you to identify what areas in the Organisation could use new technologies for exponential growth.
- Identify digital tools required for your specific business operations. You need to understand what digital products and web, or mobile-based solutions are required for the transition. These may be available commercially off the shelf, however, some will require custom creation.
- Find external teams (through outsourcing) with technical expertise that can help you create the required customized digital tools. When starting the transformation, your internal teams may not have the expertise required to successfully implement the development of these solutions. External IT experts can bring both experience and skill set required to fulfill the demands of digital transformation.
A roadmap to growing your business with digital tools
Integrate e-commerce solutions to develop retail channels for increased sales
Choosing online transactional channels is a step towards increasing your reach and profitability, as you can offer your products and services to a wider audience. In addition to the amplified reach, e-commerce enables you to create channels for customer retention. You can build your company’s brand online, manage its reputation and measure performance through advanced analytics. Google Analytics, Adobe Analytics, are some of the most powerful analytics solutions for e-commerce businesses. These solutions empower you to track progress in terms of customer interest, engagement and buyer behaviour, which helps you understand the buying trends and innovate accordingly.
Utilize third-party solutions to reduce operational costs
Web-based applications play a key role in maintaining a cost-effective and time-efficient online business. For example, services like Stripe, Dwolla, PayPal, make excellent choices for third-party payment gateways. Similarly, apps like Trello, Inventory Planner, Slack, are monumental in helping you increase productivity. These apps supplement the overall efficiency and help you reduce costs and make more profit. These third-party apps have APIs that allow you to build on additional features for your company if necessary, to enhance these web-based products and services. This can minimize operational costs while empowering your company with solutions that are essential for delivering better value to customers.
Employ custom digital management tools
As your business grows, you will have more to deal with every day. Using customized daily management solutions can help you get your team on track and monitor progress on a regular basis. These management tools automate everyday tasks allowing employees to save time and focus on other important work requirements. IT experts can help you create customized management software to automate tasks and enhance the overall productivity.
AI and machine learning enabled applications are the future of business
Regardless of the type of company you run, you can use AI embedded solutions for the following:
- Data harvesting and processing
- Data analysis and trend prediction
- Pattern recognition
- Chatbots for customer support
- Personal assistants
- Everyday task automation
Blockchain-based Smart Contracts are going to become a business must-have
In order to fully transform your company digitally, you should be looking to build Smart Contracts to facilitate air-tight digitally enforced contracts between your business and contractors and business partners. Blockchain-validated Smart Contracts enable companies to create transparency in business communications and transactions that allow for a fraudulence-free business environment. This not only makes it easy to conduct business transactions but also upgrades your business’s security.
Offer products to customers to assist in their digital maturity
When you are fully transformed, you can readily offer digital maturity products and services to your customers. Digital transformation opens new opportunities that can help you grow and increase your profitability over time. For example, if you are a marketing firm specializing in advertising, you can invest in the development of social media marketing tools or keyword planning tools that you use internally, and then sell a commercial version of them as services to customers.
The implementation of the above-mentioned tools will readily upgrade your systems and enable you to create innovative solutions for your customers.
Tips for successful digital transformation
Digital transformation is an evolutionary process for a company’s culture. Follow these guidelines to avoid pitfalls during the transformation process:
- Find partners who can help you transition successfully into a digitally active firm. Find senior developers and IT experts who understand what it takes to digitally transform a company and have the skills and expertise to guide you. Discuss your company’s vision with regards to digital transformation and seek advice for a successful transformation.
- Get out of your comfort zone and partner with external IT experts who have substantial experience in digital competencies required for your transformation. Outsourcing IT services to the best software development companies around the world can prove beneficial in this regard. Check out our guide to choosing the best IT outsourcing offer and learn how to invest in quality software development services.
- Remember that the purpose of digital transformation is to find ways to optimize and automate internal systems, as well as leverage digital to improve products and services for your customers. So, keep your customers’ needs in mind while considering digital tools.
- DevOps is a powerful set of practices that integrate IT operations and software development to produce timesaving and cost-efficient solutions. For a successful digital transformation, optimized DevOps is essential. If your company does not have DevOps expertise then it is best to rely on outsourced teams to help implement and manage automated Continuous Integration/Continuous Deployment for software development, security audits, automated software revisions (for quick availability of new version in the market), infrastructure consistency and disaster recovery.
- Rely on Agile development for increased control over project, resulting in better product quality and reduced risks.
- As you work with external IT experts, focus on developing user-friendly and flexible web and mobile solutions that can be easily modified when the need arises.
Real-life examples of the result of Digital Transformations
Transforming your culture digitally is a challenging task. However, many companies have successfully done it and there’s no reason why you can’t. Here are examples of some renowned companies who have undergone digital transformation and reaped enhanced profitability as a result.