Insights
What is Digital Transformation?
Estimated reading time: 6 minutes.
Digital transformation has become almost a cliche, but what does it actually mean?
Digital transformation is the process of integrating technology into all areas of your business. It’s about creating new – or modifying existing – processes and customer experiences to fundamentally change how you operate, engage and deliver value to customers.
In short, digital transformation is about business transformation. It’s not about creating new IT systems or simply choosing some apps. It’s a complete reimagining of how you do business. It’s important to keep this in mind when you embark on your transformation journey.
For businesses just starting out, it’s possible to future-proof your organisation from the outset. Adopting cloud-based systems from the very beginning sets you up to be flexible and positioned for growth. The cloud enables you to avoid the need to invest in expensive on-premise servers and software. Your team can also work remotely, which has been particularly important during the COVID-19 pandemic.
Digitalisation versus Digital Transformation
Digitalisation
Until late last century, businesses kept most records in paper form. Once computers became common workplace tools, organisations started ‘digitising’ their records (i.e. moving from paper to digital files), which led to improvements in productivity and operational efficiency.
It’s important to note though that the ‘digitalisation’ revolution didn’t fundamentally change the way services were delivered (i.e. processes didn’t change significantly). Instead it made service delivery faster and more efficient. For example, call centre operators could immediately see a ‘customer history’ when a call was received – rather than having to browse paper files.
This is certainly a significant benefit, but well short of the potential of ‘digital transformation’.
Digital Transformation
Improvements in technology, driven in large part by Moore’s Law 1 and a faster internet, have enabled businesses to step back and reevaluate how they do business i.e. how they operate and serve their customers. They can now ask questions such as ‘Can we adopt technologies to drive operational efficiencies, significantly improve the customer experience or even create a new business model?’.
1 Moore’s perception that the number of transistors on a microchip doubles every two years, though the cost of computers is halved.
Examples of Digital Transformation
Let’s take a look at some practical examples of digital transformation.
Digital transformation in marketing
The last decade has seen a major shift in the allocation of marketing budgets from offline media to digital. The reason for this shift is that digital marketing technology has driven down the cost of customer acquisition.
For example, emails are significantly cheaper to distribute than direct mail campaigns. Combine email with ‘personalised’ marketing automation and analytics and you have a powerful system to engage with prospects and customers.
Marketing automation allows marketers to send automated messages across email, web, social, and text. Data-driven insights (e.g. was the message opened or the ebook downloaded?) enable marketers to tailor and target ads with greater precision, personalisation and effectiveness.
Digital transformation in sales
Traditional sales activities are being transformed by feature-rich CRM (Customer Relationship Management) applications. A CRM can capture all correspondence with a prospect or customer and track sales opportunities.
With all data accessible across the organisation, magic can start to happen. Marketing, sales and support teams can collaborate more effectively – leading to improvements in customer service and more sales.
Cutting-edge technologies such as AI (artificial intelligence) can also be leveraged to give your sales team a competitive edge. For example, AI can be used to analyse all customer activity looking for useful insights such as which demographics are more likely to buy at certain times of the year or which sales strategies have proven most effective.
Digital transformation in retail
Digital technology has impacted retail at the in-store level and also given rise to eCommerce.
Changes such as digital coupon systems (e.g. FlyBuys), automated inventory management and analytics have transformed retail for both consumers and business owners.
Rather than cutting coupons from the newspaper or brochures, customers can scan an app at check-out to receive the offers. When this happens, the customer’s data and buying preferences are integrated with inventory and purchasing systems, triggering personalised customer journey events like email and SMS messaging (think personalised book recommendations from Amazon or the latest Flybuys deals on products you regularly purchase).
- Alternative payment options such as ApplePay and AfterPay
- In-store connected IoT devices (such as beacons) to help in-store navigation or to present personalised promotions and displays
- Integrated cloud ERP systems that capture and process omni-channel orders (e.g. in-store, website and social)
- Digital technology is also enabling mass customisation across many industries. Examples includes individually designed Nike runners, customised lighting and furniture for homes and customised fertilisers to suit the soil of individual farms.
- Augmented Reality (AR) is being used by IKEA to allow customers to see how products look in their own home.
- Perhaps the ultimate example is Amazon Go with their ‘Just Walk Out’ shopping experience. No check-out! Digital vision and sensors – combined with deep learning – automatically detect when products are taken from or returned to the shelves and keep track of them in a virtual cart.
How does a business begin its transformation journey?
Before planning a roadmap for change, it’s crucial to conduct an audit of the current state of your organisation – your processes, pain points and identifying opportunities for improvement. Afterall, what good is a map if you don’t know where you are?!
Our experienced cloud consultants can help scope, plan, implement and ultimately support the digital transformation of your organisation.
Call us today on 03 9467 3599 to arrange a no-obligation consultation.
