by Don Frame

Digital transformation: what it is and how to pull it off

Sep 07, 2017
CIODigital TransformationIT Leadership

Every business now knows that digital transformation is urgent. Unfortunately, most are having a hard time pulling it off.

digital transformation
Credit: Thinkstock

We IT professionals are often too close to it to see it, but if you take a step back you might notice that tech is everywhere now.

In 2017, many of us spend our days staring at one screen or another. We’re getting used to talking to smart devices in our homes and expecting them to understand what we say. We use machines to navigate tasks like food shopping or hailing a ride that didn’t used to require a layer of technology.

This pervasive spread of technology isn’t confined to the consumer space. Nearly every layer of business has a tech interface that could make operations more streamlined and efficient.

But digital transformation isn’t easy. A recent survey, for instance found that nine out of 10 digital transformation projects fail. A survey last year put the figure at 84 percent. Even so, companies need to pull off digital transformations to survive. In 1958, the average age of an S&P company was 61 years. Now it’s 17, but the figure will fall to 12 by 2025. Here’s what digital transformation is and how companies can effect it to stay ahead of this trend.

Digital transformation is all-encompassing

There was a time when the IT department was cloistered away from the rest of the operations. No more. Just as technology has penetrated consumers’ lives it has permeated every level of business.

For instance, digital transformation in sales can help find new routes to market, service existing customers faster, identify and uncover opportunities. In marketing, digital transformation ensures that businesses are capturing every source of data and finding previously unforeseen opportunities within the data.

Even small companies have a huge amount of data because of how they transact their businesses now. Whether it’s online or in-store, pretty much every transaction is a digital transaction because so few customers – just 24 percent according to a recent Gallup survey — use cash. Data from those transactions spills into customer service, which in turn has new accountability because data from customer transactions can be analyzed and improved. The data might show, for example, that customers are repeatedly asking for a product or service. Voila! A new business opportunity.

If companies aren’t analyzing data for sales, marketing and customer service, then it’s a good bet that new competitors are. New disruptive entrants don’t form relationships with customers that are merely transactional, but are creating relationships that expand communication to pre- and post-sales and create an emotional attachment.

The elements of transformation 

Businesses that started in the last couple of years have an advantage over incumbents because they come in with a clean slate. They can make full use of new technologies without worrying about legacy systems.

New companies are likely to be completely cloud-based, for instance. That allows for an elastic infrastructure that lets them expand and contract as needed to use their resources as efficiently as possible. Those challengers are also more apt to integrate IoT — devices and sensors — into their operations.

For such new companies, IT is part of the fabric of their operations. IT used to require endless log-ons, passwords, VPNs and various other hurdles to access the environment. But cloud allows everyone at the company to access the technology in a more seamless way. While there are security risks to offering cloud-based access, there are also benefits to allowing multiple devices to access the environment. A company that can enable such access for global employees has a big advantage over one that’s still providing IT access in the old, archaic fashion.

Such companies can also integrate outside data with their own to transform their businesses. A retailer might use weather data, for example, to figure out what kind of inventory to stock and which to highlight in store. The rewards then for digital transformation are great. Unfortunately, as surveys show, it’s not so easy to pull off. The comprehensive nature of digital transformation is usually what trips up incumbent companies.

So what’s the answer? While some companies might be able to pull off digital transformation on their own, most need an outside consultant to come in and tell them what to do. Such solutions are constantly improving too. While they may not be off-the-shelf type solutions yet, that’s where the market is headed.

The market, in other words, will find a solution to meet the demand for digital transformation. For some companies, the solution is coming not a moment too soon because they can’t put off digital transformation any longer.