Digital Transformation Strategy
5-Step Plan for Business
Digital transformation is everywhere. Every single business and organization in every industry is shifting towards technologies in some way.
Retail brands replace storefronts with online shops, consumer services amplify their reach via web, mobile, even in virtual assistants, manufacturing goes high-tech to improve efficiency and reduce cost, some companies reinvent their business and launch digitally native products, like Amazon’s Alexa or Kindle.
Each company has its own way to embrace innovation. However, they all share a common challenge - digital transformation journey is complex, and it comes with serious investment and possible risks.
Therefore, every business should have a sound strategy before starting any new digital project or enhancement. Thorough analysis and relevant roadmap will help predict possible risks, justify the cost of transformation and ensure successful results at the output.
Here are 5 essential steps of an effective digital transformation strategy:
Step 1. Determine goals
Understanding of digital transformation has changed over time. Today, it goes beyond making an app or opening an IT department in the company.
Instead of upgrading single operations or processes, digital transformation allows to revise the whole business, enhance its competitive advantage and even develop a new one.
At the very first step, you determine the scope and objectives of your digital transformation efforts. You may want to drastically reduce costs using predictive analytics and advanced data solutions, expand presence and customer reach across different digital channels or optimize the whole operations. Either way, defining your goals will help you foresee the results of your efforts and determine further steps of your digital strategy.
At this step:
- Consider long-term goals, short-term objectives and resources available to you.
- Focus on your competitive advantage and the means to enhance it.
- Think of new digital KPIs that would help you assess and measure the results.
Step 2. Analyze market and competition
This step is particularly important in light of recent technology development and market dynamics. Today, more and more companies and even industries fall prey to disruptive businesses.
Not so long time ago, Uber made some of the largest yellow cab companies bankrupt. Almost every company in the automotive industry invests in electric cars and self-driving technologies, or otherwise, they risk fatally lagging behind. Even small entrepreneurs choose large-scale marketplaces like Amazon over building their own webshops to reach customers.
Rapid industry changes and unexpected competition moves make this step of your strategy essential. Every business should take a close look and perform a thorough analysis of the market before making any digital transformation effort.
Read: Lexical software development as a part of a digital strategy for Oxford Languages.
Moreover, once the boundaries between industries blur, it’s not less important to study other verticals and fields. You can find a good source of disruptive technology or hidden competitive advantage there. Think of Airbnb as an Uber for renting.
At this step:
- Consider digital technologies, platforms, vendors and solutions in your vertical.
- Analyze both existing competition and emerging business models and disruptive technologies around and nearby.
- Go beyond your industry and explore success stories in other fields.
Step 3. Assess your current standing
At this step, you have to use analytics. You need to analyze your technology expertise and digital infrastructure, tools used in your business process, check your digital systems against up-to-date technology and future trends, as well as possible integration and upgrade solutions. This is step can also help you identify technology debt and assess it to further develop a strategy for technical debt reduction.
This assessment will help you prioritize the efforts and investment into your digital transformation. Eventually, you will be able to find out what needs an update, what processes you can automate or optimize, and what digital tools you have to get rid of.
Additionally, you should dig for a super asset that can bring tremendous value in the course of your digital transformation. Assess your data potential, be it user behavior datasets, sensor data at manufacturing facilities or customer satisfaction results. As a matter of fact, leveraging your data can make a big impact on your business and even become a revenue source.
At this step:
- Assess how well digital tools you use to address your current and future needs.
- Consider integrations, for example, with leading platforms in your industry.
- Analyze your data potential and consider tools to leverage this asset.
Step 4. Make customer research
The goals you define at the first stage will shape your digital transformation roadmap. However, your customers’ goals are not less important. Therefore, you need to examine your target audience and make sure your efforts and investment go along with customer requirements and preferences.
At this stage, you should revise existing experiences, analyze digital channels that connect or could connect your company with your audience, and if possible, collect customer feedback. Using these insights, you will be able to build new digital customer experiences that fit both your and your customers’ goals.
At this step:
- Research existing customers and new audience groups.
- Study customer experiences and collect necessary feedback.
- Choose the right digital channels to connect with your audience.
Step 5. Prepare your infrastructure and talent strategy
The last but not least important step on the way to digital transformation is to assess and adjust your infrastructure to upcoming changes.
First of all, if you don’t have yet, you may need to acquire a digitally competent leadership in the company - Chief Digital Officer (CDO), Chief Information Officer (CIO) or other executive qualified to monitor and ensure effective implementation of your digital strategy.
Secondly, you should revise skills and knowledge in the company and prepare employees to the transformation. In this context, you may consider training, qualification upgrades and even getting new professionals on board or choosing outside teams or agencies to help.
These efforts would take an additional strategic step for many companies. Both leadership and employees have their goals and plans associated with their position and contribution to the company. Therefore, it's crucial to translate the value and benefits of digital transformation to each member of the team, integrate employees into the process and review their feedback, demonstrate individual benefits they get from the transformation and encourage to participate in the initiative. Otherwise, the company ricks to lose serious investment put into digital transformation.
Finally, it’s important to prepare a new digital culture within the company that would come in line with the new reinvented business processes.
At this step:
- Establish qualified leadership in charge of digital business transformation.
- Help teams acquire necessary skills and qualifications.
- Build relevant digital culture within the company.
These 5 steps of digital transformation strategy will build a solid foundation for an efficient transition from a pre-digital to progressive business. Companies can implement these stages to enhance their digital capabilities by themselves if they have qualified teams and skills. Otherwise, businesses address to digital consulting agencies to build a solid strategy and enable the smooth transformation to digital.
At Digiteum, we help companies build and implement efficient digital transformation strategies. Contact us to learn more.