Digital transformation basically refers to the mix of digital technology and business. It makes use of modern technology to solve traditional problems. It revolves around finding innovative and improved solutions to tackle and support traditional methods.
According to Greg Verdino, “Digital transformation closes the gap between what digital customers already expect and what analog businesses actually deliver.”
Not so long ago, businesses would keep their records on paper. Whether it was ledgers, or documents, data was analog. Sharing and gathering of information was dealt physically – in the form of documents, papers, faxes, Xeroxes and others. Eventually, computers became the conventional mode, and businesses started converting their documents into digital computer files – a process known as digitization (conversion from analog to digital).Finding and sharing information became much easier once the information was digitized. But the methodology remained traditional.
With the evolution of digital technology, new ideas and innovations cropped up and new ways of using business technology were found. This was when the idea of digital transformation slowly began to take shape. With the advent of new technologies, new things – and new ways of doing the old things – became possible.
Digital transformation covers a large number of processes, transactions, interactions, changes, technological evolutions, and so forth. Hence, when speaking about digital transformation, it is essential to keep this in mind. Customer experiences, purposes and end goals, partners, stakeholders and others are some of the main components of digital transformation. Sometimes, it may be narrowed down to customer experiences alone, but that would be a grave mistake. Digital transformation is revolutionizing the way businesses get done, in turn, creating entirely new methods of doing business. Using digital transformation, companies are re-analyzing the way they do business, from internal procedures to customer services.
Let us now delve deeper into the methodology that is digital transformation. A fundamental constituent of digital transformation is understanding the potential of the technology.It really means asking questions as to what the technology is capable of and how business can be adapted to cater to those technology investments. Another key component of digital transformation is how it deals with customer service. The old pattern was time-consuming. A lot of time was spent in waiting for the customers to be found, whether in person, or by calling a number. However, the recent rise of social media has reformed services, in the same way that it has changed advertising, marketing, customer service and sales.
Digital transformation, in its unified and combined sense, refers to the transformation of the following:
· Business activities/functions:marketing, human resources, operations, administration, customer service and others.
· Business processes: It refers to all connected operations, sets, activities, defined to achieve a specific business goal. Here is where, business process optimization, business process management, and business process automation enter the picture (with technologies like RPA). Business process optimization proves to be imperative in digital transformation strategies.
· Business models: A business model defines how the business functions, from the go-to-market approach and value propositions, to the way it aspires to make moneyand effectively change its core business ideologies, introducing new methods and approaches, and eventually letting go of the traditional methods.
· Business ecosystems: A business ecosystem refers to the network of partners and stakeholders, and other external factors (economic, political, social, etc.)affecting the business. Digital transformation proves to be the platform through which new ecosystems can be built between companies; with the exchange of data through the system.
· Business asset management: Here, the focus lies mainly on traditional assets, but mostly on the intangible ones (customers, information, etc.) In this regard, both customers and information needs to be treated as real assets in every perspective.
· Organizational culture: Every organization has its own predefined culture whereby there is a clear customer-centric, sharp and focused goal, which is achieved by attaining certain pivotal competencies across broad areas such as leadership, digital maturity, knowledge worker silos and others. Business culture also overlaps with business processes, activities, collaboration, and information technology. Digital transformation helps to bring about changes to the businesses culture and activities.
· Customer, worker and partner approaches: Digital transformation emphasizes more on people and strategy, before technology. Stakeholders are crucial for any organization. Their behavior, needs and expectations are imperative.
Increased competition has led companies to expedite their innovation processes, by enabling them to experiment with new digital procedures and services, to intensify the existing ones. Let us consider the advent of the recent virtual assistants, chat-bots. Chat-bots make use of natural language processing to establish a direct digital pathway between the customer and the business. Powerful analytical tools drive these chat-bots. Banks, retailers, industrial manufacturers, and almost every other type of business are enforcing these digital tools.
The primary focus of digital transformation is on the business, which encompasses a comprehensive digital transformation where the key aspects prove to be customer experience, technological innovations and evolutions. Hence, it is not just about transforming in the digital age.
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