Many people use digital transformation and digital transition interchangeably. However, this is simply incorrect as the two concepts have significant differences. Digital transition is the automation of existing processes, whereas digital transformation refers to more comprehensive changes, reengineering processes to take full advantage of new technology that takes more time to implement.
In our previous blog, we discussed how you would know when to transition digitally. In this blog, we will be investigating how to identify when digital transformation is a more practical approach for your organization.
What is Digital Transformation?
Digital transformation uses digital technologies to create new business processes, establish a different business culture, and meet evolving customer needs according to the changing competitive climate.
Digital transformation involves replacing entire systems, applications, and solutions with new tools and processes. The shift from paper-based communications to blogs, for example, is a straightforward demonstration of digital transformation in your own life. For businesses, digital transformation can mean adopting automated applications, advanced intelligence tools, or using process automation for businesses.
Advantages of digital transformation
The process of digitally transforming your company brings forward many ways in which you can become more efficient. Digital tools and processes that simply outperform manual approaches will naturally make your operation more efficient. For example, through enhanced data collection methods, digital applications offer better and faster data collection methods with fewer errors and greater accuracy. The consolidation of this information leads to more effective resource management and provides avenues for data-driven customer insights which are easy to access.
Better decision making
Digital transformation encourages a digital culture within companies. Through the provision of tools tailored to the environment of employees, decision-making becomes more structured. With better access to more accurate data, executives gain greater insights enabling them to make more effective, long-term decisions. Through this improved decision-making, the company moves ahead more swiftly, digitally, and competitively.
Digital transformation makes companies more agile. But what does that mean? Through the increased productivity and efficiency of your technologies, digital transformation improves your speed-to-market and ability to adopt continuous improvement strategies. Furthermore, with better tools and applications, it can be easier to continually improve and update according to your business environment. These two elements ensure business success for the long term.
A rise in customer satisfaction
One of the primary goals of digital transformation is to increase the value you provide to your customers. Through improvements in productivity, customer service, and decision-making processes, improved customer satisfaction is a key win with digital transformation.
When should you digitally transform?
Now that you have an idea of the benefits of digital transformation, it helps to know when you should consider digital transformation.
Your business processes cannot be improved, or improvement is too complex/expensive to justify
Business processes that are no longer effective due to old technologies or outdated methods present a significant challenge to organizations. This is especially true when the cost of fixing them is prohibitively high. These expenses are only compounded further when you try to delay the inevitable and apply a digital transition process. In these cases, digital transformation would be more appropriate.
Specific processes are stopping others from performing optimally
You might be facing a situation where just some of your processes are out of date and not running cleanly. With processes often being intertwined, if one element is not performing, the whole system suffers. In this case, there might be a need for the transformation of just a few operations. It is necessary to identify where there are processes that need transforming in order to optimize the system as a whole.
You can afford the disruption, minimize the pushback and the price tag
Digital transformation can be costly. You could also face issues with pushback from employees, especially considering how disruptive it can be. As such, it is necessary to identify whether your company is in a position to deal with the disruptions that come with digital transformation.
Sometimes it is the only option to stay ahead, and prioritizing how to deal with these issues will make the process smoother. To this end, it may be beneficial to seek a partner to help you understand what to expect and how to deal with change during the transformation process.
You don’t have access to specific capabilities that could improve your operations
When considering whether or not you should transform rather than upgrade, you need to understand whether or not you already have the capabilities in place to upgrade. Suppose key components are missing from your business strategy or processes that prohibit you from upgrading effectively. In these cases, you have to consider a transformation that puts the necessary new systems in place to retain your competitive advantage. There are also many cases where the base products that your organization uses have simply outlived their usefulness. In these cases, it’s much better to replace the component with a product that possesses the capabilities you need than to add to the outdated product.
As we have covered in these blogs, there is a place for digital transformation and digital transition. This concludes our series on digital transition and digital transformation. If you want more information on effectively optimizing your digital needs or transforming them into new ones, contact us.