Digital transformation is the process of using digital technology to improve organizational performance. Successful implementation of digital transformation requires a well-developed strategy.
Change is inevitable. Fewer sayings summarise the state of existence so eloquently or succinctly. Fearing it, though, is a fruitless endeavour. Those that are able to embrace change and identify the opportunities it brings are typically those that succeed – and businesses are no different.
Technology – business-centric tech, in particular – changes frequently. New products and services are launched regularly, each promising to yield positive change in some way, shape or form. Considering various statistics relating to these tools and it becomes clear that these vows are not lacking in merit.
In 2018, 25 billion gigabytes of data were created. This data contains valuable insights that can be used by businesses to gain a competitive advantage. The machine learning market is growing rapidly, and most business leaders believe that AI and automation give them a significant competitive advantage.3 A further study, undertaken by marketing and advertising agency Spiceworks, also revealed that 89% of businesses predict they will spend more on their IT infrastructures over the coming year.4
The importance of a tailored digital transformation strategy
Organisations, then, are fully aware of the fact that tech can fuel growth. They are also happy to invest in new technology. In spite of this, though, only 27% believe that a digital transformation strategy is vital to their business. This is akin to acknowledging that your car’s engine is vital to its health and performance, but does not need to be serviced or maintained.
Simply recognising that technology is important – that it is worthy of investment – is insufficient. It is unlikely to result in stability, let alone progress.
Determining precisely how technology can bring about significant and truly meaningful positive change to a business is dependent upon analysis, consideration and, vitally, effort. It is important to have a thorough understanding of a business's current situation and goals, as well as its existing practices and models. This must be combined with a detailed understanding of existing platforms and their capabilities, as well as market deficiencies and trends. In short, a detailed and complex digital transformation strategy is required.
Successful digital transformation is digital disruption
Anyone unconvinced of the potentially transformative effect a considered and sophisticated digital transformation strategy can have on businesses and industries only needs to be presented with a handful of examples to be persuaded otherwise.
Uber has, in a remarkably short amount of time, grown into one of the world’s most recognisable companies. The company had a global turnover of more than $11 billion in 2018 and recognized weaknesses in an existing sector. They identified how they could use technology to address these weaknesses.
After this, they came up with a new business model that used technology to offer services without having to buy resources like vehicles. The end result: the world’s largest taxi company owns no taxis.
Famously Airbnb was set up by two friends whose only asset happened to be an air mattress. Like Uber, it identified a market (people looking to rent out properties for short periods of time) and developed a platform through which this sector could reach its customer base. Its strategy has been successful in driving traffic to its website, and Airbnb is now valued at over $25 billion.
Digital transformation strategies that consider markets, objectives, limitations and execution can fundamentally transform businesses, as demonstrated by streaming services, fintech companies and software vendors.