Digital Transformation: Change or Die

If you don’t digitalize, you’re out of the game. This is a common phrase you often see in business-related content published on various sources. Figures declared by credible institutions confirm: digital transformation is a vital need for every modern enterprise.

According to Entrepreneur, offline shopping still prevails in the USA, but eCommerce is growing 3x faster. And even when consumers are going to buy something offline, close to 100% of them look for goods on the web. If you do not have a website or a mobile application, you’re missing out.

And that’s only the basics. Rising technologies like the internet of things, artificial intelligence, big data, and machine learning cease to be a significant breakthrough remaining just a bit of competitive advantage.

Facts we cited above are no more than a tip of an iceberg. Being a buzzword in a business world, the concept of digital transformation doesn’t seem to be self-explanatory.

What is Digital Transformation?

Despite the common perception that digital transformation is about technology adoption, it is actually more about the new ways of building relations with customers. The evolution of business aims at bringing more value to the end user. Therefore companies become more customer-centric. Technology is the driver of that evolution, but not the primary cause. The main reason is the change of generations and their increased demand for quality services.

Digital transformation is a holistic adoption of digital methods, principles, and culture of doing business. It makes the interaction between brand and customer more effective and adjusts the brand’s services to new customer’s demands.

Digitization vs. Digitalization vs. Digital Transformation

The web is also replete with terms that seem to be synonymous to digital transformation — digitalization and digitization in particular. Even though they can describe the same process in the broad sense, there are some differences in their core.

As you can see, digital transformation is a large-scale conception that includes digitalization but considers changes from the point of the ultimate company’s goal.

The Strategy of Digital Transformation: Where to Start?

However, digitization and digitalization shouldn’t come first. Putting the strategy before the technology and re-imagining the customer journey is what you need to carry out above all.

The equally important dimension to technology is corporate culture, as it could be impossible to complete the transition process without having the right cultural environment in your company. Experts call culture “the hardest part of the digital transformation.” And, indeed, it’s much more complicated to change the personal attitude towards the new order of things than to apply impersonal tech innovations to your business.

The bright example of the successful culture shift is Adobe’s experience of digital transformation. Before moving all their services to the cloud, the company’s management had to change their employee’s mindset to a more customer-centric. To do this, they arranged a “role-play” test in which employees should leave feedback on Adobe’s products, evaluating them from the customer’s perspective. Adobe introduced their Creative Cloud in October 2011. In May 2013, they stopped release updates for Creative Suite and announced that new versions of the software will be available only through Adobe Creative Cloud. According to Statista, Adobe’s revenue increased from $1B in Q3 2013 to almost $2.5B in Q3 2018.

Major Challenges of Digital Transformation

Futurum research shows that companies handle digital transformation pretty well as of 2018. 76.6% of the surveyed companies assess their technology level as “average” or “above average.” 65% are ready to go through the digital transformation process within the nearest 3 years. Also, 40% of companies have the team of in-house specialists that work specifically on that issue.

Still, the challenges of digital transformation persist, especially when it comes to small businesses. It’s often not enough to incorporate innovative technologies into business processes, as any digital product requires continuous maintenance. As a result, seamless digital transformation takes more effort and resources than expected.

80% of companies report that their digital services and applications disrupt at least once a month, as it showed in the report compiled by Riverbed. This affects customer experience and diminishes digital performance.

Other challenges mentioned by the surveyed companies are budget constraints (51%), overly complex or rigid legacy IT infrastructure (45%), and lack of skilled specialists that could help to transform the business (39%).

Companies also named top three digital transformation accelerators: data analytics (60%), internet of things (59%), and blockchain (48%). This explains why half of the small enterprises can’t raise enough money to adopt those technologies — it’s quite hard to find affordable in-house specialists in these fields.