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Digital transformation allows organizations to implement new technologies and strategies which make their work more efficient and profitable. Digital transformation can help your organization remain competitive in the market.
What is a Digital Transformation Strategy (DTS)?
Digital transformation is the process of remodeling an enterprise to integrate digital technologies across all relevant aspects. This can be used to improve everything from efficiency to collaboration to delivery speed to customer satisfaction. According to reports, "Digital Transformation" can be anything from IT Modernization such as Cloud Computing and Digital Optimization.
Digital transformation is not just about launching new digital products, moving to the cloud, or implementing the latest technologies. It is also more than simply implementing the newest technology.
How Do You Develop a Digital Transformation Strategy?
A digital transformation strategy is a game plan for how you intend to proceed. Avoid the trap of "discussions'' that are more ideological. Begin by assessing the current state of your organization through an Agile perspective to determine your end goal. Identify potential obstacles and opportunities within your industry and with your competitors. Then, define clearly the vision and goals for the digital transformation. Finally, create a plan.
Avoid focusing on minute details, like the budget, the people and the teams that will be involved in the transformation. Agile means being flexible and open to the unexpected. It also involves a focus on the bigger picture and giving teams the autonomy they need to decide the details and the approach. Leadership sets the "why" in the strategy for digital transformation, and the teams determine the "how" to achieve it.
Who Should You Be Involved in Creating a Digital Transformation Strategy?
Approaches to digital transformation do not rely solely on executive leadership. Senior leadership should instead be responsible for creating and leading a digital team that includes many stakeholders from across the organization, usually those who are closest to customers.
According to reports, the senior leaders of an organization should "create long-term visions and communicate them, establish and sequence strategic goals, and develop organizational capabilities in order to reach those goals."
The good idea is to get different parts of your organization involved by creating a board or leadership committee of key stakeholders that will champion and embrace the method as well as digital transformation. Each will bring their perspective, and they'll be the ones who get enterprise-wide buy-in.
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Digital Transformation Strategy and Business Impact
When you wonder how to proceed with your digital transformation, several questions arise:
What Drives the Digital Transformation?
Digital transformation is the primary driver of digital transformation. Companies must adapt to any situation, even a pandemic, to survive. The market for digital transformation has grown to $1.3 trillion.
The digital revolution, combined with the selective consumer, demands that mid-market companies keep up to date, or they will die. Many brands still need to update their business model. Many brands, once world leaders, became afterthoughts because they believed digital technology was just a trend, that tried and accurate approaches would suffice, or their existing products. A digital transformation strategy that is responsive will allow organizations to evolve and ask the right questions while being prepared for anything.
What Will Happen To Companies That Still Need A Strategy For Digital Transformation?
The Financial Services, Healthcare, and Technology industries need digital transformation strategies the most since these markets are experiencing rapid growth. The status quo is maintained by companies that still need a strategy for digital transformation. It may be comfortable, but it will lead to something other than innovation.
Innovation is killed by, for example, using manual spreadsheets or working with bureaucracies that are multi-levelled and rigid work methods. Companies that are competitive use technology to gain access to comprehensive and reliable data to make better decisions. Data, technology, budgets, and people are all connected across their businesses.
What will Happen to Companies that have Adopted a Strategy for Digital Transformation?
A digital transformation strategy has the ultimate benefit of having a road map that ensures everyone is on the same page and that all teams deliver on what's most important to your business. The transformation process is slow, requires constant evolution and enables technology. However, it has at least 7 benefits, including:
- The value and performance of digital transformation can be measured
- A roadmap should accompany your digital strategy.
- Learn how to master the convergence of technology and products in an interconnected world
- Create new services and products to drive innovation
- Prioritize strategic resource funding
- Reduce cycle times and improve time to market
- Boost your organizational agility and operate faster
If you want to improve an existing strategic plan, adopt an approach:
- Assess the present and desired future state.
- Identify roadblocks, and identify opportunities.
- Define the vision, the goal, and the priority, and establish an action plan.
What is the ROI of Digital Transformation?
According to a study, over 65% of companies have digital transformation programs or are planning one. Some businesses still need to learn how to evaluate the success of their investments. Measuring outcomes is easier when you focus on key objectives and results.
Leaders need to take a big-picture view of performance rather than focusing only on short-term projects. As you tackle digital transformation, you should adopt an Agile mentality that allows you to pivot your strategies in response to uncertainty and change rapidly.
The way teams operate is less important than whether they can consistently deliver value. Businesses can be confident that the work done across an enterprise has a strategic impact, regardless of how it is executed. This is because solutions and delivery are linked to business outcomes.
The Project's ROI best practices include:
- Setting initial (even hypothetical) metrics in advance.
- Create "micro metrics" for Agile experimentation.
- Include business results (e.g. Include business outcomes (i.e. revenue growth, time to market).
- Consider the impact of strategic and operational changes, not just cost-savings.
- Review and adjust metrics regularly.
Risks are necessary to make progress. It allows you to test ideas and evaluate them without fear. You have the system in place and a digital transformation strategy that will support this experimentation.
What are The Critical Trends for Digital Transformation?
Over the last decade, digital transformation has accelerated as change has sped up. We are seeing five trends:
The Investment in Digital Transformation Has Accelerated
According to a recent study, since COVID-19, companies have increased the digitalization of their internal processes by 3-4 years. The share of digital products or products with digital capabilities in the portfolios of these mid-market companies has also risen by 7 years.
Digital Transformation Co-Occurs With the Transformation of the Workforce
According to reports, 83% of workers favor a hybrid workforce model. 63% of high-growth firms have adopted this model. Software solutions are needed to support not just productivity but engagement and alignment during digital transformations.
Digital Transformation is Made Possible by AI and Machine Learning
Businesses and organizations that have completed their digital transformation are more prepared to adapt to the rapidly changing landscape. Digital transformation is the ability for data to be leveraged to provide actionable insights and predict using AI and ML.
Digital Transformation is a Data-Driven Process
Reports express "many organizations utilize progressed examination since they've finished the primary periods of their advanced tasks, and have continued on toward the last frontier - handling information and investigation cycles and frameworks to completely change."
Automation is a Critical Component in the Digital Transformation
Automation leads to increased employee productivity and customer satisfaction, which in turn will have a positive effect on the bottom line of your business. The investment in automation is well worth it as part of digital transformation.
This trend is most evident in DevOps. Teams use automation to ensure value flows faster and predictably along the value chain. This trend highlights the necessity of a software platform which provides leaders with the line of sight they need to connect business strategy, planning, and execution. This platform is the basis for digital transformation strategies and allows teams to adapt quickly without losing their momentum.
Read More: Best steps for your team to deal with digital transformation
Why is Digital Transformation Important for Midsize Businesses?
Many businesses continue to invest in initiatives for digital transformation despite the COVID-19 Pandemic. As a result, companies that invested in digital strategies during the COVID-19 pandemic were able to adapt faster to new conditions. For companies that were forced to move to remote working, it was vital.
It is more than just technology. Data-driven decision-making helps to make better decisions. This affects all aspects of a business, including marketing, customer service, and operations. Customers expect seamless interactions with businesses. Your customers will take their business to another company if they need a better experience. You can improve the customer experience with digital transformation by providing more personalized services and making it easier to locate information. Data can be used to create marketing campaigns that are more relevant to your target audience.
Mid-market companies looking to cut operating costs will also need operational efficiency. By automating your processes and utilizing data, you can enhance efficiency and save money. In a recent survey, nine of every ten companies believe that they have changed or will change their model to remain economically viable.
Sixty-four per cent of respondents believe that they must build digital businesses. Twenty-one per cent think it is necessary to integrate digital technology services into their existing business models. This is why implementing a digital operating system will help you to position yourself above your competitors in the middle market, particularly within the following year.
How To Digitally Transform Your Mid-Sized Business for Growth & Profitability?
To digitize a company, it is necessary to transform the business model. This includes customizing go-to-market strategies, scaling services or offerings, upgrading operations, and updating technology infrastructure. In a recent Review article, it was reported that eight per cent of businesses believe their business model is still viable even if digitization continues at the current pace.
Before the pandemic hit, most mid-market companies were using technologies like Artificial Intelligence, Robotics Process Automation, the Internet of Things, and others. Pandemics have accelerated change as employers and employees are empowered to work remotely more effectively. The current market environment offers mid-tier companies a once-in-a-lifetime opportunity to increase revenues and market share by taking strategic risks.
This can be achieved through nimbly responding to changing customer needs, expanding the footprint of their business, and more effectively competing with their larger competitors. Optimizing business models and operations can improve profitability. "5R Process'' can be used to help business owners digitize their businesses and prepare them for effective growth.
Digital Transformation: The 5R Process
Re-Examine:
The first thing to do is analyze from the outside in. Re-examine the environment of your business to determine changes in customer demands, competition, regulations, technology, etc. and how they impact it. Determine whether the market changes are an opportunity for your business or a threat and determine how you can best utilize them. Business owners must focus relentlessly on understanding the needs of consumers and finding optimal solutions to them.
Re-Assess:
Assess the "inside out". Assess the vision and mission of your firm. Digital transformation is an integral part of the strategy for your firm. Look at the product/service offering of the company, the technology used to create and support it, the go-to-market strategy (customers and sales channels), the sales team and the products/services, and see how the market has affected them. Examine the firm's business, talent and capability skills to identify the necessary changes to keep the company growing. Assess all enabling functions to determine areas where margins can be improved. Review all data and knowledge requirements. Businesses must create a roadmap for digital transformation.
Re-Engineer:
Configuring your business to be successful is a critical part of digital transformation. The digital transformation journey of each firm is different and determined by the current industry and business situation. These are some tactical measures:
- Offerings of Products/Services - Analyze the current product/services and determine what modifications are required to grow and retain customers. Determine new service offerings, and determine opportunities for moving to a productized or recurring revenue business model. Different technologies may be required for new digital transformation solutions and offerings or to create recurring revenues.
- Go-to-Market Strategy - According to one study, a 5% increase in customer retention can boost profits from 25% up to 95%. Leaders tend to concentrate on organic growth. This involves improving the effectiveness of their sales and business development teams to increase revenues. To reach their customers, firms use marketing via social media and various channels. Aligning and optimizing the marketing, sales and customer service teams is crucial. Leadership has today three options to achieve inorganic growth. They can build, purchase, or create strategic alliances. Each option comes with its pros and cons and takes time and energy to implement.
- Business Operations - Most businesses require multiple functions to run their business effectively, including finance, operations, legal, risk, regulatory, procurement and technology support. Business operations are being offered "as-a-service" by providers. There is also experienced talent for "fractional roles in business and operations." The leadership should look at how these different areas have been affected and decide the best way to operate more cost-effectively and efficiently (i.e. If they are onsite/offsite or in a shared services center, they can be outsourced, sent to low-cost providers, or managed as a service. ).
To digitize a company, you will need to make changes in four key areas:
- Processes: Separate the tasks into those with high value-added judgments and mundane, repetitive work. Create a journey plan for time-consuming, repetitive tasks to see how they can be improved. Decide if it is possible to automate, combine and deliver through a shared services center, outsource to a low-cost provider, send to managed service providers or a mixture of these.
- People: People are the key. Consider the people in your organization to be partners and clients. As they have the most insight into the processes and pain points, these people are the best partners for the journey of transformation. The customers are the ones who will be using the tools and processes and ultimately determine the success or failure of any transformation effort. They need to take ownership of the process. The leadership will have to look closely at business leaders and professionals to see if the firm has the right talent and then determine how to either hire or retrain the existing talent. Gig workers, fractional talents, etc.
- Technology: As the company moves towards a repeatable or productized revenue model, it will require significant investments in technology. Analyze the technologies currently used by the group. Determine how well they're used and what role they play in the larger ecosystem of technology. Find out what additional tools or services are needed to continue the business. Security is also essential. To provide customized services to customers in a safe environment, privacy and analytics are critical.
- Culture: Business tends to overlook the importance of cultural diversity. It is essential to keep in mind that digital transformation does not happen at the center but at the edges by those closest to customers. Leaders must foster a culture that encourages innovation and empowers professionals with tools, techniques, and support systems.
It is essential to get some quick wins by leveraging development to create Minimum Viable Products with the customers/end-users, test, iterate, and pilot before launch to maximize impact on the business.
Read More: Seeking Enterprise-Wide Digital Transformation? Think Small
Retain:
After the transformation has been completed, the leadership team should keep the talent, processes and operational models in place to continue reaping the benefits of the digital transformation. They must also be on the lookout for other areas that can benefit.
Repetition:
Create a system for success. Leadership will have to continually reassess their strategies and approaches as the pace of changes accelerates. In the past, mid-market companies developed between three and five strategies and plans. Best practices now dictate organizations review their plans at least quarterly and make updates annually. The resilience of an organization is dependent on reviewing action items. It plans more often, whether it's monthly, weekly, or at all.
The leadership must recognize that digital transformation is different from "business as usual" and that it requires new skills, abilities and expertise. It's essential to identify the best partner or team for the transformation. It is important to recognize that business transformation is an iterative, complex and messy process. Each organization has its journey. There is no one-size fits all. The leadership team will likely face opposition from skeptics during this time. Leadership's goal is to get others in the company on board with the transformation and to ensure their commitment and ownership. Business, as usual, is not an option in the current environment.
What are The 4 Main Areas & Steps to Focus on for Digital Transformation in Mid-Market Businesses?
Begin with a Digital Transformation Blueprint
Many companies believe they only need to plan a little before implementing new technology. Implementing new digital systems with no planning is almost certain to lead your business down the wrong path.
A digital transformation roadmap is the key to success. It begins by identifying gaps and business requirements to create a roadmap that will avoid them. Imagine you are looking for a seamless experience with the implementation and a successful solution. A team of business experts can help you create a comprehensive plan to implement your technology.
You Need to Know What Your Customers Want
Customers in the middle market have different needs than customers who are small or enterprise-sized. By taking the time to understand your customer's challenges, you can optimize your efficiency and solve issues faster.
Identify what Technology your Mid-Sized Business Needs
It can take time to identify the technologies your business requires. It can be challenging to choose the right system for your business when there are so many options available. It's essential to be aware of the technology pain points that your small business faces. You can find the right system for your business by identifying what's not working.
Once you know what you want, you need to have a strategy for how you will implement the technology. Spending money on technology no one can prove detrimental, particularly when you are trying to expand your business and not stagnate. It's important to avoid rushing into adopting every new technology. It's important to remember that not all technologies or software are suitable for the size of your business, your specific pain points or your employees.
Watch How to Track, Analyze and Validate These Digital Transformation Initiatives
When implementing your digital transformation strategy, it is essential to establish a baseline. Consider your company and its goals. Set SMART objectives once you have a baseline. You will be able to set goals for your business that are realistic and attainable while also pushing it forward.
It is only possible to grow your medium-sized company into an enterprise after a while. Your digital transformation will require time, constant effort and analysis. Regroup to come up with a new initiative if they need to be revised.
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Conclusion
Mid-sized companies can improve their customer service, increase efficiency, and level the playing field by investing in digital transformation strategies. The right technology can help companies keep pace with larger businesses while remaining competitive in the marketplace.
Organizations have never been under so much pressure before to transform and modernize themselves into digital versions. The right technology partner and platform, as well as a strategy for digital transformation can help companies adapt better to changes. Analogue companies, as the digital economy becomes more dominant in business, are significantly at a disadvantage when it comes to efficiency, optimization and competitiveness.
