We love buzzwords, they sound good at conferences. However when some words get overused, it can be difficult to make the right decisions and take the right actions for your organization. Today, we will explore the meaning of Digital Disruption and Digital Transformation. Global spend on Digital Transformation will exceed $2.3T in 2023 yet 70% of Digital Transformation projects fail to achieve their goals, why is this? According to the Harvard Business Review, 80% of business leaders think their industry will be disrupted by Digital Transformation but less than half have a digital strategy in place. 41% of organisations say they lack the right digital skills and and 30% say they do know which technologies to adopt. Click here to see how trainingcan help your organisation. Digital Transformation is not all that new, many Chief Information Officers may tell you that Digital Transformation is an extension of modernization efforts and process efficiency programs. Many Chief Marketing Officers may tell you that Digital Transformation is the organization's ongoing efforts to adapt to changing customer needs while the Chief Finance Officer may tell you that Digital Transformation is implementing process efficiency and cost reduction programs. There are mixed views about Digital Transformation depending on which department you sit in but one thing is clear, digital Transformation is not going away. According to IDC 40% of all technology spending will go toward digital transformations, with enterprises spending in excess of $2 trillion through 2019. According to Harvard business Review, $1.3 trillion that was spent on Digital Transformation in 2018. Digital Disruption can be seen as changes in the external environment that lead to organisations having to change their operations and process accordingly. Over a decade ago, we drove to our local video store to rent the latest releases but thanks to streaming services we can watch the latest movies on our smart phone while or our morning commute, we can bank from our phone or book flights without ever speaking with a service agent. Click here to see our digital & technology jargon buster. Digital Transformation on the other hand is ‘anything from IT modernization to digital optimization, to the invention of new digital business models” according to Gartner. Technological advances in the external environment force many organisations to change how they operate and even how they provide value to customers. Successful Digital Transformation involves successfully adapting your structures, process and infrastructure to your current customer needs and market forces. Click here to see our digital & technology jargon buster. According to Dell ‘Digital Transformation puts technology at the heart of an organization’s products, services and operations – to help accelerate the business and competitively differentiate itself – in order to improve the experience for its customers’. Here is another definition from Gartner, Digital Business Transformation is ‘the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model’. When implemented correctly, Digital Transformation can enable many industries and organisations to use digital technologies to improve their operational efficiency, provide customer value and differentiate themselves from competitors. For example: smart cars are self driving, smart homes provide comfort and connected customers share videos online. Simply put, technology is changing how the world operates. According to Salesforce, Digital Transformation is ‘ the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation’. For example, Encyclopedia Britannica had its proud place on many of our bookshelves but with the rise of content online, Encyclopedia Britannica changed its model to become an online content provider. This was not the case for the movie rental company Blockbuster who failed to transition from providing content via an expansive physical store network to an online streaming provider like NetFlix. Click here to find out about Digital Transformation training. In addition to the exponential growth in connectivity, processing power and reduced storage costs there are other factors contributing to the growth in Digital Transformation. According to David Rogers from Columbia Business School, there are 5 domains driving Digital Transformation: Customers, Competition, Data, Innovation and Value. Let us explore these... If your organisation resists change or is unwilling to invest in continuous improvement then Digital Transformation is not for you. But Digital Transformation is not exclusively for digital native businesses or new tech start-ups born in the cloud. Existing organisations can transform their operations by placing technology and people at the heart of their efforts. Organisations can pursue Digital Transformation by using smart connected devices to capture data, use analytical tools to predict patterns and use artificial intelligence to improve services provided. The speed and competitive nature of business is accelerating. With the exponential growth of processing speed, connectivity and the reduction in memory storage cost, the rate of technological advancement has outpaced linear business growth resulting in a wide range of advanced tools available to organisations who possess the right vision for how they can be used and the right ability to leverage technology. Key technologies to watch include: cloud computing, artificial intelligence, sensors (Internet of Things), additive manufacturing (3d printing), robotics and distributed ledgers (blockchain) according to McKinsey. Watch our videos on Digital Transformation and emerging technology. Your organisation must assess how you should respond to changing market, competitive and industry forces. Technology is not a silver bullet to skyrocket your organisation but it can be a key enabler allowing you to keep pace with competitors and meet your customer needs. Many academics, consultants and experts say that Digital Transformation is not about technology…. This is only partly true, the right technology is required but technology is not a replacement for a well formulated and implemented strategy. We can see that technology is an enabler to deliver the strategy set by your organisation. Click here to see how training can help your organisation. What else do you need? Senior leadership must be aligned on a common vision of what to achieve with Digital Transformation and work with mid management and operational staff to successfully implement it. Process will change, staff need upskilling and the organisation must be comfortable with the process of trial and error rather than seeking the instant gratification efficiency from the start. This can be difficult for seasoned management who built their careers on fine tuning their process only to find that the market has moved onto something different and a step change is required. Click here to see our digital & technology jargon buster.
According to Gartner, Digital Disruption is ‘an effect that changes the fundamental expectations and behaviors in a culture, market, industry or process that is caused by, or expressed through, digital capabilities, channels or assets’.
Digital Transformation is more than bringing in new technology, it requires change to how parts of the organisation operates. According to George Westerman, MIT principal research scientist, Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance.
To conclude, Digital Transformation can be seen as a response to shifting external forces or upgrades required inside the organisation. Different departments have different views on what Digital Transformation means to them but a unified view is needed. Digital Transformation is not just about technology, it requires adaptation to your organisations people and process operations.
See Also
3Rs Digital Transformation Framework: Reimagine, Roadmap, Results | JD MeierAn Introduction to the Three Pillars of Digital Transformation | Copy Cat Group5 Elements For Successful Digital TransformationThe 5 Pillars of Strategy Execution: Strategy, Goals, Projects, Metrics, People (Plus Template)