What is digital transformation?
Digital transformation is a procedure in which technology takes priority in restructuring the operations of a company.
As more technology becomes available, it becomes simpler and quicker to deliver excellent services and products to your customers. Therefore, digital transformation has a positive effect.
Despite this, not every business is sold on the idea of completely revamping their procedures through technology. Individuals who do not adapt to digital transformation typically experience a decline in their customer base as it is more difficult for them to create value for the customers. The competition also becomes fierce, like other businesses.
Digital transformation has a profoundly positive effect on businesses. That impact on performance and quality provides extra value to services, which translates into data such as these:
- more than 40% of small businesses report consumer growth thanks to digital tools;
- also, more than 70% of them report revenue growth due to digital transformation;
- such growth is also responsible for those businesses creating twice as many jobs;
- 90% of small businesses that use digital tools report that it has helped foster innovation;
- businesses that work with digital transformation are also twice as profitable as those that do not.
Why is digitalization important for local businesses?
At this point, it is likely clear that digital transformation is capable of expanding all types of businesses, both small and large. It should be made clear that this is not just limited to large corporations.
It can be said that digital transformation has the greatest advantage for small businesses, allowing them a way to compete with larger companies.
The following are the most compelling reasons why it is necessary for local businesses to embrace digital transformation.
Improve products and services
By investing in digital transformation, the quality of your products and services will greatly increase. That is due to the fact that the most recent advancements in technology permit you to provide your clients with better quality services, which they will gladly accept and see your company in a more favorable manner.
This advancement could possibly create new ventures, such as making your way into a fresh market, establishing contact with fresh and existing clients, and possibly even boosting the components of your already existing items.
Optimize processes
Is your company still carrying out operations in the same way it did a decade or two ago? As technology evolves, so should our processes. In that fashion, you can work more productively, intelligently, and provide more worth to your clients.
Digital transformation can facilitate the enhancement of your processes by introducing tailor-made tools specifically designed to meet your requirements. Allowing machines and software to do the hard work will allow you to complete your tasks in the most efficient manner.
Decrease errors and mistakes
No business, big or small, is immune to mistakes. It is essential to take the necessary steps to try to decrease the amount as much as can be managed. Aiming to achieve digitalization in your local business will enable you to reach your desired outcome.
The reason for this is that digital solutions assist us in verifying data and usually take care of corrections automatically. Making use of the right technology will drastically reduce the amount of errors in your processes and those of your customers.
Learn through data
Building a large-scale infrastructure devoted to collecting and analyzing data is no longer only available to major corporations. By transitioning to a digital format, data pertaining to your products, customers, and market will be accessible to aid you in making more informed business decisions.
That is because the Big Data trend is heavily dependent on technological solutions. Focusing your efforts on these tools allows you to evaluate data associated with your activity and transactions. That is highly helpful for setting standards and trends.
Engage customers
Digital tools can assist you in providing your clients with innovative and thrilling opportunities to interact with your company. It is critical to maintain engagement with those individuals in relation to your brand and offerings, while separating yourself from other rivals.
The main way this is accomplished is through using interactive tools such as customer assistance. For example, you could provide your customers with the option of a chat support system so they can speak to someone directly instead of using a regular phone call.
Remain competitive
Markets change rapidly and any companies not able to keep up with these changes are likely to fall behind. If your business hasn’t gone through digital transformation yet, then there is a lot of work that needs to be done. Thankfully, choosing to do this will give you an edge over competitors.
This even applies to bigger competitors. It’s not necessary for you to have a large budget or a vast amount of customers since digital transformation can still be beneficial in helping you achieve better outcomes.
Provides much value for less
Analysis of the potential benefits of digitalization reveals a highly attractive cost-benefit ratio. Pick the best options to suit your requirements and implement digital transformation in a proper manner in your company.
Modern technology can open up new paths of business, enable discovery of valuable opportunities in the data you collect, and reduce the frequency of mistakes. This blend of elements will have a positive influence on your investments and make the expense of the improvement worthwhile.
Why digitalization raises interest?
Digitalization isn’t only about social media and software – it is the utilization of digital technology across everyday life by turning analog information into digital. Any action or process enabled by digital technology is included. This explains its considerable influence.
The mentioning of digitalization being democratized has come from its impact on everyday life. Approximately three billion, one hundred seventy-five million people, or nearly half the world’s population, access the web on a regular basis (we are social, 2015). The number rose by 7.6% from 2014 (we are social, 2015). Evidence from “We are Social” illustrates some of the significance of digital technology in people’s lives. Despite this, digitalization has a lot of impacts on the business world. Technology advancements are changing how companies operate, leading to a shift in the factors that contribute to and benefit from value creation. Firms must revise their approach in order to adjust and remain competitive in this continuously altering landscape.
Many businesses recognize the need to adapt, but only a few of them are attempting to identify ways to prevent being impacted by digital transformation. A study carried out by Forrester and made public in 2015 (Fenwick, 2015) states that nearly half of the executives interviewed in the United States believe that digital will have a major influence on more than half of their sales within the next five years. This shows that there is an understanding of how this technology could revolutionize business. Executives believe that digitalization will have a large effect on 47% of their revenue by 2020, a substantial increase from figures of 24% and 29% in 2014 and 2015, respectively. Therefore, these businesses are prepared to put money into online technology. By not taking steps regarding digital technology, their competitive advantage would be weakened. In addition to Forrester’s research, a study by the McKinsey Global Institute found that the most digitally advanced US industries have seen twice or even three times their average rate of profitability and productivity growth over the past two decades (Manyika & al., 2016). In addition, American companies being the most digitized tend to have better outcomes in terms of products, services, business model innovation, and revenue growth, as well as often disrupting sectors (Manyika & al., 2016).
In summary, rising businesses are paying more attention to digital because of its daily presence and its big impact on income, margin, efficiency, and creativity. It appears that a majority of corporations are not prepared for modifications yet. Many of them overlook the potential impact of the “Fourth Industrial Revolution” (Reymondin, 2016).
Changes brought in by digitalization
One of the main aspects of the digital world today is the ubiquitous connectivity, the availability of vast amounts of data, the worldwide supply networks, the increased efficiency and value of IT, the rise of cloud technology, and the introduction of large amounts of data. However, the main modifications within organizations include the restrictions of the standard methods of running a business, the variability of the IT job role, and the rise in the level of experience with IT. Due to digitalization, the way companies compete with one another has been completely altered. They must now consider different changed aspects when examining or revising their plan.
Digitalization is having a major effect on not only tech-based businesses, but also every line of work and position within every industry. Companies in traditional industries like manufacturing are beginning to invest in turning their physical assets into digital formats. In contrast to what many people believe, not only young and small businesses have higher digital development. Digitalization poses a problem for both big and small organizations, regardless of their age. All companies will be dramatically affected by it.
Some incumbents are surprised by new competitors, while others immerse themselves in the same environment and use digital technology to rethink and improve their business model in light of potential disruption. Companies who fail to recognize the value and significance of digital technology are hindering their future ability to be successful. It is intriguing that established companies do not need to fear new digital businesses. The real danger comes from businesses that have the potential to increase their effectiveness through the integration of digital technology and physical resources; those that understand and take steps to utilize digital technology.
What is a Digital Strategy?
Though the words digital and strategy are widely known, their traditional interpretation has been updated due to companies’ encounters with digital tech. According to McDonald (2015), digital is not merely a group of technologies, but much more. McDonald (2015) expressed that it is concerning the aptitudes those technologies induce. “Putting information and technology to use can help increase the efficiency of people’s work” (McDonald, 2015). Digital technology is just another tool when investments are used without changing how people work or helping with their performance, and are only seen as something to use for marketing. Rather than thinking of strategy as a rigid blueprint, McDonald (2015) defines it as the act of designating a course of action, allocating available resources, and committing to a plan. M & BD Consulting blends the two ideas together and explains digital strategy as a collection of steps that enables the organization to successfully dominate its competition in the digital realm. It is a procedure involving deliberate selections and deeds that are done consciously and ahead of time. From the procedure, the firm ascertains its points of emphasis in the online space, devotes and re-devotes its assets (Gonzalez, 2015).
Why is a digital strategy necessary?
Previous research has indicated that organizations with revenue levels higher than the standard for their industry have an advantage over other comparable companies. These businesses tend to develop at a faster rate, have increased margins, use their capital in a more productive way, and have more equity to offer shareholders. At present, those organizations that do not make moves to fully utilize digital technologies run the risk of being outpaced by their rivals.
It is absolutely necessary to have a plan for digital initiatives in the present, since digital technologies modify the rules and therefore diminish the efficacy of former methods. The graphic from Expert interviews and McKinsey analysis, as seen in Olanrewaju and al. (2013), shows how digital can have an impact on all components of the contemporary company.
Insights for the conception of a digital strategy
A digital plan must go beyond standard operational departments and business activities that are enabled by IT. Although digitization is associated with products, services, and the data surrounding them, it goes beyond the confines of the business and its supply chains to create vibrant solutions that transcend traditional industry sectors. Creating a plan cannot be done without considering the web of associations, collaborations, and rivals in the corporate environment since they are all linked.
Firms need to comprehend the alteration and upheaval that is being confronted in order to devise the most suitable digital strategy and produce wise decisions, rather than the certain individuals or groups influencing these changes.
Strategy& suggests to think about, among others, the following questions before creating a digital strategy (PwC, 2016):
- « How will digitalization affect our current business model and positioninig within our industry’s value chain ? »
- « How can we identify and enter business areas where value is being created, both inside and outside our industry ? »
- « What areas of our business model are vulnerable to disruptions form new entrants, and how can we best address them ? »
- « Which capabilities do we need to build to be a leader in the field ? » (PwC, 2016)
It is essential to inquire into additional matters concerning creative thinking and product advancement, the distribution system and activities, advertising, selling, and customer assistance, as well as the work environment. The influx of digital technologies is having an impact on the ways businesses generate new ideas and bring products to market. There are doubts about using technology to increase productivity and keep an eye on the supply chain and operations. The increasing pace of change is having a major impact on marketing, sales, and customer service strategies. The workplace is also changing, and in order to keep bringing in the best and brightest, companies must adjust (PwC, 2016).
