There’s no doubt about it: From healthcare to finance, the age of digital transformation is upon us. Across industries, new technologies are enhancing the way organizations manage everything from customer experience to internal processes.
But despite what you’ve read in the news, this agile approach to digitization isn’t just a buzzword—it’s an ever-evolving reality for many businesses, especially in a post-pandemic world. While most business owners acknowledge the significance of digital transformation, not all understand what it takes to implement a strategy at scale. And that’s okay because the truth is—it takes a lot. From IT strategy and design to decisions around architecture, custom development vs. vended solution, and beyond, there are many pieces to the digital transformation puzzle that bear consideration.
That’s where Kenway comes in. One of our key objectives is to guide and support organizations on their journeys of technology transformation. As part of this objective, we’ve created a comprehensive guide to digital transformation: what it is, what it does, and why businesses need to embrace it—or risk getting left behind.
To most, Digital Transformation is the implementation of technology to streamline operations; and that's a component of it; however, from Kenway's perspective, Digital Transformation can be summed up as the journey an enterprise will embark on in an effort to strategically realign their people, processes, and technology to satisfy their current and future customers' ever-changing expectations. It begins with leaders empowering their teams with new methods to create highly responsive strategies and foster a dedicated culture of innovation within an organization.
Today’s business landscape, much like a rushing river, is fast paced, constantly changing, and at times, rather turbulent. To stay afloat, organizations have had to engage in digital transformation strategies to help them become more agile and able to respond to emerging changes.
Consider the business implications the healthcare industry faced during the Covid-19 pandemic. To respond to new market demands and standards, and adequately serve their communities, healthcare providers like Southcoast Health had to quickly expand their telehealth offerings and find ways to manage testing data, accelerating their digital transformation needs and efforts dramatically.
While the pandemic undoubtedly accelerated digital transformation for many organizations, the fact remains that the world was already headed in an increasingly digital direction.
Although you’re now armed with the cursory knowledge required to describe what digital transformation means to the common person, how does it impact you and your organization? Where do you start? What’s the first investment? Whether your company is small or large, SaaS or Retail, local presence, or global enterprise – where you begin your transformational journey will depend entirely on your unique organizational context and existing digital maturity. However, HBR has distilled the transformation journey down to four main pillars of investment that you should consider:
No transformation is the same. Typically an enterprise will take the first step on its transformation with a strategic investment into modernizing its tech stack, then moving down the line from there. However, a more mature technology-centric organization may consider its first investment into digitizing its marketing capability. Viewing your journey through this simplified lens can help inform your first step.
As ever-evolving market conditions continue to demand enterprises digitally transform their businesses to remain competitive, the lexicon around digital business transformation is fragmented, expanded, and in need of further definition.
While digitization, digitalization, and digital transformation are related parts of a whole and may appear to be interchangeable, they are in fact distinct terms. Their meanings and contextual applications are crucial for businesspeople to understand before making digital transformation strategy decisions.
Gartner’s IT Glossary defines digitization as the process of changing from analog to digital form. When businesses take analog data and information they have collected and enter it into computer software or database for storage, processing, or transmission they are engaged in the process of digitization.
There are several examples of digitization that are already commonplace in most businesses. Taking handwritten text, such as your signature, and converting it to an electronic format for signing digital documents or use in email is one. Another is scanning “hard copy” paper documents to create duplicate versions in digital formats (such as PDF) that can be edited and stored on hard drives or in the cloud, reducing the need for physical document storage.
While extremely useful for organizing and retaining large amounts of physical information, digitization accounts only for the change in the state of the information, not the business processes that often generate the information. For that, we must look further into digitalization.
Although it is often associated with and imprecisely used as a synonym for digitization, digitalization is not as clearly or neatly defined. Understanding this term relies heavily on the context in which it is applied and the authority from which the definition is sourced.
Within a broader business context, once again, Gartner’s glossary provides some insight. It describes digitalization as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”
Digital transformation is all about accelerating the growth of the business by leveraging technology, organizational processes, and people to develop or enhance existing business models and revenue streams. Because digital transformation requires buy-in from organizational leaders across departments, implementing such a strategy is often daunting. That’s where corporate technology consultants, like Kenway, come into play. We can help create the roadmap, provide customized solutions, drive organizational adoption, and leverage a company’s data to drive revenue-making decisions.
Data plays an integral part in how an organization sets benchmarks and goals. Therefore, its role in digital transformation is a significant one. But not all data is created equal, and to utilize it successfully, there are a few things to consider:
1. Data Quality
Bad data won’t do you any good. In fact, it could even do harm—especially if your organization is making those important decisions based on low-quality data. That’s why data quality is imperative when embarking on your digital transformation journey.
Issues with data quality can occur for any number of reasons. Human error, formatting inconsistencies, and poor organization can add up over time. However, the digital transformation process presents a prime opportunity to clean, organize, and establish better frameworks for data going forward.
2. Data Governance
As defined in our data governance whitepaper, data governance is “The collection of clearly defined policies, procedures, standards, processes, roles, and responsibilities that ensure the effective and efficient use of data in enabling an organization to achieve its goals.”
Data governance defines who can take a specific action, with specific data, in specific situations, and with specific methods. As part of a digital transformation strategy, a data governance program should align with an organization’s overarching goals and objectives.
3. Data Security
Considering that cybercriminals can penetrate 93% of company networks, it goes without saying that data protection and security are of the utmost importance. As part of a digital transformation, organizations would benefit from re-examining their data security practices.
Some practices to review might include how your organization uses and updates passwords, data encryption, and compliance within your tech stack.
Now that we’ve briefly examined the role of data in digital transformation, let’s take a look at some of the benefits and challenges of implementing these strategies.
Regardless of the pillar your organization is investing in throughout the digital transformation journey, any type of organizational change can be disruptive. Here’s a look at the biggest benefits and drawbacks of undergoing this process.
1. Enhanced Data Collection & Management
Many organizations have vast amounts of data that often goes underutilized. Digital transformation can be a great opportunity to assess, enhance, and optimize the way businesses collect, manage, and utilize data through processes like data visualization, for example.
2. Increased Agility
Covid-19 certainly impacted the digital transformation timelines for many organizations, but it also highlighted the need for agility. An Agile Method of Delivery can help businesses adapt quickly and navigate uncertainty in an ever-changing world.
3. Data-Driven Customer Insights
Customer data is one of the most valuable assets an organization can own because it offers precious insights into who its audiences are and how they behave. The digitization of this data means it can be easily accessed and used to make a whole slew of important business decisions leading to improved insights, customer experience, and ultimately, customer retention.
Read this case study about how organizations can make data insightful >>
4. Improved Customer Experience
In the digital age, customers expect things now. Whether you offer a service or a product, they want the experience to be fast, easy, and intuitive—three things that digitalization can help accomplish.
Despite its numerous benefits, digital transformation comes with a list of challenges, too. These include aspects like:
1. Lack of Strategy
Digital transformation statistics show that 70% of all digital transformation initiatives fail, often due to a lack of buy-in from employees or adequate support from leadership. However, when organizations employ a fully fleshed-out change management strategy their likelihood of success increases by 6x.
The best change management strategies prioritize identifying the issues to be addressed and their main causes while bringing together stakeholders and employees and developing working relationships.
2. Complex Software and/or Technology
Another common roadblock to digital transformation is adopting complex enterprise software and incorporating new technologies. Organizations often face challenges with implementation at this stage. To mitigate this, leaders should seek out and recommend the most intuitive and integrated solutions possible.
Pro Tip: Avoid wasting time and money on solutions that won’t work for your business. Thoroughly vet vendors by sharing your requirements, attending product demonstrations, obtaining references, and closely evaluating documentation and capabilities. Never assume that an assessment has already been made in order to avoid the impact of risks and costs in the long term.
3. Difficulty Driving Adoption
Amid transformation, organizations that attempt to adopt new processes and technologies frequently encounter a general resistance to change among employees—especially those who are accustomed to certain routines and processes that they feel are already working. To allay concerns and help employees become confident using new tools, organizations must apply change management principles from the outset, provide thorough onboarding and training, sustained performance support, and an explanation of the value added by the new processes so employees feel they are part of the solution rather than victims of change.
4. The Continuous Evolution of Customer Needs
Market demands and customer needs are constantly changing. Acknowledging this is only half of the equation. Organizations will also need to be capable of responding to these changes, even while they’re engaged in a digital transformation.
Digital transformations are often complex processes and can take years to complete. It is likely that during that time your customers' needs will evolve. Anticipate such shifts and plan to be agile in adopting new technology solutions to serve your customers as their needs change.
While digital transformation can present significant challenges, there are a few things you can do to help make the transition as smooth as possible.
1. Define your strategy
Make sure your teams are aligned around a clearly defined strategy and they understand their role in the plan's execution. Encourage cross-functional collaboration, communication, and coherence across stakeholders and the involved teams.
2. Invest in skilled IT talent
Build the team you need to successfully get your organization to its digital transformation finish line. Hire experts, highlight their inputs, and empower them to lead the change goals outlined in your business transformation strategy.
Additionally, don’t be afraid to reevaluate your organizational structure to determine if a change may help you reach your transformation goals.
3. Get company-wide buy-in
This is crucial for success. Leaders must develop a plan to get everyone on board through the use of change management principles early in the process. Digital transformation requires the full support and buy-in of an organization because it touches every department. Without stakeholder and/or leadership support, implementation and adoption will likely fail.
So, how do you get leadership buy-in? A key consideration that drives decision-making for stakeholders is ROI. This brings us to our next point…
4. Measure ROI of digital transformation
Digital business transformation is a costly process—in resources, time, and money. Be sure your efforts are on track to adding value to your enterprise by conducting an ROI evaluation. A corporate technology consultant can serve as your digital transformation guide and help you measure the success of your digital transformation strategy.
Of course, there are many other moving parts and considerations when it comes to adapting your business to digital transformation, and there is no “one-size-fits-all” solution. To find out how your organization can embrace digital transformation, talk to a Kenway consultant today.
We’ve covered a good deal about digital transformation and its importance across industries. If you still have any lingering queries, check out these frequently asked questions from professionals like you.
The four main areas of digital transformation are:
1. Process Transformation
With the right strategy, technology can be leveraged to invent new approaches to existing business processes. Optimizing these processes through the use of data, analytics, machine learning, or APIs can help organizations realize improved quality, lowered costs, or reduced cycle times. Successful process transformation can give companies an edge over their competitors.
2. Business Model Transformation
Process transformations try to optimize specific activities within an enterprise. Business model transformations take a holistic assessment of how value is created within an industry and utilize technology to adapt traditional business models to capitalize on new market opportunities.
3. Domain Transformation
Domain transformation involves an organization expanding or diversifying its business operations and entering into a new market domain. Amazon’s launch of Amazon Web Services (AWS) serves as a strong example of this type of transformation.
4. Cultural/Organizational Transformation
Companies that have the most success with their digital transformation recognize that commitment to this initiative must take root at all levels of the organization. Internal mindsets, processes, talent, and capabilities must all be aligned around specific digital transformation goals. These include freeing up workflows, decentralizing decision-making processes, and adopting the practice of testing and learning.
Here are two examples of digital transformation in action:
The financial services industry is undergoing a major digital transformation as a result of advances in technology and the rise of digital-first business models. Banks are shifting their focus from legacy services to digital services and investing in technology and data analytics to better meet the needs and expectations of their customers. While the journey is complex, this type of transformation has the potential to bring significant benefits to the industry due to the required investment into new technology, changes in operational process, and an intentional shift in mindset.
The wealth management sub-sector of financial services is a great example of a domain that is being significantly impacted by digital transformation. In this article, McKinsey argues that wealth management firms have a specific opportunity to leverage digital and data-driven technologies to improve their services and better meet the needs of their clients. Advanced analytics and technology solutions are leading to improved services and greater efficiencies in the sector. By leveraging these technologies, wealth management firms can better understand their client’s needs, offer more personalized services, and increase efficiency in their operations – ultimately leading to the nirvana state, a complete 360-degree view of their customers. This won’t happen organically, or overnight - as we’ve explained, digital transformation is a journey and will require firms to invest in new technology and develop new processes and capabilities; however, the investment could yield (and already is in some cases) significant benefits. Wealth management firms, and all sub-domains within the broader financial services industry, must embrace digital transformation and analytics to remain competitive in a rapidly changing and competitive environment.
An industry-leading healthcare solutions provider faced a worst-case scenario when it learned that the strategic partner it had leveraged to help collect and aggregate data was not only terminating its agreement but was also going to become a direct competitor in just 12 months.
As the company quickly began to evaluate new solution partners, it realized that one of its largest obstacles was getting all the data from the existing solution provider and migrating that data to the new solution provider.
Kenway Consulting guided them through finding a solution to their data transformation problem to support an improved future state.
Read the full case study here.
Digital transformation has quickly become par for the course for companies wanting to remain competitive through innovation and grow in their capacity to respond to changes in the market. Common drivers of digital transformation are improving productivity, reducing costs, differentiating product offerings, creating competitive advantage, improving the customer experience, and covering the bases of data governance and compliance.
Ultimately, digital transformation gives your business the agility it needs to react to market disruptions and with the right strategy, become a market disruptor—so your enterprise not only survives but thrives.
1. Have a Plan to Ensure Internal Adoption
Despite consensus on the value of being a data-driven enterprise, only 37.8% of organizations would describe themselves as such. When new technology and protocols are introduced for properly managing, storing, and utilizing data in decision-making, many employees find it difficult to adapt to the new process.
If a company's team does not embrace the new technology and ways of working, its digital transformation initiative will fail. A change management strategy can help to mitigate this risk. Effective change management looks like this:
Companies that invested in a rigorous change management approach reported a 79% success rate—three times the average for all other initiatives.
2. Evaluate All Potential Costs
While transforming your business will likely be a costly endeavor, (the average digital transformation budget for mid-large scale businesses is $14 million) the long-term savings and benefits gained from access to more usable data make it a worthwhile investment for your business.
Studies show that data-driven businesses are 58% more likely to beat revenue goals and 162% more likely to significantly outperform laggards.
3. Assess Your Resources
Avoid potential roadblocks to your digital transformation by identifying areas in which your organization may be lacking knowledgeable resources and/or subject matter experts.
For example, if you don’t have a data process transformation expert on your team or are short of trained staff who can manage these kinds of organizational changes, you may look to engage a consultant as an added resource to ensure the success of your digital transformation strategy.
At the end of the day, digital transformation isn’t just a strategy—it’s the future. From benefits and challenges to organization-wide implementation, navigating the process with the right partner is paramount to success.
And Kenway Consulting can help. We’re specialists when it comes to aligning IT strategy with business objectives to maximize value. We’re experts in change and project management, as well as the architecture and design required to build a solid foundation for future growth. We’re masters at developing custom solutions that focus on security, scalability, and optimized performance. And we’re just a phone call or email away.
If you’re ready to take your business to the next level, we’re ready to assist. Kenway can help guide you through your organization’s digital transformation. Contact us today to get started.
