Digital transformation is one of the biggest buzzwords you hear more and more often these days. But what does it really mean for today’s businesses? And how do they leverage digital to operate faster, smarter and gain success?
In this article, we introduce to you the essence of digitalization, the current challenges and the critical success factors for digital transformation.
What Exactly Is Digital Transformation?
Digital transformation or digitalization refers to the process of leveraging digital technologies to improve business efficiency, open up new opportunities for growth and revenue and manage risks. It forces and enables traditional businesses to transform (changing their business activities, processes, competencies and models).
Digital transformation synthesizes online and offline channels. It has some benefits like below:
- Automation, increased efficiency and productivity
- Optimization, greater agility, more resiliency
- Improved collaboration and communication
- High-quality user experience
These things are essential to the success of a modern business. Therefore, digital transformation is definitely a must for your business.
What Are the Challenges of Digital Transformation?
According to the latest research, an organization’s culture is one of the prime barriers that can have a huge impact on its digitalization. Often, businesses tend to fail at digital transformation because of many reasons including poor employee communication and engagement, lack of experience and goal alignment.
Another research shows that 62% of people are terrified of change while only 38% love it. On the organization level, therefore, digital transformation can cause anxiety, fear and uncertainty for employees, leading to frustration in the workplace. Here, the responsibility of supervisors and managers is to handle problems and resolve conflicts.
Besides, the majority of employees are worried about digital technology eliminating their jobs. They believe that some skills and professions will disappear in the digital age. But the fact is that digitalization requires a combination between humans and digital technologies. It demands employees to learn new skills, acquire new behaviors and adopt continuously.
From research, 37.3% of companies say that digital transformation provides new job opportunities. 30.5% report no change caused, whereas 32.3% see digitization as a job killer rather than a job generator.
Digital transformation is the process of cultural, operational and organizational transformation. Therefore, business owners must create a practical digital transformation strategy to foster employee engagement and interaction in the workplace.
What Are the Six Critical Success Factors for Digital Transformation?
Research points to six factors that determine a successful digital transformation. They include:
1. Leadership
To ensure digital transformation success, it is important for companies to have effective leaders. They must be familiar with emerging technologies, know how to align individual, team, organizational goals and be committed to the success of their organization, team and employees.
2. People
Human element is a key factor for successful digital transformation. Companies should build capabilities, equip employees with necessary skills through training programs to help them advance in their work and get more opportunities at the company in the future. Make sure employees are fully engaged in your company’s transformation project.
3. Agility
Agility is among critical success factors for digital transformation. To compete and thrive in the digital age, a business needs to be agile. That means it has to respond immediately to market changes, and adapt to customer’s needs or competitor’s challenges. Agility enables businesses to make swift changes and allows management teams to improve their decision-making.
4. Business integration
Innovation is driving the future of businesses. By integrating new digital technologies, they can improve their operations and performance. Some key technologies for digital transformation include Cloud computing, Artificial intelligence (AI), Blockchain, Data science, Internet of Things (IoT), etc.
5. Ecosystem
A company creates a digital ecosystem to maintain all the processes needed for digital transformation. It is a network of connected products, companies, partners, suppliers and so on. The aim is to build connections, drive innovation and transformation as well as increase business performance. Ecosystem integration allows businesses to embrace new technologies to automate processes, operate efficiently and grow in the future.
6. Value from data
One of the critical success factors for digital transformation is data. Multiple interactions in the entire digital universe generate data, especially customer interactions. Organizations and companies can use that data to measure their performance, advance business goals and make better business decisions.
That being said, digital transformation is helpful in business. Each company should focus on the above critical success factors for digital transformation to build capabilities, create value and achieve business growth.
