What is Digital Transformation
Digital transformation is one of those terms that is often used to explain a wide array of business development, making it hard to precisely pin down. However, the way we define digital transformation at Cloud Doing Good is the process in which companies use digital technologies to create new, or enhance existing, business processes and to increase the value delivered to customers.
Even within this definition, digital transformation can take many forms. Understanding what “digital” means for an organisation is fraught with difficulties as it can include everything from implementing email, all the way to integrating AI with existing practices.
To clear up this messy conceptual framework, a helpful way to understand digital transformation is through terms like digitisation and digitalisation.
Digitisation is moving from analogue to digital. In layman’s terms, this means converting physical information, i.e. folders and binders, into digital data. When computers became ubiquitous, companies invested heavily into this new technology as it greatly improved organisation efficiency.
Digitalisation is using digital technologies to improve established business processes. This means using digital information to improve efficiency and effectiveness. Digitalisation is how a customer records can be instantly retrieved within a database.
Digital transformation transcends both digitisation and digitalisation. Whilst these concepts are often a significant part of any digital transformation, a digital transformation goes beyond using digital technologies to improve established business outcomes. It intends to use new technologies to create new ways of doing things, and even expand organisational scope, to drive profit and outcome.
Why is Digital Transformation Important
Traditionally, digital transformation was often used to bring value to the end customer. A famous example of this was Netflix. Originally, it started out as a DVD mail order service. However, when the technology was scalable, it then ended the traditional DVD lending sector by allowing people to stream films and television directly into their homes.
Their digital transformation not only turned Netflix into a multibillion-dollar behemoth but delivered an entirely new way of consuming media around the world. With their digital transformation both improving their operations and supplanting their legacy approach, their achieved success.
Especially in a post COVID world, businesses and organisations are waking up to the importance of internal digital transformations. With an increase in home working and increasing supply chain pressures, digital transformations are vital for maintaining operational efficiency.
For example, take an organisation using spreadsheets as the basis of their finance system. The finance team within the organisation must manually reconcile accounts at the end of each month, cobble together the spending of different departments by hand and make do with lacklustre security.
By shifting to a finance system like NetSuite, not only are these processes dramatically improved, an example of effective digitalisation, but the digital transformation can expand the capabilities of the organisation.
With NetSuite’s forecasting and planning capabilities, data driven strategic level decisions could now be taken.
Being Outcome Focused
Considering the importance of digital transformations, knowing where to begin can sometimes be confusing.
Any digital transformation begins and ends with the outcome in mind. It is all very well implementing the latest technologies in AI and machine learning, but if they cannot directly improve the customer experience or reduce the costs for the organisation, the transformation is for nought.
This article discusses the processes in which you can carry out a digital transformation, but all of these strategies need to have an end goal in mind which is conducive to the organisation’s needs.
Digital Transformation Framework
A digital transformation framework refers to a structured approach or set of guidelines that organisations follow when undergoing the process of digital transformation. Whilst every organisation is different and has unique needs, there are themes that are broadly consistent across digital transformations.
Important building blocks for digital transformations include:
- Leadership and Culture
- Customer experience
- Security and Compliance
- Operational Processes
- Skills training
- Digital technology and data analytics integration
There are numerous guides and frameworks for carrying out digital transformations, decision makers should research these when developing their own digital transformation strategy.
Our Digital Transformation Strategy
Whilst there are several helpful frameworks for digital transformations out there, it is easy to be overwhelmed with the amount of, sometimes conflicting, advice. As we are a team of Digital Transformation specialists at Cloud Doing Good, we are adept at implementing change hand in hand with our clients. You can find out more about NetSuite implementations or our page or alternatively you can read our guide.
Please contact us if you want to learn more about our strategy.
Identify Outcome
For us, the very first step is to identify what the desired outcome is. The goal should dictate the technologies, training and steps when undertaking the digital transformation. The desired outcome should align with current broader business strategies and objectives, otherwise the benefits of the transformation cannot be realised.
Examine Current Processes
If you are planning on a digital transformation, it is vital to evaluate your organisation’s current operations, infrastructure, culture and the ways these intersect. A digital transformation crosses these boundaries and understanding what makes your organisation is how you can make the most of your transformation.
Build Consensus
From CEOs to frontline staff, ensuring that key stakeholders are involved is essential for a successful implementation. It is not only important that they are aligned with the transformation in general terms, but their input and engagement should make up some of the process.
Build your Transformation Team
Once you have agreement throughout the key stakeholders, it is important to create a team that can take responsibility for delivering the transformation. Our team of NetSuite consultants (link to page) is often used to bring together this cross departmental team in client organisations because of their drive, professional experience and positive working attitude.
Your team must be able to maintain the consensus and direction of the transformation throughout the organisation. This requires a mixture of both technical skills and expertise in project management.
Depending on the nature of the transformation, the complexity of your organisation and its culture this team can be entirely made up of internal employees, entirely driven by external consultants or some mixture of the two.
Even if you opt for an approach which utilises consultants, we recommend always having an internal champion of the project so that the client’s aims and the external contractors' ideas are in step.
Develop a Roadmap
Create a project plan based on the information and expertise gained from the previous steps. It is important to set timelines and milestones so that the digital transformation can move forward.
Promote Innovation and Flexibility
Whilst the roadmap is important for setting intermediary goals, ensure that the team and wider organisation have the flexibility to adopt the transformation. Experimentation and outside the box thinking is a must, and promoting an innovative culture allows the transformation to take hold. It is inevitable that there will be hurdles and delays, but a can-do attitude and willingness to problem solve turns these obstacles into opportunities.
What Drives Digital Transformation
It is easy to look at digital transformations and think technology’s importance is above all the other components, but this is to miss the forest for the trees. What this article has so far highlighted is that the context in which the transformation happens is important for its success, and the same applies to what drives the transformation.
Culture
Having a growth-minded business culture is essential for driving any transformation. However, this mindset must be coupled with empathy. Organisations are made up of people with varying backgrounds, ideals and preferences. While you may be onboard with a large-scale digital transformation, others might be more apprehensive.
Whether their apprehension comes from being old timers, a dedication to following process or a maverick mentality, engaging with these elements that typically slow transformation momentum is essential.
If you are trying to persuade someone of anything, you typically wouldn't use the exact same argument for them as the next person; yet many organisations use this exact approach!
Identify where people's apprehensions are and discuss the benefits of the transformation in the business language that they respond to. Not only does this help them understand the importance of the transformation, but it opens discussion.
Ultimately, if the digital transformation needs to happen it must happen, but it is much easier for the transformation to happen with employees rather than to employees. As they will have to adapt to the transformation, it is vital they understand the benefits it brings and how to fully utilise it.
Even though some people might be opposed to the transformation, their input is still valuable and should be considered. A workplace culture in which these questions and concerns are integrated into the transformation is what guarantees the long-term effectiveness of the transformation.
Technological Relevance
A digital transformation wouldn’t be a digital transformation if it weren’t for harnessing new technologies. Technological relevance is using technology which can directly improve efficiency and outcomes.
Back to the example of a finance system upgrade, where NetSuite is particularly powerful in driving a digital transformation is the technology directly improves business outcomes. More benefits of NetSuite can be found on our blog, but to summarise organisations can expect:
- Integrated Operations: NetSuite unifies financials, CRM, and inventory management for streamlined business processes.
- Real-time Insights: Access to live metrics and customizable reports for informed decision-making.
- Scalability: Adaptable to growing business needs without major IT changes.
- Cloud Accessibility: Anywhere, anytime access for flexibility and remote collaboration.
- Financial Efficiency: Robust accounting, revenue recognition, and financial planning capabilities.
- CRM Integration: Seamless customer relationship management from lead to order.
- E-commerce Support: Integration with e-commerce platforms for efficient online transactions.
- Automation and Customisation: Streamlined tasks and adaptable system to suit business needs.
- Global Operations: Multi-language, multi-currency capabilities for global business management.
- Security Assurance: Advanced measures to protect sensitive data and ensure compliance.
- Regular Updates: Cloud-based system ensures access to the latest features and security enhancements.
These are all examples of how the technological capabilities of NetSuite exceed spreadsheets. The driving force from this technological relevance is it empowers organisations to do much more, using fewer resources.
How to evaluate digital transformation
Evaluating and measuring any change, let alone digital transformation, is often a challenging undertaking. As a digital transformation is an ongoing process with constant learnings and development, deciding upon a point to assess its success is difficult.
Instead of picking a date and retroactively assessing the success of a project, we recommend a much more continuous, data driven approach.
By using a mixture of financial and non-financial data metrics, it is possible to swiftly ascertain the impact of a digital transformation over time. From coupling KPIs with scenario planning capabilities, these metrics are a trove of valuable information.
With a swathe of data to draw upon, it is important to identify which metrics you use to define success. Before undertaking the transformation, decide upon which KPIs measure the impact of the transformation and use these for the bulk of your analysis. A holistic view is important to understand any unexpected side effects, but to determine whether the transformation satisfies the desired outcomes a focused approach is a must.
Large scale transformations are often costly undertakings, and being able to identify areas for improvement is important for maximalising the ROI. Across large organisations, it is possible to set up micro experiments where some departments receive the transformation before others and examining the differences in outcome between them.
Conclusion
With planning, open communication and an innovative culture, a digital transformation is nothing to fear. A digital transformation is so much more than just an IT upgrade; it requires key stakeholders to buy into the process and for there to be clear aims. By having dedicated project managers in place, it is possible to ensure the organisation doesn’t lose sight of the end goal. A team of experts should be able to bring together both the cultural and technological driving factors, speeding up both implementation and adoption. Our team of accredited NetSuite Consultants can support organisations needing this expertise.
If you want to find out more about Cloud Doing Good’s approach to digital transformations, please contact us!