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Digital Transformation: How Technology is Changing Business

Digital-Transformation-How-Technology-is-Changing-Business

Digital Transformation makes a business more efficient and profitable - when executed correctly. Technology can expedite processes, provide new ways to reach customers, and make it easier to adapt to market changes. Unfortunately, few companies realize these benefits as a majority of digital transformation projects fail.

Companies spent $1.3 trillion on digital transformation in 2019, and nearly 70 percent of it was wasted, according to research published in Harvard Business Review.

In this guide, we’re taking a closer look at the urgency behind digital business transformation and how you can succeed. We’ll cover:

What is digital transformation?

Digital transformation is harnessing technology to change the way you do business. It’s a fundamental cultural shift in how you interact with your customers.

Companies undergoing a digital business transformation will:

  • Integrate digital technology into every aspect of their business,
  • Change the way they operate by modifying or creating new processes and customer experiences, and
  • Foster a culture that embraces innovation and change. 

Many companies confuse modernization or digitizing with transformation. Digitization is just introducing a tool. Examples of digitizing include:

  • Switching from typewriters to word processors and personal computers
  • Replacing manual cash registers with point-of-sale systems
  • Introducing email (or more recently collaboration tools like Slack)

What-is-digital-transformation

Yes, these technologies changed the way people worked, but they did not fundamentally change the way businesses operated. Digital transformation is rooted in changing and improving the customer relationship first. 

Companies need to focus on more than just the tools they use; they must also consider an overall digital business transformation. In 2021, every business is a digital business. No matter what you sell, you're using a digital channel to reach your customer or conduct a transaction.

Salesforce Chairman and CEO Marc Benioff puts it this way:

"Every digital transformation is going to begin and end with the customer, and I can see that in the minds of every CEO I talk to"

Why does digital transformation matter? 

Companies started digitizing decades ago, so why is transformation such a buzzword in 2021? Thirty years ago, companies had the luxury of taking things slowly. That's no longer the case. Technology is rapidly changing, so companies need to be agile enough to adapt.

Digital business transformation is not a once-and-done deal; it's a continuous process and mindset for organizations. CIOs and IT teams should be continually evaluating and testing new technologies to see what could add value to the company.

Why-does-digital-transformation-matter

The pervading school of thought used to be that a digital transformation gave you a competitive advantage. That's no longer the case. Companies need to change and adapt for survival, let alone competition. The best examples come from retail. Look at the collapse of Sears. Throughout most of the last century, Sears was the leading retailer in the United States.

In the 1970s, the company began to face increasing competition from discount chains like Walmart and Target. Walmart would replace Sears at the largest retailer in the 1990s, but that's not what doomed the retailer. The business began to collapse as more shoppers moved online around the turn of the century. Customers made the transition to digital, but Sears did not. By the time it invested in eCommerce, it was too late to compete with Amazon.

It’s important to note that Sears’ collapse is not solely related to a lack of an eCommerce strategy. Other retailers also surpassed Sears in their use of technology to run their business. Walmart and Amazon invested millions in building the logistics and infrastructure to support their changing business.

The COVID-19 pandemic continues to accelerate the necessity for driving Digital Transformation across companies of all sizes. Organizations are embracing remote work & quickly modifying their day-to-day business operations to match the new normal. 

The key takeaway is that if you don’t develop a digital transformation strategy, your business will fail.

What are the benefits of digital transformation? 

Efficiency and productivity are the main benefits of digital transformation, but changing the way you do business unlocks the potential for positive impacts on your customer experience, operations, and employee engagement.

What-are-the-benefits-of-digital-transformatiozdvvn

Area #1 - Customers 

Benefits 

  • Improved customer experience
  • Lower churn
  • Ease of doing business 

Technologies:

  • CX Management 
  • Customer Self-Service 
  • Chatbots 
  • CRMs 

Area #2 - Employees 

Benefits 

  • Better efficiency 
  • Lower employee turnover 
  • Increase engagement 

Technologies:

Area #3 -Operations

Benefits 

  • Better efficiency 
  • Lower support costs 
  • Faster response times 

Technologies:

The table below highlights some of the most common benefits companies can expect from their transformation efforts. 

Area 

Benefits 

Technologies 

Customers 

  • Improved customer experience 
  • Lower churn 
  • Ease of doing business 
  • CX Management 
  • Customer Self-Service 
  • Chatbots 
  • CRMs 

Employees 

  • Better efficiency 
  • Lower employee turnover 
  • Increase engagement 

Operations 

  • Better efficiency 
  • Lower support costs 
  • Faster response times 

Why do some digital transformations fail? 

Mckinsey estimates that 70 percent of digital transformations will fail, and recent history provides plenty of examples. 

One of the most prolific failures was GE. The company began its digital transformation in 2011 by being an earlier innovator in IoT (internet of things). GE added sensors to products and modified its business model for its industrial products. Its downfall would be the creation of a new business unit GE Digital in 2015. The company spent billions and hired thousands of people but could never produce any value - eventually leading to the ouster of the CEO.

Why-do-some-digital-transformations-fail

Digital Transformation challenges need to be addressed in order to sustain in the long run. Not only GE but also many other big players in the market fail to get positive outcomes from their digital initiatives. 

With the evolution of technology, the CIOs role has drastically changed. Today they are strategic partners who play a significant role in decision making. Here is the ultimate guide for CIOs who are struggling to build an effective Digital Transformation strategy. 

Related Reading: Companies That Failed At Digital Transformation And What We Can Learn From Them

So what are the most common reasons transformations fail? 

  • Lack of executive leadership - Transformation begins at the top. The entire executive team must not only buy-in to the plan, but actively promote and implement it. If executives dismiss digital transformation as merely an IT project, the company will struggle to make changes. 
  • Poorly defined goals- Before you can achieve a goal, you need to define it. Digital transformation can mean a lot of different things. If you lack a consensus for what it means for your business, it will be hard to execute. 
  • No roadmap- You need a vision and a roadmap for how you're going to get there. Many companies recognize the need for transformation but struggle when it comes to defining what and how they'll do it.
  • Resistance to change- Like any significant organizational change, humans' natural resistance to change will be challenging to overcome. Companies that don't develop and execute a change management plan are more likely to fail.
  • Poor talent development or recruiting- New technology means you need workers with different skills. Mismatches between your talent skillset and your technical needs can derail a project. You’ll need to think about retraining workers or hiring people with the skills you need. 

Learn how Apty helped a major U.S. airline overcome digital transformation challenges.

How do you build a digital transformation strategy? 

Author, entrepreneur, and Harvard Professor, John Kotter’s 1996 book Leading Change is one of the most used frameworks for how to navigate change in business.

How-do-you-build-a-digital-transformation-strategy

When developing a digital transformation strategy consider following Kotter’s 8-step process:

  1. Create a Sense of Urgency
  2. Build a Guiding Coalition
  3. Create a Strategic Vision
  4. Communicate the Vision
  5. Enable Action by Removing Barriers
  6. Generate Short-Term Wins
  7. Sustain acceleration
  8. Anchor Changes in Corporate Culture

Digital-Transformation-Strategy

Step

Who’s Involved 

Objectives 

Step 1: Create a Sense of Urgency 

  • Executives 
  • Managers 
  • Other Leaders 

Explain the importance of transformation. Why is it essential for the business? Focus on not only why you need to change, but what you need to do it now. What harm will come from waiting too late? 

Step 2: Build a Guiding Coalition 

  • Executives 
  • Managers 
  • Other Leaders 
  • Technology Specialists 
  • End-users/Front-line employees 

Assemble a team that can spearhead the transformation. This is not a one-person job or something just for IT. It involves every level and department.

Make sure your coalition includes different levels and departments to build buy-in across the entire organization.

Step 3: Create a Strategic Vision 

  • Executives 
  • Managers 
  • Other Leaders 
  • Project Team 

Align your efforts into a clear vision and roadmap. Companies often use the term digital transformation with only a vague idea of what it means.

Your guiding coalition needs to be able to describe the vision in a couple of minutes. Your vision should include what the company will look like in the future and why it's crucial. 

Step 4: Communicate the Vision 

 

  • Executives 
  • Managers 
  • Other Leaders 
  • Project Team 

Repetition is your friend when it comes to change management communication. You’ll need to use every communication channel you have to keep employees informed and motivated.

Be sure to talk about your vision and give updates on the project. 

Step 5: Enable Action by Removing Barriers 

 

  • Executives 
  • Managers 
  • IT 
  • Project Team 
  • Learning, Training and Development Professionals 

You can accelerate your transformation by making it as easy as possible. That means leadership needs to clear any barriers, including:

  • Budget 
  • Training 
  • Staffing 
  • Procedural 

Step 6: Generate Short-Term Wins 

 

  • Executives 
  • Managers 
  • Other Leaders 

You won’t transform overnight. It will be a long process. Break the transformation up into smaller milestones and celebrate when you achieve them.

Mini-milestone celebrations help build momentum for the project.  

Step 7: Sustain acceleration 

 

  • Executives 
  • Managers 
  • Other Leaders 
  • Technology Specialists 
  • End-users/Front-line employees 

You need to build momentum and keep going. Monitor your transformation and modify your plan based on the data. After each rollout, have a debrief.

Talk about what worked and what can be improved. Inspire teams to continually improve their processes as they learn more about the new system. 

Step 8: Anchor Changes in Corporate Culture 

  • Executives 
  • Managers 
  • Other Leaders 
  • HR 

Digital transformation is about changing your culture as much as changing the way you work and do business.

Many organizations abandon new processes or systems before they can see the benefits of the system. Promoting change and digital adoption as a part of your culture ensures a faster and more fruitful transformation.  

Step 1: Create a Sense of Urgency

Who’s Involved

  • Executives 
  • Managers 
  • Other Leaders

Objectives:

Explain the importance of transformation. Why is it essential for the business? Focus on not only why you need to change, but what you need to do it now. What harm will come from waiting too late?

Step 2: Build a Guiding Coalition 

Who’s Involved

  • Executives 
  • Managers 
  • Other Leaders 
  • Technology Specialists 
  • End-users/Front-line employees 

Objectives:

Assemble a team that can spearhead the transformation. This is not a one-person job or something just for IT. It involves every level and department.

Make sure your coalition includes different levels and departments to build buy-in across the entire organization.

Step 3: Create a Strategic Vision

Who’s Involved

  • Executives 
  • Managers 
  • Other Leaders 
  • Project Team 

Objectives:

Align your efforts into a clear vision and roadmap. Companies often use the term digital transformation with only a vague idea of what it means.

Your guiding coalition needs to be able to describe the vision in a couple of minutes. Your vision should include what the company will look like in the future and why it's crucial. 

Step 4: Communicate the Vision 

Who’s Involved

  • Executives 
  • Managers 
  • Other Leaders 
  • Project Team 

Objectives:

Repetition is your friend when it comes to change management communication. You’ll need to use every communication channel you have to keep employees informed and motivated.

Be sure to talk about your vision and give updates on the project. 

Step 5: Enable Action by Removing Barriers 

Who’s Involved

  • Executives 
  • Managers 
  • IT 
  • Project Team 
  • Learning, Training and Development Professionals 

Objectives:

You can accelerate your transformation by making it as easy as possible. That means leadership needs to clear any barriers, including:

  • Budget 
  • Training 
  • Staffing 
  • Procedural 

Step 6: Generate Short-Term Wins 

Who’s Involved

  • Executives 
  • Managers 
  • Other Leaders 

Objectives:

You won’t transform overnight. It will be a long process. Break the transformation up into smaller milestones and celebrate when you achieve them.

Mini-milestone celebrations help build momentum for the project.  

Step 7: Sustain acceleration 

Who’s Involved

  • Executives 
  • Managers 
  • Other Leaders 
  • Technology Specialists 
  • End-users/Front-line employees 

Objectives:

You need to build momentum and keep going. Monitor your transformation and modify your plan based on the data. After each rollout, have a debrief.

Talk about what worked and what can be improved. Inspire teams to continually improve their processes as they learn more about the new system.

Step 8: Anchor Changes in Corporate Culture  

Who’s Involved

  • Executives 
  • Managers 
  • Other Leaders 
  • HR 

Objectives:

Digital transformation is about changing your culture as much as changing the way you work and do business.

Many organizations abandon new processes or systems before they can see the benefits of the system. Promoting change and digital adoption as a part of your culture ensures a faster and more fruitful transformation.  

With the evolution of technology, the CIOs role has drastically changed. Today they are strategic partners who play a significant role in decision making. Here is the ultimate guide for CIOs who are struggling to build an effective Digital Transformation strategy. 

Related Reading: How to Develop a Digital Transformation Strategy: Step-by-Step Guide

What needs to be in your digital transformation change management plan?

You can't transform your business overnight. You'll likely complete this journey in several phases or projects. For each stage, consider drafting a change management plan that will define:

  • Change Scope
    • How big is the change?
    • Who does it impact?
    • What is and is not going to be a part of this rollout?
  • Timeline
    • When should the change be fully implemented?
    • What dependencies are there in the rollout plan?
  • Responsibilities
    • Who is responsible for each part of the rollout?
    • Who is responsible for ensuring compliance with the changes after rollout?
  • Training
    • What training will employees and managers need for this change?
  • Analysis
    • How ready is the workforce for this change? A readiness assessment will help identify training deficiencies and common objections to the change.
    • What metrics will be used to determine if the change was successful?
    • How and when will the metrics be collected and reviewed?

What tools are available to support your digital transformation journey? 

If you want to improve your technology adoption rates, you’ll want to invest in a digital adoption platform. DAPs are a growing category of SaaS products that help users navigate and adopt web-based applications.

The features of each digital adoption solution can vary, but most of them include: 

  • On-screen guidance,
  • Integrated support or help content, and
  • Step-by-step guidance.

A product adoption tool shows users where to click and what to do next. They can help users complete their work instead of just reading how they should do their job.

Advantages of a Digital Adoption Solution

Digital Adoption Platforms offer several benefits when implementing new technology. They can help you realize the advantages of your new technology sooner.

Accelerated Adoption 

By making new technology easier to use, Digital Adoption Solutions can help you decrease the amount of time it takes to adopt new technology. Apty clients report they can fully adopt new software 2-3 times faster using Apty’s adoption tools.  

Decreased Training and Support Costs 

When adopting new technology, training and support costs can quickly spiral out of control. Digital Adoption Solutions reduce training and support costs by providing on-screen guidance.

Users are less likely to open a support ticket when they can use the adoption tool to show them where to click and what to do. Some Apty clients report up to a 70% decrease in support tickets after implementing Apty's guided workflows.  

Improved User Onboarding 

User onboarding is another area when companies struggle when adopting new technology. Not only do you have to onboard your entire userbase during implementation you also have to onboard new hires as they join.

Digital Adoption Solutions make onboarding easier. On-screen guidance allows users to be productive on their first day - even if they've never used the technology before. 

Usage Analysis 

You can’t improve your product adoption if you don’t know what the problem is. The analytical tools in a digital adoption solution like Apty can help you identify where users are struggling so you can deploy extra help to overcome the challenges.  

a. Accelerated Adoption:

By making new technology easier to use, Digital Adoption Solutions can help you decrease the amount of time it takes to adopt new technology. Apty clients report they can fully adopt new software 2-3 times faster using Apty’s adoption tools.  

b. Decreased Training and Support Costs:

When adopting new technology, training and support costs can quickly spiral out of control. Digital Adoption Solutions reduce training and support costs by providing on-screen guidance.

Users are less likely to open a support ticket when they can use the adoption tool to show them where to click and what to do. Some Apty clients report up to a 70% decrease in support tickets after implementing Apty's guided workflows.

c. Improved User Onboarding:

User onboarding is another area when companies struggle when adopting new technology. Not only do you have to onboard your entire userbase during implementation you also have to onboard new hires as they join.

Digital Adoption Solutions make onboarding easier. On-screen guidance allows users to be productive on their first day - even if they've never used the technology before. 

d. Usage Analysis:

You can’t improve your product adoption if you don’t know what the problem is. The analytical tools in a digital adoption solution like Apty can help you identify where users are struggling so you can deploy extra help to overcome the challenges.

How do you measure and track your digital business transformation? 

One of the biggest challenges with transforming your company and the way you do business is keeping track of your progress? What metrics should you use? How do you know if you're succeeding or failing? Based on vast experience helping companies, both large and small, change their operations, processes, and customer experience, Apty recommends clients implement OKR (objectives and key results) strategy to ensure their projects are successful.

Former Intel CEO Andy Grove is credited with introducing and popularizing the OKR approach. The idea is relatively simple. You need objectives that are clearly defined goals. For each objective, you need key results which you will use to track the achievement of the goal.

The key results need to be measurable. Key results should be any numerical such as percentages and dollar amounts. Companies that use this approach report better focus, alignment, and engagement - which should lead to a faster and more successful business transformation.

After defining your objectives and key results, you'll lay out your initiatives detailing your plans for how to achieve the desired results. The strategy and change management plans discussed above are examples of the initiatives you'll create to complete your transformation objectives.

Related Reading: OKR: Definition and examples

Digital Business Transformation: Key Takeaways

If you haven’t done so already, it’s time to start planning and implementing your digital transformation. Remember these key points: 

  • The need for change is urgent. Your competitors are likely further along their journey. You risk falling behind or no longer being viable by not optimizing your business for the digital revolution.
  • Transformation doesn’t happen overnight. It’s a journey. Align your leadership behind common goals and make a plan to achieve them. 
  • Focus on more than just the tools you’ll use. Think about how you can improve your customer experience and relationships. 
  • Equip your company and associates for success. Invest in the right technology, training, and talent to complete your business transformation.
  • Measure and track your progress. 

One last tip - don't be afraid to fail. Part of creating a transformation culture is learning to take risks. Not every initiative of your transformation will be successful, but if you can learn from your mistakes and modify your next effort, your overall business transformation will be a success.

Ensure Successful Digital Transformation with Apty

 

This post was originally published in April 2020, and was updated in April 2021. 

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Nathan Altadonna
Written by Nathan Altadonna

A former journalist and product manager, Nathan is a proud tech geek who blogs about digital transformation, employee productivity, and enterprise software. In addition to his work with Apty, Nathan runs his own consulting company, Innate Digital, helping companies develop content and get the most out of their marketing tech stack.

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