by Thomas Erl
Digital transformation has become a key focal point for organizations in both private and public sectors internationally, but especially for corporations in competitive digital business markets. What digital transformation is, and how it is achieved, has been well documented in A Field Guide to Digital Transformation. However, what is important for any organization considering a move toward a digital transformation is an understanding of the business problems that it aims to solve.
Losing Touch with Customer Communities
With most services and products being available online, it is easier than ever for customers to browse and discover new options and alternatives. Furthermore, customer communities are themselves becoming more sophisticated with online and social technology. The overall evolution of customer communities has raised expectation levels with business vendors, while lowering their tolerance of more traditional business approaches.
This has negatively impacted many organizations that are unable to respond to or keep up with these raised expectations. Such organizations can lose market share as a result of losing touch with customer communities they previously established.
Digital transformation can enable organizations to recognize and respond to customer community trends. Digital transformation platforms and solutions are typically designed to be customer-centric from the ground up, allowing businesses to gain competitive advantages by improving their online presence to continue to meet and exceed customer expectations.
Inability to Grow in Stale Marketplaces
For years, several marketplaces did not change because several major businesses established themselves as the primary suppliers in a given industry and, from a customer’s perspective, there was little to distinguish one from the other. This has stalled the growth of organizations while completely inhibiting the growth of others (such as those trying to enter a well-established marketplace).
The enhanced data intelligence used in digital transformation solutions and the manner in which such solutions are designed with the primary goals of improving customer experience and introducing new innovations can help organizations break away from (or break into) a stale marketplace to noticeably distinguish themselves from competitors.
Inability to Adapt to Rapidly Changing Marketplaces
In more volatile marketplaces, change is a constant factor. Vendors may aggressively introduce new, unique products or services or impose new promotions that are difficult to compete with. Organizations in such business climates can find themselves outmatched, especially when their competitors are larger and wealthier.
Other factors that can introduce rapid change into marketplaces can be political or regulatory influences that can affect international trading or currencies. These too can lead to volatile marketplaces.
As international communities become more connected and responsive, corresponding marketplaces may be subject to greater and more rapid change. Organizations without the ability to adapt to such changes can find themselves left behind.
Digital transformation can intrinsically improve an organization’s ability to act more responsively to unforeseen change, such as rapid developments in business marketplaces. Digital transformation especially supports aggressive innovation, such as to enable organizations to introduce new, disruptive products and services into a marketplace.
Cold Customer Relationships
On a fundamental level, many organizations establish relatively impersonal relationships with their customers. Custom dissatisfaction has remained common in every industry for decades. Many private and public organizations have recognized that there is much benefit to building “warm”, long-lasting relationships with their client communities. However, though the desire has been there, there has traditionally been little innovation in this field that has supported the development of truly customer-centric automation solutions.
Digital transformation provides a genuine opportunity for an organization to dramatically improve customer satisfaction for the purposes of building longer term relationships with existing customers and attracting new customers.
Inefficient Operations
While most organizations utilize business automation technology to automate various parts of their operations, the extent of automation is often limited to those tasks that are obvious automation candidates and for which the development of automation systems is relatively straight-forward. Many menial steps in modern operational workflows therefore remain dependent on human involvement, which can result in on-going performance limitations.
Digital transformation solutions can introduce technologies that can more easily and effectively automate tasks that have been commonly carried out manually.
Inefficient Decision-Making
Even for organizations that already have significant automation solutions powering their day-to-day operations, they traditionally continue to rely upon key personnel to make the majority of operational decisions.
Many repetitive decisions made by humans are based on simple decision-making criteria. Other decisions made by humans are based on decision-making criteria too complex for a human to process efficiently. In either case, the involvement of a human decision maker can lead to unnecessarily inefficient operations. Digital transformation platforms introduce a sophisticated level of data intelligence, as well as data-driven systems that can use this data intelligence to automate a range of decisions that have customarily been carried out by humans.
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Thomas Erl is a best-selling author, series editor of the Pearson Digital Enterprise Series from Thomas Erl and host of the Real Digital Transformation podcast series. With the recent release of A Field Guide to Digital Transformation, Erl has authored and co-authored 15 books published by Pearson Education. He is a senior adviser with Transformative Digital Solutions Inc. and founder of Arcitura Education Inc., for which he has led the development of the Digital Transformation Professional Academy certification program.