Digital transformation may seem scary or overwhelming to those accustomed to doing everything manually or are unfamiliar with technology selection. However, the concept means different things to different people.

You have to understand what digital transformation means for your business. This article covers everything from benefits and how to execute a transformation to technological examples and FAQs.

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Table of Contents

• What Is Digital Transformation?
• Benefits
• Six Essential Steps in a Digital Transformation Strategy
• Digital Transformation Examples
• FAQs
• Conclusion

What Is Digital Transformation?

Digital transformation is converting business workflows into a digital landscape with efficient technology — i.e., the Internet of Things (IoT), digital twin, AI and more — for seamless automation, higher productivity and more profits.

Advanced technology, especially AI, is here to stay. You see AI in streaming platforms, when you talk to Alexa or even when getting song suggestions on Spotify.

AI’s presence may be why MarketsandMarkets predicts the global AI market will reach $1,345.2 billion by 2030.

Even implementing some advanced technology into the simplest of tasks, be it sending invoices, performing bank reconciliations or supervising bill of materials (BOMs), can make your company stand out among competitors.

Primary Benefits

Implementing digital transformation has perks, from increasing client satisfaction and offering more data to streamlining digital growth.

Boost Customer Satisfaction

Client needs constantly shift, and part of your job is meeting these needs regularly. Most people want as little human interaction as possible. Digital transformation allows you to initiate chatbots to fulfill any quick needs.

New technology can also streamline all company operations so you can allocate products and materials to suppliers and customers expeditiously. The happier the clients, the better your revenue and reputation.

Drive Data-Based Decisions

Making sense of data to make well-informed business choices is a must.

Merging digital transformation with BI and CRM tools helps you review numerous leads, opportunities and other vital KPIs.

For example, you may own a frozen waffle company and try two new flavors. One for kids and the other for adult consumers. You can measure sales and client feedback on both products over a set interval.

After you finish the interval, you can gather information to determine which flavors have the highest sales. If both compete well, you can create variant flavors. You can discontinue the product if they both perform poorly or one has a negative performance.

Enhance Collaboration

Digital transformation offers collaboration and communication tools to streamline projects. You also reduce lost information, sluggish response times and more.

For example, your team is trying to develop a new frozen waffle flavor. Instant messaging and video conferences when face-to-face meetings are impossible can streamline brainstorming.

If you’re trying to pitch ideas between stakeholders across different time zones, hosting a video chat where you can all meet simultaneously can save flight expenses and garner quicker results.

Increase Agility

Owning a business means constantly looking for ways to keep your company running at maximum capacity ahead of your competitors and in line with your customers’ needs.

Enabling digital transformation offers automation and continuous improvement strategies to stay ahead of the curve and maintain relevance.

Some continuous improvement methods include auditing company time for productivity gaps, rejuvenating staff training, updating worker photos and maintaining employee encouragement.

Optimize Future Digital Growth

Lastly, digital transformation provides future growth.

Some companies keeled over because they chose not to implement digital practices. Once you start, staying aware of updates is a piece of cake. If you don’t adopt digital transformation, you’ll lose relevancy among clients and become obsolete.

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Key Steps in a Digital Transformation Strategy

There’s no be-all-end-all way to bring your business into digital transformation. Some people offer four stages. Others provide ten or more.

We’ve narrowed the digital transformation framework to six vital steps, from managing objectives and preparing the company to measuring results.

1. Manage Objectives

Company goals vary by industry, mission, size, client base and other factors. Centralizing your company’s objectives in one list helps you know how you want to develop a suitable digital transformation strategy.

Answering these and other questions can help you develop an ideal game plan:

• What pain points are we facing, and how can new technology rectify them?
• How can we improve customer experiences and meet their needs?
• Is there a way for us to develop cost-effective and more efficient workflows with new technology?
• How can we gather more data and make better sense of it for improved procedures?
• What’s our budget, and can we allot for extra expenses if needed?

2. Create a Transformation Strategy

Like ERP software and implementations, developing a digital transformation strategy lets you know how to install new technology. Some companies implement technology all at once, which isn’t highly recommended.

Developing a strategy and managing new technology in manageable phases is best because you won’t overwhelm yourself. If things don’t work out in one stage, you can revise your strategy and try again with something else.

Creating a plan also allows you to collaborate with and get approval from stakeholders to keep everyone on the same page.

3. Find the Right Technology

Because IoT, AI or cloud-based technology worked for your friend’s new mid-sized company, it doesn’t mean the same technology will garner the same results for your needs.

Learning the pros and cons of specific technological advances and how they align with your workflows can save you time and money in your digital transformation process.

Some machinery may not operate as you initially believed, meaning you’ll have to repeat the step with different technology or focus on another business area.

4. Prepare Your Company

Providing accurate training materials and communicating your digital transformation goals with your staff is critical. Garnering demos, reading material, community forums and more can help employees acclimate to your new environment.

Holding a Q&A session with your technology sellers can also help workers clear the air about operations and reservations they may have.

5. Perform the Transformation

Establish timelines and set realistic goals in your digital transportation roadmap as you prepare for the installation processes. You also have to allot for flexibility and contingency plans if some things don’t turn out exactly how you hoped.

For example, IoT could streamline production floor operations. Then, you believe that IoT would be a great fit for your supply chain network. Cloud software may not perform well for your customer service practices, and you may not need it after all.

6. Gauge Outcomes

What good is implementing new workflows and technology without gauging performance over time to review your ROI?

In-depth analytics and performance metrics can help you understand what’s going well and detect bottlenecks.

Measuring results also helps determine which operations thrive or fall short with digital transformation.

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Digital Transformation Examples

Now that you understand digital transformation’s typical stages and how it can help your business, let’s review some technological examples.

IoT

IoT devices are internet-connected sensors used across numerous machinery to measure their performance via preventive maintenance.

For example, you may have a lathe machine that might break down on you. IoT can help you determine how well this tool works in real time. You can also use data to decide whether to fix or replace the machine.

AI and Machine Learning

AI and machine learning are branches of the same tree with slightly different characteristics.

AI mimics human intelligence, while machine learning “learns” numerous patterns.
AI can use machine learning to streamline tasks. For example, have you ever wondered how streaming services find the best TV and movie recommendations?

By “learning” your watch history and likes, the program can pull up similar shows and films it thinks you’ll enjoy.

AI and machine learning are game changers for accounting, manufacturing and other vital sectors.

Digital Twin

Digital twins allow you to create a clone of a physical model and alter it in a virtual space.

For example, you may need to test what-if scenarios on a car prototype. You can add that model to a digital workspace and test the product under numerous conditions for enhanced revisions and faster time-to-market.

Augmented Reality (AR)

Unlike VR, AR allows you to cover real-world environments with sounds, images, animations and more. Selfie filters and Pokemon GO are just a few real-world examples of AR. Some companies implement AR and VR for training purposes.

We can use AR for work and leisure, which may be why Research and Markets estimates the global AR market will reach $597.54 billion in 2030.

Cloud Technology

Cloud and SaaS technology can streamline productivity and offer real-time alerts for all mobile devices.

For example, cloud ERP software allows you to review CRM, financial, supply chain and manufacturing operations in one centralized space via your phone, tablet or laptop instead of constantly checking for updates at the office.

Cloud systems also come with numerous ways to safeguard vital data. Multi-factor authentication allows you to use fingerprints, mobile phone codes or other means to log into your account.

Encryption scrambles data into an unreadable format that you can only decode through an encryption key.

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FAQs

What is digital transformation?

Digital transformation is converting business workflows into a digital landscape with efficient technology — i.e., the Internet of Things (IoT), digital twin, AI and more — for seamless automation, higher productivity and more profits.

The definition of digital transformation can change from company to company.

Why should I consider digital transformation?

There are numerous reasons to consider digital transformation for your business, such as increasing happy customers, pushing for more data-based decisions, strengthening collaboration, improving agility and driving future digital growth.

What are examples of digital transformation technology?

Some examples include IoT, AI, machine learning, digital twin, AR and cloud technology.

Can small businesses implement digital transformation?

All business sizes can use digital transformation to streamline processes.

What are the main stages of digital transformation?

Though digital transformation varies across businesses, we’ve found these the most popular stages you should consider:

1. Manage objectives
2. Create a strategy
3. Find the right technology
4. Prepare your company
5. Perform the transformation
6. Gauge outcomes

What are essential roles and skills in digital transformation?

Here are some critical roles:

• Digital transformation consultant
• Manager
• UX designers
• Writers

Some vital skills include:

• Data analysis
• Project management
• Digital marketing

What are the challenges of digital transformation?

Some challenges include:

• Budget restrictions
• Lack of expertise
• Security concerns
• Complex technology

Are there different types of this trend?

Some other forms of digital transformation include:

• Enterprise digital transformation
• Digital business transformation
• Digital transformation banking
• Finance digital transformation
• Government digital transformation
• Healthcare digital transformation
• HR digital transformation
• Insurance digital transformation
• Retail digital transformation
• Digital transformation in manufacturing
• IT digital transformation

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Conclusion

Digital transformation streamlines business protocols and keeps your company relevant. Taking the first step means you don’t want your organization to become obsolete.

Finding out how a digital transformation plan aligns with your company’s objectives and finding the right technology for your needs is another vital step on this journey.

How has digital transformation helped your business? Let us know in the comments.