How to create a powerful digital transformation strategy
Organizations are increasingly investing in digital transformation as a way to maintain or expand their competitive advantage. Organizations that implement successful business transformation are more likely to grow existing businesses, eliminate silos, generate revenue growth and business models, and reinvent how they operate.
A proven way to approach digital transformation is to understand your customers’ relationships with your products and brands, where those relationships currently fall short, and how they can be improved. Organizations can then benefit from looking at industry and technology trends to better determine how to provide the best customer experience to existing and potential customers.
3 reasons why digital transformation connects to your business strategy
The digital transformation journey involves the introduction of new technologies and business processes associated with those technologies to optimize customer experience and improve relationships with other stakeholders.
According to McKinsey, digital transformation helps different organizational functions collaborate in new and productive ways. The results are almost always the same. We find that digital leaders “have significantly higher real assets, P/E ratios, and total shareholder returns than digital laggards.” why? There are several reasons why digital transformation and business strategy are closely linked.
1. Changes in customer habits and preferences
Organizations must respond to the growing complaints and demands of their customers. Customer expectations have changed since the pandemic began, and organizations must change to meet them. Digital transformation often creates opportunities to establish new business models, create new products, transform user experiences, and help organizations embrace modernization.
2. Emergence of advanced digital technology
Technological developments that improve organizations include automation, quantum and cloud computing, artificial intelligence, machine learning, and the Internet of Things (IoT). The right technology creates opportunities to create new digital solutions and improve operational efficiency. It also allows organizations to respond more effectively to competitive challenges in real time.
3. Increasing competition and business pressure
Established organizations are under pressure from digital-first startups and other established organizations that have been quick to embrace digital transformation initiatives. To maintain current business value and hopefully grow, organizations must innovate within themselves to fend off competition and build new capabilities as a bulwark for growth.
Digital transformation is top of mind for many organizations and executives because it can contribute to critical business outcomes and increase adaptability in competitive markets. So what is a digital transformation strategy and how can organizations execute it successfully?
Customer Story: IBM and Wimbledon create world-class digital experiences with AI.
How to strategically accelerate your digital transformation journey
1. Secure executive level buy-in
Digital transformation projects are unlikely to succeed without executive buy-in and leadership. Digital transformation is often a key component of change management because it completely transforms the way a business operates. Some leadership teams may need guidance on how digital transformation, which has upfront and ongoing costs, contributes to business goals and ultimately creates value.
One way to understand digital transformation is to remember that it can not only propel a business to achieve its future goals, but also protect it from competitors who are also undergoing a digital transformation process. For example, an organization’s CEO should work directly with the CIO and other executives to plan how digital transformation will impact the department. The organization will then have a complete picture of what changes will occur and how they will improve the organization’s standing.
2. Understand the impact
It is important to understand that digital transformation is both a technological transformation and an organizational or business transformation. Comprehensive digital transformation brings significant cultural change. Solve your workflow to increase efficiency. This introduces technology that fundamentally changes the way employees work, often reducing manual processes and improving decision-making and the value that comes from it.
For example, digital transformation can introduce a set of digital tools that improve decision-making. By replacing spreadsheets and word processing files with a centralized online portal, you can force your employees to change the way they work. However, achieving this balance typically requires training and reorientation of many processes, which may be difficult for some long-serving employees. That’s why it’s so important to communicate the value of digital transformation success and encourage employees to help shape the roadmap for success.
3. Treat digital transformation as a never-ending process.
Digital transformation is an ongoing process. A successful digital transformation has a beginning but no end. Organizations engaging in digital transformation regularly discover new ways to improve, continuously evaluate how their processes are progressing, identify which new technologies and external factors are impacting their processes, and correct course if necessary. You should.
4. Picture what success looks like
Digital transformation has no end date, but individual initiatives within it have milestones and goals. For example, an organization may move from phone-based customer service to digital innovations such as chatbots or knowledge-based wikis. This can help you resolve customer service issues and improve customer satisfaction. If your organization has issues with legacy technology, you may need to prioritize application modernization. Through this, organizations should expect to see less downtime, less security incidents, and increased efficiency.
5. Obsessively track results.
Every successful digital transformation involves setting key performance indicators (KPIs) and rigorously tracking them. This helps organizations understand where they are successful and where they are lacking. A successful digital transformation must include a robust data analytics component to accurately track success.
For example, if an organization is looking to improve customer satisfaction, it should benchmark its customer satisfaction (CSAT) scores and net promoter score (NPS) before and after digital transformation. If you’re using digital transformation to change your digital marketing strategy, you’ll need to track metrics like return on ad spend (ROAS) and cost per acquisition. This allows organizations to ensure that their digital transformation drives results and creates value.
6. Embrace the ecosystem
Digital transformation creates digital capabilities that enable partnerships within the ecosystem. For example, organizations that enable APIs can share real-time information and data with partners to better serve each other’s end customers. For example, an ecommerce organization that imports APIs from multiple payment processors can complete sales with customers regardless of their preferred payment option.
7. Find the right partner
Digital transformation is complex, time-consuming, and often requires organizations to step out of their comfort zones. Your chances of success are higher when you involve the right partners who can realize maximum value using proven levers.
A strong digital transformation strategy is worth the investment
Digital transformation is a powerful tool for any organization looking to improve relationships with customers and better adapt to an ever-changing world. Digital transformation requires investment and ultimately changes the way an organization does business, but when done right, it has many benefits. Organizations that succeed in digital transformation can maintain a competitive advantage, improve relationships with employees and customers, and better prepare for the future.
New technologies and social forces are creating new customer experiences that are changing expectations and needs and disrupting business models. IBM Consulting’s Business Professional Services help organizations navigate an increasingly dynamic, complex and competitive world by aligning digital transformation with business strategy to drive competitive advantage and a clear focus on business impact.
Explore our strategic consulting services Read the blog ‘How to Build a Successful AI Strategy’
