The stats around successful digital transformation are pretty damning. Too many...
Adapting to change is something that almost all of us have had to get used to, particularly since Covid-19. And for those of us still examining how we can embrace digital transformation, we need to remind ourselves of the huge benefits and improvements that change can bring.
Digital transformation represents the profound and extensive changes that companies go through to adopt digital technology. Goals include increasing value through innovation, invention, customer experience and efficiency.
As with many business processes, a new and varied language often evolves throughout the digital transformation process.
So, what are the differences between digitisation, digitalisation, and digital transformation? What benefits can companies and industries gain from each step?
Digitisation, Digitalisation and Digital Transformation – What’s the Difference?
When we talk about digitisation, we’re describing the process of converting analogue information into a digital format. This might mean something as straightforward as scanning paper documents and converting them into electronic files. Or it might mean using a digital form of project management or digital organisation methods. These initiatives are often brought in to improve efficiency, increase quality assurance, and in the mid to long term lead to a modest cost reduction within operations.
Whereas digitalisation, on the other hand, involves using digital technologies and software solutions to streamline and automate business processes. For example, you might want to use software to manage inventory or customer relationships or bring in a CRM to automate customer communications and digital marketing. These changes are likely to lead to improved quality in your customer relationships.
Digital transformation is a more extensive and strategic process involving a fundamental shift in how your company operates. It might also affect its business model, culture, and customer experience. It uses key business insights, competitor research and industry innovation to find new opportunities in the marketplace. By using digital technologies, we look to create new business models that can respond quickly to new opportunities, transform existing products and services, and deliver new revenue, reduced costs, and exceptional customer value.
Both digitisation and digitalisation may be precursors to digital transformation or they might occur as part of a transformation project, but it is important to understand that when talking about digital transformation it takes a holistic approach to a company's digital landscape - creating a digital-first business model to keep up to date with a digital world and gain competitive advantage.
Meeting changing customer needs with digital technology
One of the key aspects of the digital transformation process is the collection and analysis of digital data. It's this data, and how it's then used that gives a digital business the ability to meet and respond to changing customer needs.
With new digital technologies, we can gain valuable insights into customer preferences and behaviours whilst creating more personalised and targeted products or services.
Gaining customer satisfaction and loyalty is the driving force behind many of these changes and improvements.
Let’s look at the following examples of how businesses can meet the changing needs of their customers:
You run a restaurant and decide that you can use digital technologies, such as a CRM, to collect your customer data: favourite dishes, dietary preferences, and days they prefer to book. Armed with this data, you can now create personalised menus, offer loyalty rewards, and send targeted promotions to your customers. This whole system helps you offer your customers what they want, earn their loyalty, and increase your sales.
In the case of Nourish + Bloom Market, based in Atlanta, USA, the owners wanted to offer an alternative to the usual, and often mundane, shopping experience. Their decision to offer a 24-hour access grocery store with a turnstile scan at the entrance and a receipt as you walk out is revolutionary. No more waiting in line for the checkout, just get what you need and automatically pay on the way out. The whole experience has been designed to meet their customers’ needs for fuss-free 24-hour shopping that fits around their busy lifestyles. However, offering such an advanced experiential retail service involved a different way of thinking. A range of technologies and processes were needed to create a viable and customer-centred model.
Digitalisation and Digital transformation can also lead you toward significant increases in productivity levels. By automating manual and repetitive tasks like data entry, inventory and project management, your employees can focus on higher-value tasks.
Becoming a digital first company usually requires adopting agile methodologies. Working in short sprints with clear objectives and key results means that everyone is pulling in the same direction, and changes get delivered fast when they're needed.
Rather than being stuck in an eternal loop of tediously time-consuming work, your team can be instrumental in driving your business forward with better use of their skills and time.
Improved culture and employee morale
A benefit, that not many initially think of when considering the idea of digital transformation, is the effect on company culture and the benefits to employee morale.
Because streamlining business processes leads to reduced workloads, and in turn increased job satisfaction, you’re able to create a more positive and engaging work environment. This can have a noticeable effect on the whole company. Using digital transformation to create lasting changes for your staff results in improved employee retention and higher employee satisfaction scores.
On top of this, becoming a digital business will require training and upskills sections of the workforce. Giving your team members opportunities to gain new skills and qualifications is a great way to build loyalty and engagement.
If your company can use digital technologies to automate repetitive, time-consuming tasks, such as data entry, it frees up time and enables staff to focus on more creative and innovative projects. The long-lasting effects of increased job satisfaction and motivation amongst your teams can easily be overlooked but they have huge benefits.
As mentioned, digitisation, digitalisation and digital transformation can lead to significant cost reductions across a business. Despite implementation and development costs, automation and project management tools can reduce headcount or free up resource to be used in more lucrative projects. Efficiency savings will help you to reduce costs across several different areas of your business.
For example, let’s say you have a financial services company and you’ve decided to use digital technologies to automate your current paper-based processes. You’re particularly keen to save time and money on repetitive tasks such as processing loan applications, opening new accounts and preparing reports. Implementing time-saving digital technologies and processes will help you to reduce your costs, increase your efficiency and improve turnaround times. That's a good example of using digitisation and digitalisation to save time.
But you could also take it one step further and develop an app that enables your customers to self-serve, use AI to process loan applications, and automate the running of reports. This isn't just using technology and digital processes to your advantage, it's creating a new business model that puts technology at the centre of your offering and would lead to far bigger savings, higher profit margins, and new customer acquisitions.
Businesses that implement big data see a 10% reduction in overall costs.[i]
Eliminating human error
Digital transformation also offers a welcome safety net and can help to reduce human error. Cutting down the risk of errors and improving accuracy increases several different factors: productivity, profitability, and job satisfaction to name just a few.
There are lots of reasons why we make mistakes, at best they can be a nuisance but at worst they can be fatal to a business. They usually fall into one of the following categories:
Lack of knowledge – if you’re unable to ask for help or there are no procedures put in place to address issues or answer questions.
Lapses in memory – we’ve all forgotten things, like a particular step in a task or for passing on information. Busy or stressful work environments can make this worse.
Slip error – this is often caused by a lack of concentration or fatigue and can be when an employee accidentally mixes up information or documents.
Rule-based – mistakes happen when old policies are replaced with new ones or when someone has a different interpretation of what the task requires.
Removing the element of human error by using tech based systems, automating tasks or implementing AI process will ultimately lead to less wastage, a higher degree of confidence, and happier customers.
Higher customer satisfaction
Happier customers don't just come from fewer errors. There are lots of ways digital transformation increases customer satisfaction and improves the customer journey.
Collecting digital data and learning more about your customers and their needs and expectations can help you to use personalisation to your advantage.
By providing a seamless and personalised customer experience across all channels, your company can increase customer satisfaction scores. It’s important to recognise that whilst it’s good to attract a high volume of new customers, the longevity of your company is built on their loyalty and their willingness to act as brand advocates. Using personalisation to make their transactions simpler and their experience more pleasing will build loyalty.
Increased Collaboration and Innovation
Failing to collaborate holds businesses back. If we’re going to have a full understanding of the effects of digital transformation, it’s important to have a complete understanding of the impact of these changes.
A lack of collaboration fosters a lack of innovation. Teams can often find themselves caught in endless cycles of meetings trying to identify the causes of log jams whilst frustration levels rise at miscommunications and low productivity levels.
By prioritising greater communication and transparency, your company can benefit from close collaboration with all partners and stakeholders.
Solving complex challenges and understanding which technologies will deliver the best results will require your teams to work closely and support one another throughout the process.
Data Collection, personalisation and accurate insights
Customer and social data analysis is the second most important use of big data analytics. This is swiftly followed in importance by predictive maintenance. Your ability to digitally collect and analyse data about how your company runs is a huge asset and can transform the way you do business. Combining this with accurate modelling data will help you decide how to best implement the changes that will aid personalisation and profitability.
Knowing how to collect your data, where to store it and why you need to analyse it is all part of the data lifecycle. You’ll need to make key decisions based on this data so getting the setup right is vital.
The future of digital transformation
To stay competitive and relevant in today’s rapidly changing business landscape, businesses need to embrace digital transformation. While the majority have undertaken the weighty task of digitisation, and many have begun digitalisation of particular streams of work, these alone aren't enough to create innovative products or value producing opportunities. Digital transformation uses innovative thinking at its core to ensure your business is able to scan the horizon for changes and leverage technology to meet ever-changing customer needs.
Digitisation and digitalisation can certainly use digital technology to deliver benefits around efficiencies and cost savings. But becoming a truly digital business with strategies that bring about innovation, improved customer experiences, higher revenue and increased profits required new business models through digital transformation.
As businesses continue to evolve and adapt to the ongoing digital revolution, embracing change and learning how to adapt will remain a key driver of growth and competitiveness.
Highly motivated senior marketing and production executive with broad experience. Partnering with various sized companies including several of the animation industry’s most critically acclaimed film studios, to understand and set strategic goals and then find effective and innovative ways to achieve those goals.
With work experience ranging from social media content production to consumer product development; from feature film deliveries to tv spots, trailers and featurettes; from understanding new technologies, how they work and developing new systems with in house with technology teams to developing tie-in partnerships and mobile and online game development; live and virtual event planning to joint company/partner presentations; and from CRM creation, setting strategic goals and strategies, to data and insights analysis. Ensuring all deliveries are creatively on point with company brands or style guides. Simultaneously working to develop the in house talent to grow and offer more options and solutions for the company and be a leader in creative solutions.