Digital transformation is back at the top of every agenda, all the more so because it appears that companies that have embraced transformation are those most likely to thrive in today’s disrupted economy.
But what is digital transformation in a practical sense? What does it mean for an organization?
Digital transformation is often defined as the transformation of certain manual and nondigital processes to digital processes. That certainly covers some aspects of transformation, but are we to believe that all companies that embrace cloud computing (for example) were previously using paper and pencil?
Of course not. The point is that digital transformation can have a broad range of meanings and impacts, depending on your perspective and influenced by where an organization lies on the spectrum of digital sophistication. In most instances, the transformation is from some existing legacy system or process — perhaps manual, perhaps digital — to a more agile, connected and modern approach. That may mean that legacy systems and processes are scrapped entirely, or that they’re integrated with and supported by newer technologies, such as mobile applications, the cloud, automation and machine learning.
But the tools and technologies are just a means to an end. In a very real sense, digital transformation is personal to each employee, customer and organization, and it’s most useful to think of it in that fashion: What is the outcome that’s expected? How will it improve work for employees, engagement for customers, and efficiency and governance for the organization? How will it change the way you operate? Let's look at a few of those areas in more detail.
1. The Customer Experience
For customers, digital transformation typically means three things:
• I get to engage with you how I want (mobile, online, in person and 24/7/365).
• You’re going to better understand me and what I’m interested in (existing services, past purchases, brand affinity and future interests).
• Everything is going to be fast (seconds, minutes or hours, not days, weeks or months).
Defining transformation by these outcomes puts the customer where they should be: front and center.
In financial services, for instance, banks and similar organizations are using digital transformation to dramatically speed things like account opening, loan processing and approval, customer wait times, etc. Automation can speed routing of requests through appropriate systems and reviews, while AI can flag issues or anticipate next steps — all of which increases customer engagement and drives satisfaction. As an example, banks that had adopted robotic process automation as part of a digital transformation to speed loan processing were able to submit such rapid volumes of Paycheck Protection Program applications on behalf of customers that the government had to subsequently ban automated submissions to ensure that customers of the banks that hadn’t digitally transformed weren’t unfairly harmed.
As importantly, having progressed down the transformation path, organizations are primed for better agility and more rapid innovation — especially when it comes to customer engagement. In the face of the Covid-19 pandemic, a South African financial institution, one of our clients, was able to rapidly pivot from having to close retail storefronts to allowing customers to engage and bank via WhatsApp — something that wouldn’t have been feasible to “spin up” if it had lacked the underlying digital infrastructure.
2. Business Productivity And Employee Experience
From onboarding to daily tasks, every process-driven aspect of work is ripe for digital transformation. Process automation (both digital and robotic) and artificial intelligence can play big roles in changing how people work, connecting and improving the workflow across disparate systems and silos, replacing repetitive and laborious tasks, and adding new predictive insights. Ultimately, the outcomes from this sort of transformation tend to be greater worker efficiency and satisfaction, along with better and more agile decision-making.
One global apparel and footwear brand, another one of our clients, focused on supply chain transformation in streamlining its operations. The company had process gaps across marketing, e-commerce, retail and finance, along with a hodgepodge of decentralized supplier data, manual and inefficient purchase order coordination, and long and opaque product/factory onboarding. For this company, digital transformation meant connecting all of these processes and workflows, ultimately reducing operational costs by 60% while eliminating over a million needless back-and-forth emails and speeding factory onboarding.
3. Transforming Compliance And Governance
Compliance is critical for most organizations, and it’s not an after-the-fact bolt-on you can add later; it needs to be baked in as the default. Digital transformation offers organizations several key compliance outcomes:
• It allows businesses to turn business policies into operational rules.
• It ensures those rules are consistently followed.
• It links and unifies disparate systems and data points to ensure organization-wide compliance.
• It provides verifiable audit and reporting.
This makes governance part of the transformation and innovation, as opposed to having it be an obstacle or speed bump to overcome.
In the current environment, many organizations have faced new challenges in managing compliance with existing policies as staff work from home and the chains in business operations have broken. In addition, organizations have to create new corporate policies specifically to protect staff and business continuity, which also bring their own requirements when it comes to managing compliance. Looking forward, it's also likely that the disruption caused by the pandemic will lead to regulatory change that was highlighted by systems being stretched beyond capacity. With all of this in mind, a digitally agile approach to compliance and governance is critical.
These are three key areas of outcomes and impacts from digital transformation — each different and each a reflection of the priorities and approaches of the individual organization or business unit. Companies that have transformation initiatives stall often get trapped in the notion that they need to boil the ocean, attempting to rethink everything they do and scrapping existing systems and processes. Those that succeed are much more iterative, recognizing that incremental success focused on transforming particular outcomes will quickly open the floodgates to future innovation.
Sourced from Forbes- contributed by Gustavo Gomez