In 2018, we wrote a guide on transformation, how it will affect your business and the role your ERP system plays. Now, three years on, we’d wager you’ve seen major changes, with digital transformation impacting organisations across the industry divide.
Of course, over that period, a handful of major events have accelerated the need for digital transformation – not least Brexit and the coronavirus pandemic. Such events brought unprecedented disruption to industries, sectors, and supply chains, compelling even the most digital-sceptic businesses to rethink their operations.
However, implementing new digital technologies, and ensuring they work in the long term, is no easy feat. Recent data suggests that 70% of all digital transformations fail, so it’s vital that businesses adopt a formal, future-looking strategy when managing their digital revolution.
In this guide, we’ll show you what a digital transformation strategy is and how to develop one for your business.
- What is a Digital Transformation Strategy and Why Do You Need One?
- How Can Digital Transformation Benefit Your Business?
- Where to Start with a Digital Transformation Strategy
What is a Digital Transformation Strategy and Why Do You Need One?
A digital transformation strategy sets out how a business will adapt to emerging technologies to optimise its operations within the digital economy. It’s a comprehensive plan of action detailing how an organisation must change its business model to future-proof against rapid, digital-driven change within its industry.
Digital investment is essential for success in the modern business landscape. But to ensure health, growth, continuity, and long-term ROI, a digital transformation strategy is needed to keep the project on track.
Without a strategy, your digital transformation could lose momentum or fail to deliver on your predefined goals, objectives and KPIs. Not only could this result in poor ROI for the technologies you’ve invested in, but it could also impact the long-term viability and profitability of the business.
Remember, digital transformation isn’t just a matter of investing in technology; it’s a complete course-correction of your business model. Implemented correctly, and it can lead to reduced operating costs, greater efficiency, and an increase in profit. Without a strategy, however, it could have the opposite effect – consuming greater resources without bringing value to your business.
An important thing to remember about digital transformation is that it is you that has the power to change your business – not technology. While embracing the latest tools and applications will go some way towards improving day-to-day efficiencies, cultural change is needed to ensure a successful and sustainable digital transformation.
How Can a Digital Transformation Strategy Benefit Your Business?
The benefits of digital transformation are clear, but why should you spend time creating a strategy outlining your approach? Here, we look at some of the key reasons why a digital transformation strategy can be a major advantage for your business.
- It provides scope and scale – A digital transformation strategy helps you determine the scale of the project and the work/investment involved. This, ultimately, helps with budgeting, while clarifying the viability of your long-term plan.
- It ensures buy-in from senior stakeholders and investors – Shareholders may be wary of increased digital investment; your digital transformation strategy could help sell them your vision for the future.
- It gets the whole team on board – To guarantee the success of your digital transformation, it’s important to bring teams and individuals along with you. When developing your digital transformation strategy, consult with departments, managers, and other key personnel, ensuring complete buy-in across the business.
- It provides a point of reference for future success evaluation – As part of your digital transformation strategy, list your KPIs, goals and objectives; everything you want the process to achieve. That way, both you and senior stakeholders have a reference when evaluating the success of the transformation in the future.
- It sets out your long-term vision – A digital transformation strategy sets out your vision for the future of the business. This is not only beneficial from a staff and customer buy-in perspective, but can also help drive increased revenue, increase brand awareness, and reshape marketing collateral and messaging, essentially reinvigorating every aspect of your operations.
Where to Start with a Digital Transformation Strategy
Developing a digital transformation strategy is challenging, but the benefits make such an endeavour well worth your time. If you’re unsure where to start, we’ve put together a step-by-step guide on how to create a digital transformation strategy.
Step 1: Understand the Three Disciplines Required for Successful Digital Transformation
To ensure a digital transformation stays the course, there are three disciplines typically used to ensure your business is both ready and equipped for the project. These are:
- Risk management – what threats face your business both now and in the future? How will the maturation of digital-backed operations help support the business, and mitigate new and emerging threats? Risk management is a fundamental part of developing a robust digital transformation strategy.
- Strategic intent – what is your bold vision for the future of the business, and how will digital transformation get you there? Defining your strategic intent for the project is a powerful means of ensuring stakeholder buy-in while ensuring that the project follows a clear and tangible path.
- Value and cost evaluation – Digital transformation must come with a cost and value-add benefit, so make sure your desired KPIs and ROI targets are defined by your strategy document. Identifying the value of digital transformation simplifies budgeting and costs, while validating the achievability of the project.
These three disciplines provide the main guiding principles that control your digital transformation. They also provide a convenient framework on which to build your strategy, setting out all the elements of the project into a simple-to-reference final document.
Step 2: Is Your Business Ready for Digital Transformation?
Digital transformation doesn’t happen autonomously, and nor does it happen simply by spending big on new technologies. As touched on earlier, only you and your team can ensure the long-term viability of such a project, so it’s vital to ensure that your business is sufficiently prepared.
To guarantee the success of your digital transformation, you should look to identify the following attributes within your organisation:
- Willingness to innovate
- Strong leadership and management throughout the business
- Adaptable, creative, and resourceful staff
- Resilience across every business department
- Individual maturity and strength
- Progressive, future-looking, and ready to change
Such attributes may seem difficult to assess and identify, which is why it’s important to consult with managers and teams across the business as part of the strategy development process. Recognising where these strengths lie within your business is critical to owning and following through on your transformation strategy and will also help you to assemble the right team to oversee the delivery of the project.
Step 3: Assess Your Current State of Play
The next step is to identify your organisation’s present strengths, weaknesses, and opportunities. This will give you a comprehensive state of play on which to define the goals and objectives of the digital transformation.
There are several ways of gaining an understanding of where your business is within the market space. One such strategy involves using gap analysis to identify weaknesses and opportunities which digital innovation and investment can help to resolve.
As well as recognising points of weakness, you should also look to define your organisation’s culture, skillset, processes, and operations. Which of these will need to change to ensure effective digital transformation? You might find that all such aspects need to adapt and evolve to meet the needs of your transformation strategy.
Step 4: Identify the Pitfalls of Digital Transformation – Know What to Avoid
By understanding some of the common obstructions of digital transformation, you can build a strategy that sidesteps pitfalls and reduces operational risk within your business.
Here are some of the typical stumbling blocks of digital transformation:
- Resistance to change
- Failure to control, manage and utilise data
- Lack of expertise
- Lack of buy-in from teams and individuals
- Failure to innovate business processes
- Underestimating the effort and time required
Step 5: Create Your Digital Transformation Roadmap
Now is the time to create a roadmap for your digital transformation, a document outlining your steps and how the business will get from point A to B. There are several elements to consider as part of your roadmap, including (but not limited to) the following:
- Required technology and investment
- Recruitment and HR management
- Retraining and upskilling current personnel
- Transitioning to new processes and agile workflows
- Updating your technology stack
The roadmap should be visual, succinct, and easy to digest by key stakeholders, while also containing the key information required to ensure the project stays on track. It should also be adaptable, evolving with unforeseen changes which affect the pace of transformation across your business.
So, there you have it, our in-depth guide to creating an effective digital transformation strategy for your business. If you’re looking to revolutionise your business with the very latest management and database control solutions, Intact can help. To learn more about our ERP and business management software, visit the homepage or get in touch with our team via the contact page.