Top tips for successful digital transformation
Digital transformation, when done well, can transform your organisation's operations for the better. Here's how to govern the digital transformation process.
‘Digital transformation’ can help businesses engage their staff and stakeholders, develop new goods and services, reach new markets, secure their supply chains, and become more efficient.
But there are pitfalls, too; poorly implemented digital projects can be ineffective uses of precious resources. At worst, they can actively damage a business’s brand, operations or customer and stakeholder reputation.
This article explores 3 fundamental questions every board faces:
1. What is digital transformation?
2. What are some key technologies to watch?
3. How can they be governed?
What is digital transformation?
Digital transformation is more than building a website, enabling e-commerce or online transactions, or launching a mobile app. In the right circumstances, these can all be worthy projects. However, they’re examples of ‘digitisation’ - taking analogue media or processes and translating them into the digital realm.
What, then, is digital transformation? The second word is the key: Digital transformation fundamentally changes how your business operates, how employees work, or how customers interact with you. It’s about using digital technologies to transform your business, but its impacts won’t only be digital.
Work processes, business rules, corporate culture, workforce composition, market position and more may need to change.
Leaders at all levels will need to be flexible. The digital landscape can change quickly, so agility and adaptability are critical. The ability to ‘fail fast’ and learn fast is crucial for any digital transformation project’s success.
The key is to start with strategy. What goals are you trying to achieve, and is a digital transformation project the best way to achieve them? Once your goals are clear, you can select and implement technologies. If you want to improve the customer experience, you might look at solutions such as chatbots, mobile apps, online transactions, and the like.
Adopting these technologies won’t simply automate some processes or swap paper records for electronicones. They’ll change those business functions, and other operations around them may also need to change.
Technologies to watch
Technologies come and go, and predictions are difficult. The following technologies – some currently available, some not –that have the potential to transform industries and reshape the way businesses and customers interact.
The Metaverse is a project from Meta, Facebook’s parent company. The goal is to create a virtual world where people can meet, socialise, shop, work, watch movies, or take holidays. Not yet launched, it’s unclear if it will succeed in generating a user base and business interest or what its costs and risks might be. The potential upside of establishing a presence could be significant –boards should inform themselves and be ready to respond if and as necessary.
Augmented reality (AR) and virtual reality (VR)
The critical difference between these technologies is that AR takes place in the real world while VR takes place in a virtual world. You might wear AR glasses and see data overlaid on the real world, such as advertising or other information tailored to your preferences. Both technologies have many potential uses in training and assisting with technical tasks; boards should stay abreast of new developments and possibilities.
Edge computing is a distributed model where servers are placed on a network’s geographic edges to improve resilience, save bandwidth, and provide faster network speeds than in a centralised model. It can make it quicker and easier for companies to conduct business online, accommodate a mobile workforce, gather data, and generate business intelligence.
Some companies and industries are already using drones for deliveries and other tasks, transforming operations in high-risk and remote environments, such as mining and firefighting. They’re also used extensively for photography and video capture, for example, by real estate agents, film companies, and property developers.
Blockchain is a highly secure way to store and transmit information. Beyond its use in cryptocurrencies, there is significant potential to make documents secure – a boon for legal and business-sensitive information such as contracts and strategic plans. It also has considerable potential to make supply chain management, regulatory compliance, and foreign currency transactions faster and more secure.
Artificial intelligence (AI)
AI is already being used for business analytics and in certain types of automation. Further possible uses include forecasting customer and market behaviour, fraud detection, mass personalisation (advertising, sales, customer support and more), content generation, and virtual assistants.
Robotic process automation (RPA)
RPA involves using software-based robots to automate business processes, increasing operational efficiency, and superseding other workflow technologies by combining tasks and datasets, reducing error rates, and freeing workers to concentrate on value-adding tasks.
5G mobile and Wi-Fi 6
Pervasive, robust, high-speed internet access is becoming a reality. As societies become ‘hyperconnected,’ new products and services will become possible. These include telemedicine, mobile AR and VR, autonomous vehicles, precision automation, and more.
Governance and digital transformation
The key message for those concerned with governance is that digital transformation projects are change management projects; the technological piece is just one part of the whole. Therefore it’s critical to have all groups and stakeholders aligned and involved.
There are 4 key elements to consider for good governance:
1. Business case
2. Project governance
3. Project management
4. Risk management
As with any project, digital transformation initiatives should be supported by a strong business case that aligns with your organisation’s strategic goals. The business case should include a realistic value proposition, adequate time frames for completion, and contingencies for both time and cost.
It’s advisable to have a director on the project steering committee and for a project manager to report to the board regularly. The board needs visibility of key project metrics, milestones, and outcomes.
Appointing a capable and qualified project manager is crucial. Internal and external subject matter experts should be involved, and leadership should focus on change management and communication with staff and stakeholders.
Potential pitfalls can be involved in being the launch customer for a new technology in a region or industry. Awareness of localisation or other complexities for your domestic market can also help reduce risks, including compliance and regulatory requirements. Look for service providers who are aware of such concerns. For its part, the board should set clear parameters around compliance, customisation, and cyber security risks.
Transform your business with digitisation
Digital transformation can revitalise your business. Good governance is the key to success, from setting clear project goals and milestones to having a clear business case and carefully monitoring progress.
Boards must play their part in all these processes to ensure their organisations’ projects succeed in delivering benefits to customers, stakeholders, and shareholders. There’s nothing to fear from digital transformation, and much to gain.
Like any project, such initiatives require a good strategy, sufficient resources, and effective governance. Effective digital transformation needs an effective board – it’s as simple, and as complex, as that.