For as long as we’ve been online, we’ve needed processes to support online, digital resources. These processes are called digital transformation — the evolution of digital technology. As reported by DOCUMENT Strategy online, IDC expects “worldwide spending on the technologies and services that enable the digital transformation of business practices, products, and organizations to reach $1.97 trillion in 2022.”
In order to better understand digital transformation and its effects, we’re introducing a two-part series on the subject. In this first part of our two-part series on digital transformation, we’ll lay the groundwork for understanding digital transformation as not a technology itself, but as a means to better serving customers. We will ask why it is so important to organizations today and where businesses can begin the digital transformation process.
Adapting to Customer Needs
In recent years, “digital transformation” has become a catch-all term for implementing new technology. But in order to better understand its place in the hierarchy of needs for business owners and operators, the focus should be on how the implementation of new technology can enable organizations to improve customer experience and stay competitive.
According to this 2019 Harvard Business Review article, 70% of all digital transformation initiatives do not reach their goals. Of the $1.3 trillion that was spent on digital transformation last year, it was estimated that $900 billion went to waste.
So why is it that some digital transformation efforts succeed, while others fail?
The HBR article suggests that most digital technologies provide possibilities for gains, but “if people lack the right mindset to change and the current organizational practices are flawed, DT will simply magnify those flaws.”
A more holistic, thoughtful approach to digital transformation is one that focuses on improving business outcomes, rather than just replacing outdated tech with newer systems. This strategy is tied to the ability to stay agile and responsive to changing customer needs, which is especially crucial in consumer-driven industries like banking and financial services, insurance, and healthcare, where customer experience (CX) is top of mind.
When these organizations focus on who digital transformation strategies are serving, they can narrow their focus to only employ technologies where they will add the greatest value. This is better for the customer and the business’ bottom line. For example, using intelligent document processing to tackle mortgage applications or life insurance applications results in a more positive customer experience – and greater revenue for financial services and insurance companies.
Where and How to Begin: Identifying Pain Points
Understanding where and how to begin the digital transformation process should be the primary focus of every organization. As you focus on the consumers who interact with your business, you can target transformation strategies and tech that will meet their needs. But how can we become more aware of what consumers want?
Start with identifying consumers’ biggest business pain points to understand what matters most. This customer feedback can be gathered through measurable surveys.
Next, analyze that data and then map what your current process is against what your consumers want. Visualize and determine what needs to change in order to adapt to the market and be most competitive. Stay informed about what technologies your industry competitors are employing and where the market trends are evolving.
It’s also critical that C-suite executives and other organizational leaders set the tone for adaptation by preparing their organization for change. Some 20% of companies fail to achieve their digital transformation goals, so preparation is key when it comes to finding successes. Addressing internal culture and the people and processes that support new systems can be important for digital transformation success than the actual tech.
In part two of this series, we will address what comes next after identifying key customer pain points – the hurdles to digital transformation and how to overcome them. What does it mean to be digitally transformed in 2020 and what part does AI play in all of this?