“Digital transformation.” It’s the phrase on everybody’s lips. Organizations of every size and scale are obsessed with it. All the major consultancies, business periodicals and experts from the most prestigious universities and companies all over the world are telling you that you better be doing it too — or else.
But when you get down to it, what is digital transformation? What does it really mean to you and your organization? And where’s the best place to start?
Digitization or digital transformation; what’s the difference?
Digitization and digital transformation are two entirely separate things, and it is important to understand the difference and which process should come first.
Digitization involves standardizing and digitizing business processes and is typically associated with lowering costs and improving operational processes.
In other words, with digitization you closely examine every part of the way your business processes work and figure out where it might make more sense to substitute a digital alternative.
For example, is it really necessary to have three people performing a basic administrative task when software could do it much faster and with fewer errors?
Digital transformation, on the other hand, is all about rethinking the company’s entire value proposition, not just its operations.
The key word here is transformation. This means looking at every part of what a company is and, if necessary, changing everything, and reinventing every part of it to best take advantage of the possibilities that digital technologies offer.
This is clearly no small task. So where do you begin?
The first step
Your digital transformation journey begins with digitization, which will lay the foundation for everything that follows.
Broadly speaking, digitization impacts two key areas of organizational activity:
The way an organization works.
The way an organization communicates.
The best way to start digitization is by looking at how your organization uses paper and determining what is ”good paper” (productive, effectively used to drive business processes) and what is ”bad paper” (slowing down business-critical processes and delaying decision making).
Follow the paper trail
“Paper is a good place to start thinking about digital transformation, because it is the Achilles heel of most organizations. Paper clogs up processes. Paper creates disruptions to smooth information flows. Digital processes require digital information.”
— John Mancini, past president, and chief evangelist, Association for Information and Image Management (AIIM)
Paper is at the center of every business process. And while it plays an important role in any organization’s information flow, its sheer quantity and unwieldiness can also hinder the efficiency of employees and business processes, causing disruptions at multiple levels.
So, by tracking how your organization uses (and wastes) paper, you’ll arrive at an excellent starting point for your digitization journey.
The way an organization works: Increasing your operational efficiency
Optimizing or digitizing these business processes is not just about mapping out current process steps and replacing them with software tools. It also involves understanding information flows in your organization and making the correct and relevant information available to the decision maker — human or computerized — at the right time.
The best way to do this is via a workflow assessment which will review the document-intensive processes in your organization and identify inefficient steps in those processes. With these fact-based insights, you are well underway on your digital journey.
But what about the most important part of any business? How do you begin the process of digitizing the way you communicate with your customers?
The way an organization communicates: Improving your customers’ experience
Digital transformation has had a vast impact on how customers acquire information and interact with organizations. Virtually every considered decision begins with looking up information on your smartphone. Whether it is buying a car or renting an apartment, the first step is usually to check relevant websites for pricing and information about car brands or rental rates in preferred locations.
But while digital interaction is a vital consideration when it comes to customer relationships, it is not the only consideration. Sometimes your customers’ experiences are indeed worth the paper they are written on.
Recent studies have demonstrated conclusively that reading printed text requires less effort than digital text, and information is more likely to be understood. According to a study by Canadian neuromarketing firm TrueImpact, “(Printed) Direct Mail requires 21 percent less cognitive effort to process than digital media.”
However, depending on the target audience, receptivity to your message may well depend upon the medium conveying it. By tracking and understanding how your customers interact with your organization — physically and digitally — you’ll be in the best position to work out how you can improve their experience of your brand … and your sales results.
The human connection
Employees and customers are central to the success of any attempt at digital transformation. But there’s a problem: Recent research by McKinsey found that while 84 percent of CEOs are involved in and committed to transformational change, only 45 percent of front-line employees are likewise engaged. This problem is even more challenging for larger organizations.
To address this, organizations should opt to either train and develop staff internally or identify which digital and nondigital processes are not core to the business and outsource them to a suitably qualified vendor.
With the greater cost and work efficiencies achieved via outsourcing, more resources can be focused on training, developing and redeploying employees to more business-critical areas of the organization.
As you can see, digital transformation is no simple matter. The key is to treat it just like any other journey — plan your route carefully and take it step-by-step. With the right processes, technology and above all, people in place, you’ll get there sooner than you think.
Getting your digital transformation journey off to the best start
- Start with digitization
- Before you can even think about digital transformation, look at what parts of your business process can be effectively digitized.
- Look at the paper trail
- Understanding your organization’s use of paper is key to realizing the significant benefits of digitization.
- The personal touch is paramount
Gaining a proper understanding and buy-in from your employees and customers is vital to the success of your digital transformation journey.