October 19, 2021 
“At least 40% of all businesses will die in the next 10 years if they don’t figure out how to change their entire company to accommodate new technologies.”
Indeed, since technology has been changing radically the way individuals live, they expect businesses, as either employers or vendors, to catch up and even lead such changes. As such, digital transformation is no longer a luxury for only big corps or tech startups but has become a necessity for today’s businesses of all shapes and sizes.
If your business is in very early stages of digital transformation journey, this article would give you a great warm-up.
Let’s get started!
What is Digital Transformation?
Shortly put, digital transformation is a form of business transformation with adoption of technology. This process involves leveraging advantages that technology offers in an efficient, innovative, and cultivating approach.
4 Main Areas of Digital Transformation
1. Process Transformation - modifying business process elements to achieve new goals.
e.g. Adopting data analysis and business intelligent tools for data-driven decision making; Automating and moving to cloud admin processes that are formally manual and offline; Implementing an ERP system to improve efficiency of business operations.
2. Business Model Transformation – leveraging new technologies to modify a traditional business model or even generate an entirely new business model to better solve customer pain points.
e.g. Netflix with their streaming subscription model; Uber with their platform business model; or more partially, Adobe switched their Adobe Creative suite from the desktop version to Adobe Creative Cloud, thus changing their monetization model from upgrade model to subscription model.
3. Domain Transformation - using new technologies to redefine products and services a company offers to the market, thus expanding the industrial domain that it participates. This form of DX is less popular due to the challenges in both seeing the new opportunities and being bold enough to make a move. However, done right, it’d pay off tremendously.
e.g. Just think of Amazon expanding from online retail to the super successful Amazon Web Services (AWS).
4. Cultural / Organizational Transformation - transforming the people inside the company to adapt to the new technologies. No matter the ultimate missions of your DX attempts are about the operational productivity or consumer experience, your in-house personnel is the first ones who needs to be prepared with sufficient digital literacy, mindset and skillset. Without this fundamental transformation, your later initiatives would likely fail or poorly perform.
The evolution of digital transformation
DX did not immediately happen at the holistic level and large scale as it is today. In fact, it has undergone an evolution that increasingly addressed different levels of shared roadblocks within organizations. Having a comprehensive view over these digital transformation levels would give you better ideas on where your business is standing today regarding technology adoption and where you would like to get to in the near future.
1. Systematic recording
The switch from paper to electronic record keeping is apparently one of the most basic but effective forms of digital transformation. Instead of spending hours (with superhero memory) looking for some file or piece of data record, with a few clicks or shortcut keys, you can now find it in a couple of seconds.
2. Systemic collaboration
Shared information, data and other working materials previously used to be physically transferred from one collaborator to another. Otherwise the collaborators had to sit in one room at the same time. Now, platforms like Slack, Microsoft Teams, Trello, Figma, Jira, etc. provide a virtual workspace where collaborations can be done in real time with team members sitting at wherever they want.
3. Systemic engagement
Back in the day, businesses depended largely on traditional radio, newspapers or TV to communicate to their target customers, with the “target” part was barely achieved, given that the audience base of these channels were mostly fixed.
Data science and algorithms has now radically changed the game. Today’s businesses can leverage real-time online databases and powerful algorithms to reach to the right demographics. To the customer end, this has also helped personalize their experience, giving them exactly what they want with less effort.
4. Systemic productivity
Technology is now a means not only for problem solving but also to enhance humans’ capabilities and productivity. Once companies reach unified and seamless digitalization, they will be able to map out optimized workflows and resources, ultimately gaining enormous competitive edge.
What are the benefits of digital transformation?
To employees: better productivity, efficiency and collaborating experience
Your employees would likely be the first ones who are touched by the company’s digital transformation initiatives. Prepared carefully, they would enjoy smarter workflow, smoother communications and collaborations, ultimately better productivity and efficiency. This would not only reward the company but also improve employee satisfaction and facilitate them in personal growth.
To customers: Better experience and more values
Customer loyalty is becoming rarer than ever before. Today’s companies are competing on every touch-point of customer experience. Accenture reported that a single point increase in customer experience scores can add millions of dollars to annual growth. To be not left behind, digital transformation is absolutely a must in your strategy. This would enable not only better care to customers but also involving them in shaping your products, services and values, thus establishing really long term customer relationships.
To the organization as a whole
Enable data-driven decision making
Even when your business is performing excellent, you are missing out on enormous opportunities lying in your dark data. Digital transformation would help you make the most of this asset by gathering, processing and analyzing data into insights and forecasts that fuel your decision making.
More efficient and sustainable resource management
Digital transformation when applied holistically would encompass every area in your organization. Its tools would help integrate formerly disperse resources and assets into a central repository for better control and more business intelligence.
Greater agility
If you have ever heard about the agile philosophy in software development teams, you may know that its central idea is about speeding time-to-market and reacting more effectively to changes. The same values could be implanted in whatever kinds of organizations with the facilitation of digital transformation.
Generate better or new sources of revenue & boost profits
At the end of the day, bottom line is (almost) all that matters. It is quite obvious though that all the previous benefits are collectively creating pathway to better revenue and profits. According to the SAP Center for Business Insights and Oxford Economics, 80% of businesses reported increased net income after implementing digital transformation, 85% increased their market share.
What SMEs should know before starting digital transformation initiatives
Before kick-starting your next digital transformation initiatives, plan it thoroughly to optimize your effort and minimize risks. Below we list down critical steps that you should go through when crafting your own DX strategy and plan.
Step 1. Ask the right questions
- Which parts of the business could be improved by adopting new tools?
- Which parts of the business are performing well enough and should be kept untouched in short term?
- Which employees could find challenging in adapting to new tools and how could you prepare and train them?
- How will the digital transformation affect the business’ positioning or brand image in the industry?
- How will digital transformation affect existing customers?
- How long will it take for the transition period?
- How long will it take to have these initiatives produced business values? (time-to-money)
- Should you build your digital transformation solutions in-house or outsource to professionals?
Step 2. Team adjustment
Not everyone is able to adapt to changes swiftly. Hiring a professional to train your team about the new tools, new workflows and best practices could help you speed up the progress. This is where a lot of companies make mistakes — letting the most tech-savvy employee lead digital transformation activities instead of hiring a specialized professional. Read the section below for a more thorough approach on adaptation without ruining the company culture.
Step 3. Choosing the right tools
Most of the cases, at the first place there appears to have more than one option to solve your specific problems and achieve your digital transformation goals. You might probably feel lost in questions like: Technology Build or Buy? If you opt to SaaS, then which vendor to go? Otherwise, if you prefer to work with a tech partner, how to find the best match? etc.
At this point, conducting thorough research and analysis about the available options will be crucial to your decision making. Try to find as many as sources to get information like product reviews, client testimonials. Some reliable review platforms are: G2 for SaaS, Clutch, Goodfirm for software service providers, App Store or Google Play Store if your prospective tools are on mobile.
Keep in mind, as you might not be right at your first choice, try to find solutions that offer sufficient trial period, or tech partners that offer certain forms of service trial.
Step 4. Incentivizing the transformation
Imposing changes without incentives can become reluctant. Providing incentives allows people to look forward to the adaptation since they will be earning something once they are well integrated towards your company’s digital transformation.
Step 5. Pilot before scaling
Some companies try to skip the beginner phase of trial and error before scaling. Let’s say if you want to automate your hiring process, test it out with a specific department before applying to the entire organization. Familiarize yourself with Zoom, digital documents, surveys, and viewing introduction videos before going large scale. This is the same with other segments of your company as well.
Start small to sustainably realize your digital transformation goals
Instead of investing a fortune in a total digital overhaul right from the beginning, you can start with the following small but impactful initiatives:
Communication
Instead of using separate software to communicate with your marketing, sales, IT, HR, admin and other teams, consider doing it in one aggregated platform.
Collaboration
Streamline collaboration processes within your teams through platforms that can keep track of your projects throughout phases in real-time, and allow project members to collaborate online in one place.
Data storage
Cloud services available today are becoming more and more efficient, secure and user friendly. Moving your data to cloud should be among the first steps you should take to start enjoying other perks that digital transformation could bring about.
Data analysis
Making use of data analysis is crucial to scale your business. At the simplest level, let’s say you’ve just made a sale. Now it should never be end of story but rather the beginning. You should go ahead to learn why and how you made that sale, what are implications. Use analytics to find out business intelligences like which demographics, locations, and generally what types of clients are most responsive to your products. For that converted customer, don’t forget to retain them.
Digital marketing
The world has changed and a slot on newspaper is definitely not as effective as it once was. Your customers are spending a major part of their everyday living online, follow them!
Final Thoughts
To answer the question in title, we would say: Digital Transformation is not a bandwagon but a new norm for all kinds of organizations, SMEs included.
You should join it as soon as possible, with thorough preparation and thoughtful considerations. It would be great if you have an in-house team that is super digital-savvy (in fact if it is the case, you must be thriving in your DX journey). Otherwise, consider to hire a tech expert to accompany you with strategic advice and practical know-hows.
Let’s talk if you need any advice from our team of digital specialists at Enable Startup. We have experience in 30+ product development and DX projects with clients in 12 countries.
Frequently Asked Questions (FAQ)
What is digital transformation?
Digital transformation is a form of business transformation with adoption of technology. This process can happen within 4 main areas: Process transformation, Business Model Transformation, Domain Transformation, Culture / Organizational Transformation; and at 4 levels: systematic recording, systemic collaboration, systemic engagement and systemic productivity.
Why is digital transformation so important?
Without digital transformation, you are missing out on significant benefits, including: better productivity, efficiency and collaborating experience to employees, Better experience and more values for customers, better decision making capability, agility and ultimately increased profitability.
Is digital transformation costly? How should SMEs approach DX with minimal risks?
Digital transformation could be resource intensive in the long run and especially for large-scale organizations. With small and medium firms, it is not necessarily that demanding. You can start with small yet effective initiatives such as adopting a new collaboration tool, implementing digital marketing methods and tools, moving your data to cloud, etc.
