You have probably been hearing the buzzword 'digital transformation' (DT), but what does it mean?
A digital transformation is the change associated with the application of digital technology in all aspects of human society.
When speaking of a business undergoing DT, it means that it is strategically applying digital technology to all aspects of its operation which fundamentally transforms it. But is is a necessity? Many business executives, owners, and IT directors are asking...
Why do you need a full digital transformation?
Businesses need to undergo a digital transformation to keep up with the world around them.The technological evolution is fueled by our ability to access the internet. Mobile device adoption has exploded, internet speeds continue to get faster, and internet accessibility is ever-expanding. While using a desktop computer to connect via a dial-up connection was terribly cumbersome and inefficient, a 4G signal ona mobile device enables almost instantaneous interactions from anywhere. This ability has created a whole new world of possibilities. For example, we go online to socialize, work, shop, market, find entertainment, bank, and much more. When we do, we leave data footprints. An extraordinary amount of data has been created in the past years (approx. 2.5 quintillion bytes per day is the latest estimate). Can you see where this is going? Digital technology allows businesses to enter this online world and connect dots that they didn't have access to before. It can help every aspect of business including but not limited to manufacturing, product development, partnerships, delivery, marketing, customer support, sales, and employee management. There is hardly an area that won’t benefit from the increased transparency and optimization possible.
Digital transformation in action
So what does a digital transformation look like? Let’s look to the financial services industry as an example. Alternative lenders like Prosper and LendingClub have cropped up with a new business model that allows potential borrowers to apply online for credit, get a decision in seconds, and have money transferred into their bank accounts as soon as the next day. Many traditional brick-and-mortar financial institutions have followed suit, creating online offerings. Quicken even allows you to go through the entire mortgage origination process online. How does the business model work? Companies build secure websites/mobile apps and develop algorithms to quickly analyze an applicant’s financial situation. In most cases, they quickly communicate with the credit bureaus to pull consumer information without hurting the consumer’s credit score. This innovative model has completely transformed the U.S. lending market over the past decade.
The U.S. continues to be one of the world’s top markets for advanced, technology-enabled, online alternative finance channels and instruments. The 2016 US market volume of $34.5 billion marked a 22% year-on-year increase from 2015.- 2017 Americans Alternative Finance Industry Report
This is just one example. Netflix is another, as it sparked a digital transformation in the entertainment industry. It offered customers on-demand access to movies and shows in the comfort of their own homes. This effectively changed the way many Americans entertain themselves. Further, not only does Netflix distribute content, but it now creates it, too.
How can your company digitally transform?
It’s time to ask how your company can use technology to take full advantage of today’s digital world. Look into every aspect of your operation and ask,
How can technology help us to improve performance?
The truth is, there will likely be opportunities everywhere you look. Here are a few ideas that can help you jumpstart your digital transformation:
- Strategize with the leadership team about your company as a whole and how technology can help the different branches of your business.
- Build a strong online presence that spans multiple channels (website, social media, email, blog, third-party sites).
- Use analytics to make data-based decisions vs. person-based decisions.
- Optimize operational functions such as inventory management and delivery tracking.
- Be aware of opportunities in adjacent markets which have become more accessible through technology.
- Look for partnerships which can help you to create an online ecosystem.
- Keep an open mind about new business models that work in the online world. Test new models out on a small-scale.
- Use data to your advantage to personally interact with customers, employees, peers, etc.
The time for businesses to undergo a digital transformation is now as our world has already been transforming. By using technology to its full potential, you can keep your business competitivewhile securing your place in the evolving marketplace.