Steve Nash has twenty–five years across various business roles, leadership, strategy, strategic, entrepreneurship as well as philosophy
Definitions of digital transformation
There are many definitions of digital transformation. Different authors, analysts, strategists and industry leaders have come up with various definitions, understandings and theories around digital transformation.
Some define digital transformation as the way companies go to market, using not so traditional methods of selling. This includes selling through mobile, laptops, internet, or any other latest connected gadgets, using a portal or an application. This way, selling is no more physical, utilizing ‘digital’ front office, or digital face of a company.
Others define digital transformation as a way to modernize the business processes, technical workflows or supply chain using latest digital technologies such as automation, artificial intelligence (AI), analytics or cloud.
Across all these concepts, it may be missed that digital Transformation is not the end! It is a means towards an end. Many ‘pundits’ pursue Digital Transformation as an end, that they are trying to achieve digital transformation as a modern fancy concept, instead of realizing that digital transformation is a means towards achieving business goals. It is not an end in itself, but a concept, that can be leveraged or implemented across the business, to achieve real business goals, such as revenue growth, cost cutting, improving margin performance, enhancing worker productivity or achieving process efficiency.
Key objectives of digital transformation
So key objectives of digital transformation are related to real business objectives of revenue, cost or productivity. The successful model of digital transformation will include some or all the elements stated below:
Achievement of business goals:
- Growth in revenue / incomes
- Improvement in margins / profitability
- Reduction of costs
- Enhancement of worker productivity
- Enhancement of resource productivity / efficiency
Underlying technology enabled transformation:
- Digital front office to drive digital sales using connected devices
- Digitally driven sales using analytics, artificial intelligence and mobility
- Digital transformation in processes utilizing automation and cloud
Companies struggling for business revenue, growth and financially challenged on margins and other metrics are in the need of transformation. These are mostly traditional companies that have witnessed some sort of digital disruptions for new stage startups and hence need to evolve and transform their business and operations to stay relevant, cope up and survive as a going concern.
Most of these challengers or startups are seen as ‘digital only’ companies. Such companies have been referred to as born digital companies, such as Uber, AirBnB and PayPal. They have their business models tailored to digital operations and hence ‘already digital’. These ‘already digital’ companies, began their operations to support 100 percent (or close to 100 %) digital businesses, and hence may not require a separate digital transformation journey to succeed. In many cases, they do not have physical assets or do not need to invest in building physical operations. As such their costs of operations are low, and passing on the benefit to end customers, they are able to offer much more attractive value propositions to end customers. For example, FinTechs have disrupted the business models of traditional banks by offering digital only services as an alternative to traditional banking payments’ services. With low cost of operation due to minimal investment in physical stores, these FinTechs are able to pass on the benefit to end customers, providing money transfers or online purchases at much lower commission or per transaction costs than traditional banks. As such, they have grown rapidly, affecting the earnings of traditional banks and disrupting their landscapes.
Because of such disruptions, traditional companies such as banks will need to look for ways to reinvent themselves. Digital transformation for traditional companies may be an inevitable journey for these traditional companies to survive, involving several years in some cases. It is clear that digital transformation will be brough about as a journey as an imperative and if done well, can take a few years to reap the benefits, as happened in the case of Best Buy
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2022 Steve Nash