Digital Transformation is necessary for business survival
By all accounts businesses that aren’t keeping up with digital transformation efforts don’t expect to survive for longer than four years. According to a Couchbase global study, businesses expect to either be ‘absorbed’ or go out of business if they don’t keep up. And four in five already believe digital transformation is leaving them behind.
The message is clear – digital transformation is imperative for all businesses, from SMB through to global enterprise. It’s a recurring theme in practically every keynote, roundtable discussion, blog, or study related to how businesses can remain competitive and ultimately survive in an increasingly digital world.
What do we actually mean by digital transformation?
Digital transformation – a working definition
Let’s be honest here, because digital transformation will look different to every company it can be hard to create a universal definition. According to trends analyst Altimeter, digital transformation is “the realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touch point in the customer experience lifecycle.”
At MLR Networks we’ve adopted a more straightforward definition and talk about it as the integration of digital technology into all areas of a business to change how that business operates and delivers value to its customers. Digital transformation enables business agility, engagement and creativity. We’re operating in a digital world now where business success requires the adoption of new technology, new approaches to strategy and a cultural shift.
What’s driving digital transformation?
There are five main drivers for digital transformation:
- The availability of information and the ability to convert data into business insights. Accessto tools and resources to measure, analyse, record and report on your business data in real-time are now available instantly at accessible costs. This is paving the way forbig data even in small business, allowing businesses to interact and translate vast levels of information and data in a way that can inform critical business decision with a data-backed approach. Reducing risk, costs and delivering higher returns.
- Changing customer expectations. Brendan Witcher, principal analyst at Forrester believes the cause of rising expectations is fairly clear and Uber, Amazon and Netflix are to blame: “Each time a consumer is exposed to an improved digital experience, their expectations are immediately reset to a new higher leve”
- The power of the millennial – Millennials expect as standard that company systems will support remote and collaborative working. They’re highly mobile, always connected and demand technology that allow them to get their work done independently of location, network and device.
- Competition from born digital companies is disrupting the market. The IDC report“FutureScape: Worldwide CIO Agenda 2016 Predictions” emphasised that, “One-third of the top 20 firms in industry segments will be disrupted by new born digital competitors within five years,” and that it’s a matter of “transform or perish.”
- Speed to market: competition, for customers, resources, even for skilled workers, has never been greater, but even in the digital age, the basic rule of competition hasn’t changed: to get the business, you have to be first, and best. Pressure is on to reach markets faster; manufacture quicker; deliver next day. Digital transformation is required to speed up business processes across the board.
Life or death; when not if
The boardroom conversation is changing. No longer is it focused on ‘if’ a business will digitally transform, but of when and how fast. And should UK businesses ask the question why? Well, the demise of household name companies should serve as a warning to us all of what a lack of action can lead to. As John F Kennedy so eloquently put it: “There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.”
Of course, making the decision to press ahead with digital transformation is the easy bit. The actual articulation and implementation of a strategy is an altogether harder undertaking and comes with its own set of challenges and difficulties.
The oft cited McKinsey statistic that 70% of digital transformation projects fail is enough to put some companies off. Reasons for failure include insufficient collaboration, poor integration, cultural rejection and ineffective project management. That said, there are some fantastic examples of successful transformation projects, which have resulted in boosted productivity, new product development, improved customer engagement and increased revenue – all ensuring a company’s survival in the digital age.