Digital transformation in the digital age

Our global, technologically driven business environment rewards brands and companies who think, act and plan in ways that can keep up against a backdrop of volatile economies, evolving consumer needs and market innovations.

21st-century businesses who prioritise sustainable, flexible and agile methods of scaling must be digitally minded. Statistics from McKinsey, Deloitte and other sources indicate the potential, and scale, of digital transformation:

• The global digital transformation market is projected to grow from $469.8 billion in 2020 to $1,009.8 billion by 2025
• Digitally transformed organisations are projected to contribute to more than half of the global gross domestic product (GDP) this year, accounting for $53.3 trillion
• 70% of organisations have a digital transformation strategy or are developing one
• The implementation of digital technologies can help accelerate progress towards enterprise goals such as financial returns, workforce diversity and environmental targets by 22%
• 60% of marketers state that technology has significantly boosted their competitiveness.

Many have already made the switch and adopted successful digital transformation initiatives; for those keen to press advantage and remain relevant in increasingly saturated marketplaces, the time to re-evaluate business ecosystems – and embrace digital innovation – is now.

What is digital transformation?

According to global software giant, Salesforce, digital transformation (also referred to as DX) is the process of using digital technologies to create new – or modify existing – business processes, culture and customer experiences to meet changing business and market requirements.

Its focus is to use digital technologies – integrated across all business areas – in order to operate in ways that are more effective within a digital economy. As a broad business strategy, it has cross-industry, cross-sector application – from healthcare to e-commerce, from start-ups to established, global businesses, from supply chains to customer service. It enables businesses to optimise existing practices for the better, solving challenges and creating opportunities along the way. It’s essential that digital transformation strategies are developed in line with both financial and operational business values and objectives if they are to deliver the most impact.

Digital transformation is comprises three main areas:

• Customer experience (CX)
• Data and analytics
• Cloud computing
• Mobility.

In real terms, much of digital transformation is a result of adopting the use of innovative, new technologies such as artificial intelligence, machine learning, the Internet of Things (IoT), APIs and embeddable tech, apps and mobile technology, blockchain, cloud computing, social media, big data and real-time data analytics.

Many businesses have teams focused on change management, creating senior leadership positions such as chief digital officer (CDO) or chief information officer (CIO) whose responsibilities involve overseeing business operations to achieve wider objectives.

What are the benefits of digital transformation?

Implementing successful, meaningful digital transformation initiatives can lead to improved business performance – across all areas. There are numerous, quantifiable benefits associated with DX:

• Cost reductions associated with improved asset efficiency, supported employee productivity, and reduced manufacturing and overhead costs
• Transitioning from traditional, analogue practices – such as a reliance on paper-based records – to digital is more sustainable
• Better quality of products and services and greater compliance
• Improved time-to-market rate
• Automation across a variety of business processes and practices increases operational  efficiency and productivity, and frees teams up to work on more creative projects
• Customers receive more relevant, personalised user experiences, which helps boost repeat custom, build loyalty and increase brand recognition
• Enhanced company culture and employee satisfaction
• Data-driven decision making becomes more widely adopted and aligned to meaningful performance metrics
• Creation of additional streams of revenue and drivers of growth.

Digital transformation in practice: a case study

There are countless examples and case studies of digital transformation – and global car manufacturing company, Ford, is one of the most prominent.                                                                                                                                    

Ford has experienced digital transformation success in several areas of its business operations. One of their most effective initiatives revolutionised the way in which their vehicles are manufactured in their facilities. The introduction of a material flow wireless parts system – which enables tracking of various vehicle parts so that lack of availability doesn’t disrupt manufacturing processes – has streamlined their model and allows for greater clarity over production and capacity planning. Ford also focused their attention on meeting customer needs and optimising their experience; the FordPass app allows customers to remotely control their vehicles, to check, for example, fuel or battery levels, or to lock and unlock their vehicles remotely, giving customers greater control, autonomy and minimising pain points.

Ford studied customer behaviour and collected information in order to make data-driven, digital decisions that would add the most value for their buyers. Similarly, in order to give a digital transformation strategy the best chance of success, it helps if businesses:

• identify what is required from a digital transformation
• establish cross-team involvement and buy-in
• focus on optimising the customer experience and outperforming customer expectations.

Digital transformation trends for 2023

Sustainability, end-to-end automation, blockchain, composability, internal marketplaces, and organic governance all continue to rise to the top of the digital strategy agenda, as well as these three trends:

Further investments within software-as-a-service (SaaS) and cloud technologies are likely on the horizon as businesses who haven’t upgraded since before the pandemic now seek to do so. For example, software such as product lifecycle management and computer-aided design, and cloud-native options have the potential to present more agile, attractive alternatives to on-premises infrastructure for many.

The move to remote, hybrid and more flexible ways of working shows no sign of disappearing as many businesses platform employee autonomy and wellbeing, as well as seek alternatives to running expensive office units and other workspaces. SaaS works equally well in decentralised settings, and augmented and virtual reality technologies are evolving by the day.

Agile product development, as a more flexible, resilient alternative to waterfall product development, is a cycle-based model that is rapidly gaining popularity. Characterised by short sprints, cross-collaboration, agile models revolutionise traditional workflows and processes and aim to deliver high quality, new products more quickly and efficiently.

Gain the skills to ensure businesses succeed in the digital age

Could reimagining operating models and business processes be the key to driving growth in your industry?

Choose Keele University’s online MBA Finance and MBA Entrepreneurship programmes, and equip yourself with the expertise to design and develop your business transformation roadmap.

Influence decision making and strategic thinking at the highest levels as you prepare for your next career step. Through highly flexible, online learning, explore key concepts across finance and entrepreneurship, including: digital business transformation; sustainable operations; strategic marketing; human resource management; financial innovation; leadership, and more.