How to digitally transform your business

While every digital transformation will involve unique challenges, there are some vital steps which underpin any successful transformation process:

With a huge range of routes and opportunities available, the first building block for potential success is establishing tangible and realistic goals that outline your transformation efforts. The importance of this strategic thinking cannot be underestimated.

In spite of annual global spending on digital transformation being forecast to reach $2.8 trillion by 2025 (more than double the amount allocated in 2020 according to IDC), the success of these initiatives is limited. In fact, an incredible 70% of digital transformations fall short of their objectives, often with profound consequences according to The Boston Consulting Group.

The first step to avoiding disaster is to get specific about what you want to achieve with digital transformation. Are you aiming to remove friction points in your customer journey? To optimize channels to better meet customer needs? To get more from your human interaction touchpoints? Get specific and make sure your goal is realistic, achievable, and tied to tangible customer benefit.

It can be easy to rush into digital transformation purely from a bottom line perspective: to increase efficiency, increase revenue, etc. But 89% of businesses compete primarily on the basis of customer experience (CX), according to research by SmartKarrot. This means customer benefit is now inextricably tied to a solid business case for transformation.

If your transformation does not lead to better customer outcomes, it’s likely to be a costly and fruitless process. In the banking sector, the inability to meet customer expectations has led to declining confidence in the efficacy of digital transformation for collecting and using customer data, according to CSI’s 2022 Banking Priorities report.

The key to ensuring your transformation does not end up in the 70% that fail is working with a customer-first mindset. Examine and specify what the customer will gain from the transformation. If the outcome of that examination is not compelling, it’s time to reevaluate your approach.

To identify the highest value areas for digital transformation, you need a deep understanding of the limitations and strengths of your current processes. This will highlight clear deployment points for new technologies, operations, and processes. A key element of this will be how you can break down silos to increase data mobility so you can use this data to improve customer experience.

This is especially important if your business has been involved in any mergers and acquisitions (M&As). Unless the systems or processes of the merged business are rigorously integrated, M&As often lead to legacy technology debts. In this interrogation phase, you have a big opportunity to address this issue, break down silos, and increase your operational agility. If you do not, you’re seriously limiting the success or impact your digital transformation can make.

Before you dive into digital transformation, you also need to deeply consider the impact on employee experience both during and after completion. Will your proposed solution make your employees’ jobs easier in the long term? If not, you’re likely to experience issues gaining buy-in, implementing your solution, or driving adoption.

The most successful digital transformations deliver a blend of business, customer, and employee benefits.

By this stage you should have a clear vision of what you want to achieve. Now you need a way to deliver it from a tactical standpoint. That means drawing up an actionable roadmap that outlines the technology, skills, people, budget, and timelines needed to complete this transformation. Your tactical framework should also outline a review schedule and milestones for the process.

Once you have mapped out the framework, the size of the task ahead will become clear. At this point, assess whether you should complete the transformation in-house or with an outsourcing partner for all or some of it.

Want to dive deeper into transformation with an outsourcer? Check out our page on outsourcing business process transformation

Tied to your tactical framework, a successful digital transformation process needs a system for how you’re going to measure and report on it. That means both the final outcome and your progress during it. It’s vital that this also covers accountability for what happens if targets are missed along the way.

The KPIs you need will cover the overall strategic goals of your transformation as well as smaller initiatives. How you plan to use the data you collect is also crucial. That’s the key to turning simple reporting methods into a vital feedback loop that leads to course correction.

KPIs are especially important if you’re working with an outsourcing partner. You need a clear vision of what good performance looks like, transparency on how it will be measured, and carefully outlined processes for any targets that are missed. While having a measurement system may seem like basic advice to some businesses, there are many who underestimate the importance of them. Only two out of five organizations address this adequately, according to research by The Boston Consulting Group.

Successful digital transformation requires a specific set of skills and competencies—many of which a business will not have in-house. In fact, one study from The Boston Consulting Group revealed that just one in four organizations possessed these competencies. Unfortunately, this is not reflective of the way businesses actually approach digital transformation, as many underestimate the extent and specificity of skills needed.

The size of your digital transformation will dictate the extent of person-power you will need, but below are the key areas that need to be covered:

1. A “product” manager: This is your all-star player. Your digital transformation may not be a “product”, but having someone who plays a role akin to a product manager is vital. That means communicating with all departments, ensuring timelines are met, and orchestrating any course corrections.

2. Business-tech liaisons: These team members help the product manager connect the dots between customer experience, your business model, and your technology strategy.

3. Technologists: This department safeguards the technical success of your digital transformation. They will match the right technology and tech partners to your digital transformation and will ensure you’re anticipating technology trends.

4. Security and compliance specialists: Cyber attacks (phishing, ransomware, hacking) are now inevitable and during times of digital disruption, your business is particularly vulnerable to them. That makes it important to get your security team set up early. This team also ensures your transformation stays within compliance guidelines—a vital concern for highly regulated industries such as healthcare or fintech.

5. Implementation experts: This is the team that executes your roadmap. Technology and process implementation fall under the remit of this team.

While your digital transformation will be tied to employee benefits, there is no getting around the fact that it will involve behavior change. So give your employees time to adjust to the new ways of working and aim for confidence rather than competence. That’s the key to adoption of new technologies and processes.

To help instill this confidence, spend time listening to the concerns of employees and allowing them to understand how this new way of working will benefit them, your customers, and your business. If your teams feel they are part of the change, rather than simply affected by it, they are more likely to evangelize the benefits of the new approach to others.