- IDC anticipates that 65% of the global GDP will be digitalized by 2022. This is expected to trigger direct digital transformation expenditures of over 6.8 trillion dollars between 2020 and 2023.
- Digital transformation is a lengthy process that necessitates cultural, technological, and operational adjustments centered on the end-user experience.
Digital transformation has been a topic of discussion for quite some time. Many believe that digital transformation is just about implementing new technologies in an existing organization. But the fact is that it isn’t just about investing in new technologies such as Artificial Intelligence (AI), Blockchain, and the Internet of things, among others. It’s to do with many other aspects, such as the transformation of products and services at a deeper level, changes to an organization’s structures, the development of new strategies, customer service, and corporate culture in general. In sum, it radically transforms the model of your business and its business processes.
Generally construed, a digital transformation (DX) strategy integrates digital technology across all aspects of an organization, intending to enhance current operations, develop new ones, and increase customer value. Organizations are shifting to new business models to facilitate adaptability, efficacy, and cost management. Businesses that have embraced a digital service mindset have accepted the digital transition with elegance.
No wonder digital transformation is fast becoming a reality for many organizations: IDC anticipates that 65% of the global GDP will be digitalized by 2022. This is expected to trigger direct digital transformation expenditures of over 6.8 trillion dollars between 2020 and 2023. Furthermore, Statista states that DX investment will exceed USD 1.8 trillion in 2022, and global spending on digital transformation is expected to exceed USD 2.8 trillion by 2025.
But the real question is how to implement digital transformation in your business? After all, digital transformation requires a robust strategic foundation and comprehension. Real transformation also means crossing the barriers of conventional transformation of the IT infrastructure landscape and inculcating a robust policy around data security and organizational behavior.
Let’s take a quick look at the most pertinent challenges businesses face while implementing digital transformation strategies.
Significant Challenges Faced by Enterprises
Digital transformation can help organizations reimagine how a business is run with the help of new digital processes and tools. But businesses often encounter several roadblocks at every stage of the digital transformation process.
Business leaders need to understand that digital transformation challenges arise not just because of technological barriers. Other factors are non-tech and may include people-centric issues and organizational structures. Leaders must identify and assess the peculiar problems that affect their business to overcome the problem. Let’s briefly discuss some of the most common digital transformation challenges businesses face.
Digital Transformation Challenges
- Siloed decision-making: Organizational silos negatively impact digital transformation and affect every aspect of the transformation process – strategy building or implementation. As each team or division concentrates on solving its issues and accomplishing its objectives, silos result in disjointed decision-making. Add to it the absence of a unified vision that propels team members towards a united goal.
- Legacy systems: Despite the availability of more agile and resilient platforms, organizations frequently utilize legacy systems. They find it challenging to move out of their comfort zone as they have significantly invested in these systems that still yield their benefits. These legacy technologies have obsolete software and outdated technologies and act as a barrier for firms to undertake the digital transformation journey. What’s more concerning is that they are vulnerable to security breaches.
- Risk-averse organizational culture: A risk-averse corporate culture hampers the growth and development of a business. Many firms still exhibit a risk-averse mindset when it comes to digital transformation. Employees and even C-suite executives are reluctant to adopt newer technologies. They see no point in shifting from tried-and-tested practices as they are still registering positive results. But businesses that do not address such issues are missing out on growth opportunities.
- Insufficient budget for technological change: Due to a lack of funds, digital transformation methods have been relegated to the back burner. This is especially true as the pandemic yielded significant losses for various businesses. The fact is that implementing new digital solutions after the pandemic is a costly endeavor that necessitates substantial expenditures. Additionally, there’s a belief that technology expenditure is an operational expense. Businesses that do not realize the strategic benefits of digital transformation fail to allocate budgets for it. Ultimately, this acts as a barrier to full-proof implementation and impedes future agility and adaptability.
- Imminent digital skills gap: As firms digitize their operations, nearly every position will require digital capabilities. The same is true for even non-technical positions that entail basic technical know-how. This leads to an insufficient breadth of digital skills needed for successful transformation. The laxity of specialists in core competencies adds to the skill gap. Some of the essentials for digital transformation are expertise in analytics, cloud, cybersecurity, enterprise architecture, digital experience, and other areas. Finding the right skill from an already skewed talent pool is not just difficult but expensive as well.
- Deficit of technological resources: In addition to the skills shortage, businesses also suffer shortages of additional resources for implementing digital projects. For example, the global microchip shortage is still an impediment for many industries. The supply chain for IT and equipment continue to remain hampered due to several issues.
- Increased security threats: Many firms implemented digital solutions in haste to maintain pace with changing consumer demands. This left them highly susceptible to rising cybersecurity threats. Other businesses treaded with caution, fearing they too would have to experience the same breaches if they implemented their initiatives. The fear is not unjustified, though. It’s a daunting task to work with dozens of SaaS vendors. Even for firms with a solid tech dev team, verifying the security level of each third-party platform and tool is challenging.
The price of undertaking digital transformation without an all-encompassing plan might be rather costly in terms of the amount of money that must be spent and the quantity of labor that must be performed.
How Do Successful Organizations Transform their Services?
Digital transformation is a lengthy process that necessitates cultural, technological, and operational adjustments centered on the end-user experience. By embracing cloud-first infrastructure and digitally providing services, businesses may be free to adapt to consumer and business requirements. But how to implement digital transformation? What are the critical steps involved in this transformation journey? Here is the solution for all your queries.
Below are a few essential steps for a digital transformation strategy.
- Develop a customer experience vision: Of all the aspects associated with digital transformation – technology, data culture, the redesign of processes, and redefining business models – the most misunderstood fact is that DX entails customer experience improvement. Everything about DX must be considered while keeping the consumer experience in mind. The first step toward digital transformation is to visualize your digitally empowered client experience in a post-pandemic environment.
- Identify KPIs of your business: After recognizing a starting point, it is essential to have a solid grasp of the KPIs for each service to guarantee accurate measurement and goal tracking. You might begin by monitoring KPIs for certain infrastructure types. Those in charge of the services may have a goal for success and a vision of what they aim to achieve. IT and business teams may collaborate to monitor development.
- Developer technology and cloud/edge computing vision: As we know that each business is unique – its operations are unique – and to suit its demands, technology must be used uniquely. As enterprises are rapidly adopting and immersing themselves in digitalization, it is crucial to determine the best technologies to help them meet their needs. To cite an example, a logistics company that wants to deploy IoT heavily may also consider deploying AI and ML. Other companies may be good at cloud computing, but the logistics company may need to think about edge computing to make real-time choices. A clear vision will help businesses move on the right path and make the correct choice.
- Establish predictive insights for a service: With the capability to observe and monitor a service end-to-end, the next step is to configure and train algorithms to produce predictive intelligence for a service. Begin with piloting advanced algorithms within a service. Never apply any alert or response until this has been confirmed. Then machine learning algorithms need to be trained on KPI health.
- Create a center of excellence for data: Expand the monitoring approach and comprehensive framework to more teams and discuss the benefits of correlating additional data into one place. Buy-in will be simpler when more teams embrace holistic monitoring. Teams may also analyze their data in a new way to demonstrate value. Provide them with your dashboard structure and platform to help them create a dashboard. When a problem emerges, you can utilize your intelligence to explain what went wrong with their systems. Enable automation and orchestration to forecast outages and decrease clean-up times. Use data and analytics to drive accountability and efficient workflows.
- Initiate siloless digital reimagination of business processes: Often, DX efforts result in silos that prohibit efforts from producing the desired outcomes. This can only be avoided by reimagining the process and ensuring that each department coordinates with one other. Data sharing does not just streamline the process but also results in inefficiency.
The digital transformation roadmap is a massive, perpetual process that does not occur quickly. There are several calculations and work involved. It necessitates integrating digital services, supporting personnel, and technology with long-term business objectives, ensuring the end-user experience is emphasized.