What is Digital Transformation?
Your strategy to deliver Digital Transformation, (also referred to as DT or DX), has probably centred on the automation of manual processes to deliver enhanced productivity and lower costs. Seen in this light, digital transformation is clearly an essential element of a mature business continuity program too.
Digital transformation, also referred to as DT and DX, is the leveraging of technology to enhance corporate culture, customer experiences, and business processes. Its purpose is to deliver improvements which may be evidenced through more than mere efficiency and cost savings, and it is very much focussed on enabling organisations to be leaner, more flexible, and able to both increase their revenues and lift their margins.
The scope of digital transformation
In this article, we explore how digital transformation (DX) must be approached from a management perspective, and we offer insight as to the real-world benefits which can make a positive impact on every employee and customer. You will discover how DX is within your reach, and you will learn how the scope of digital transformation is as relevant to the smallest SME as it is to global corporations.
In this article we explore these five topics:
- The Scope of Digital Transformation
- Digital Transformation and Corporate Culture
- Digital Transformation and Customer Experiences
- Digital Transformation and Business Processes
- Creating your Digital Transformation Management Framework
Reading Time: 7 minutes
Change can be driven from within
Your early investigations may have led you to think it’s all about out-of-reach technologies, artificial intelligence (AI), and esoteric – and uncontrollable – IT projects. Small wonder, given how the global consultancies such as McKinsey and IBM swamp the internet with a consultancy-led approach. Instead, discover how change can be driven from within. You will then be able to identify the progressive and effective changes which reward you with an immediate and positive return on investment (ROI).
Short term, well defined, and fully measurable projects
McKinsey who, let’s face it, are consultants first and foremost, refer to the two-year and £900m investment in digital transformation by Axa Insurance as ‘cautious’ and write that ‘you get what you pay for’, before concluding that ‘only firms willing to truly commit to the investment needed will be able to pull off a digital transformation’.
Instead, approach the topic with a down-to-earth approach, taking short term, well defined, and fully measurable projects which can deliver cost-savings of 40% while delighting your customers at the same time. And how short is ‘short term’? Some digital transformation initiatives can be implemented in full in the space of a week, with a bewilderingly positive return on investment. As we will see, it’s all about leadership.
Take a hard look at your organisation and question the corporate culture. Are your employees accepting of the inevitability of a percentage of errors, whether in respect of administrative tasks or customer-facing mistakes? What are the impacts of those errors, and have the costs been thoroughly measured? What were the root causes?
Ask how technology can enhance the working environment
Too often, mistakes happen because employees haven’t been given the resources – such as the time to perform the task properly – or the procedures are so cumbersome or outdated that human error is inevitable. Delivering success requires the reform of the set of beliefs, values, habits and experiences that define a company through its workers. The staff need to be able to voice their ideas, and their management prepared to investigate how technology can enhance the working environment.
Consider the lack of fulfilment inevitable in a role which has a high proportion of manual data entry: it’s hardly a satisfying task, and it’s made all the worse by knowing there are certain errors. Your digital transformation initiative must, therefore, be to ‘automate the mundane’. Examples of such wasteful tasks abound and can be as common as sales teams entering details from business cards into a CRM, or accounts payable teams manually coding invoices and copying data from paper into a finance / ERP suite, or HR teams deciphering hand-written entries on time sheets. It’s time to change!
Foster a happier, more productive, workforce
Corporate culture benefits from digital transformation when your employees are encouraged to consider ‘what if’ scenarios. What if the field sales team could save an hour or two per month by fully automating expense claims vs. typing receipts into an Excel spreadsheet? Could they use that time to close the next deal?
By fostering a corporate culture which questions core aspects of how we work, and a management approach which then strives to seek answers, the organisation gains through a happier, more productive, workforce; and when that happens, the customers benefit and the enterprise is, thus, both enriched and enhanced.
Customers are less forgiving of mistakes
From seeing how corporate culture is enhanced through digital transformation, so too may the customer experience benefit. In this age of social media and global online choice, customers are less forgiving of mistakes and less loyal to a single company. They are also more informed, communicate more with other customers, and are forming ever higher expectations regarding digital service provision.
Your digital transformation approaches to enhancing the customer journey may range from replacing paper forms with webforms, translation of documents on-the-fly into your customer’s preferred language, or by enhancing the technology with which they interact so faults can be rectified with minimal frustration. Indeed, the permutations are endless.
Leveraging technology to enhance the customer experience
Taking a popular example from the impact of the COVID-19 pandemic, EtiQube developed an application to enable the booking of office desks, meeting rooms and even car parking spaces to ensure adequate social distancing. Designed for mid to large organisations, this simple app has been shown to free one full time employee while enhancing regulatory compliance. Client firms utilising the EtiQube app, report enthusiastic acceptance from staff and visiting clients alike. It’s a win/win: clients reduce costs, and the customers are pleased.
Whether the customer-facing digital transformation initiative is a root and branch redesign of an entire corporate website and e-commerce platform or claims management system, or a smaller quick win, the essence is the same: leveraging technology to enhance the customer experience (CX) is essential as the globalisation and digitalization of commerce continues at an ever-increasing and more competitive rate.
A tenfold increase in productivity
The potential digitalisation of business processes is limited only by the imagination of those involved. Bringing digital transformation to firms operating in the transportation and logistics sector can enable a tenfold increase in the productivity of delivery drivers, while in the legal sector the Big Five law firms are using digital transformation to automate vast swathes of their workforces.
The logistics firm will be using specialised print management applications integrated with mobile technologies, while law firms are adopting artificial intelligence (AI) to streamline and automate everything from their research to their document lifecycle management.
Digital transformation: a real-world business case
For a more detailed exploration, let’s consider the real-world business case for a housing association which operates more than 2,000 properties. Our client approached the digital transformation program from the time-honoured standpoint of seeking to ease the pressure on the finance department.
Early investigations revealed that out of the twenty-strong team across the finance department, no less than five full-time employees were devoted to the accounts payable function: receiving and printing invoices, then data entry into their ERP system (in their case, Oracle), and then the consequent reconciliation, filing, storage etc. The costs were staggering: almost £250,000 annually was spent on paying invoices!
The digital transformation approach initiated with the implementation of a Purchase to Pay solution, which eliminated all manual data entry, printing and copying. At a stroke, the department saved the cost of four full-time roles.
Report a positive ROI can be reported from the outset
In the second phase, the Purchase to Pay application was then enabled to deliver a centralised mobile purchase order requisition component. The effect was dramatic: the processing of expense claims was halved, multiple suppliers were found to be unnecessary, and early payment discounts were negotiated on top of preferential discounts.
Whether your organisation processes 250 or 20,000 inbound invoices monthly, this example of digital transformation is a perfect example of how DX may be applied to the benefit of almost any organisation, with a return on investment so dramatic that a positive ROI can be reported from the outset.
Digital transformation is not an optional direction
From corporate culture, through to your customer experience and business processes, you now have some practical examples to help you recognise that digital transformation is not an optional direction, but one which demands active consideration.
Although companies are unclear about where to begin their digital transformation,
the focus of any transformation effort should be on the efficiency and effectiveness of the bottom line, which always connects to the customer
A study by PwC’s global consulting team, ‘Strategy&’, found that approximately 19% of top global companies now have a CDO – a Chief Digital Officer – and that 60% of them were hired since 2015. In much the same vein, the smaller organisation should have a key sponsor within the C-Suite.
Designate a visionary management sponsor
Successful digital transformation strategies hinge upon your Chief Digital Officer, or management sponsor fostering a culture of questioning why processes are as they are, and asking also what value each process adds to the customer experience (CX)? It matters not whether your customer is internal (such as staff being the customers of the Human Resources department), or customers who receive your goods or services.
Approached carelessly, change can prompt fear. For example, when automation is first voiced, staff may resist for fear of losing their roles. It’s the same for those staff who are regarded as the magicians who are perhaps the only staff who can administer specific internal systems, such as legacy databases. With this in mind, it is essential that the management framework anticipate the perceived threats and provide the essential reassurances so staff can understand how their might transition into other, more valuable roles.
Reference: T. von Leipzig et al. / Procedia Manufacturing 8 ( 2017 ) 517 – 524
Digital transformation should be regarded as a continuation of what businesses have been undertaking for decades: programs of continuous improvement. Being mindful of the commercial challenges facing all business sectors, together with the increased pressures of regulatory compliance (such as the GDPR and the challenges faced by your Data Protection Officer), and the potential to increase the value of a business through the implementation of more modern processes, the motivation to invest in digital transformation is an absolute.
Humperdinck Jackman – Marketing Director
Humperdinck has a 30-year career spanning Document Management Systems (DMS), data protection, Artificial Intelligence, Data Protection and Robotic Process Automation. With many articles published in print internationally, he believes the advances in office technology are such that we’re entering the 4th Industrial Revolution. Now Director of Marketing and Consulting Services at Advanced UK, he’s as active with clients as he is in endeavouring to write original blog articles.