According to an article by Deloitte titled How digital transformation and a challenging environment are building agility and resilience by Janet Foutty, 85% of CEOs accelerated digital initiatives during the pandemic.
Creating an adaptable business that can thrive in the digital economy is becoming increasingly important. This change for businesses can be driven by digital transformation. The use of technology to change the way you do business is known as digital transformation. It is a fundamental shift in the way you interact with your customers.
What does taking up a digital business transformation initiative mean for businesses?
- Integrating digital technology into every aspect of their business,
- Changing the way they operate by modifying or creating new processes and customer experiences, and
- Fostering a culture that embraces innovation and change.
The technology aspect of digital transformation
Digital transformation involves a partial or complete change in the organization’s technology stack encompassing hardware, software, cloud infrastructure, network architecture, and data storage methods. In short, technology transformation is a subset of digital transformation.
Its primary goal is to improve the organization’s technology stack to increase overall efficiency and create economies of scale. The goal is to modernize the tools that can impede organizational efficiency and assist in creating a technological transformation roadmap.
A leading IT organization headquartered in Germany needed to collaborate closely with decision-makers while also responding quickly to any emerging problems on the ground.
A ticketing system was developed to mirror the customer’s command/control structure based on detailed planning and forecasts provided by the customer. A weekly rollout plan for each location was created. This was backed up by “site-readiness reports,” a bi-weekly snapshot that gave the project team visibility into which client locations were on track and ready for their IT assets to be collected. Due to this level of integration and visibility, the customer received a net financial return of more than 6 million euros for their retired equipment. The need for subcontractors was also significantly reduced. This directly translated to more consistent communication channels, business practices processes, and reporting.
Digital transformation as a business transformation
Digital transformation enables a brand to be modernized and relevant to its customers and overall ecosystem. The main benefits of digital transformation are increased efficiency and productivity. Changing how your company operates can improve your customer experience, operations, and employee engagement. In other words, successful digital transformation unlocks the business’s potential, increases returns on investments, and improves the overall transformation of the business.
But it’s also worth mentioning here not all digital transformation initiatives translate into successful business transformation stories. According to Mckinsey, 70% of digital transformations fail, and recent history has plenty of examples.
American conglomerate General Electric was one of the most prolific failures. General Electric aspired to be the sole owner of the industrial internet. The organization spread its resources too thin in this endeavor, resulting in a failed digital transformation initiative. GE Digital was formed in 2015 as a separate unit to centralize all of the company’s IT operations. GE spent billions of dollars on digital initiatives to become one of the top ten software companies by 2020.
Instead of individual units handling their own digital needs, GE Digital was established as a separate entity to centralize the company’s digital initiatives. On the other hand, GE Digital intended to strengthen the company’s data analytics capabilities and position General Electric as a more technologically focused enterprise. The unit’s objectives were strikingly different than the company’s expertise.
The company’s hasty transition from massive machinery to cloud-based software solutions backfired, leaving it in a dark economic rut. The quarterly P&L requirements limited GE Digital’s ability to invest in long-term strategies, limiting them to short-term goals that added little value to the overall business. Instead of opening new revenue streams, GE digital resulted in plummeting stock prices, a bad reputation, and economic losses.
There is no silver bullet that can guarantee digital transformation success. Enterprise digital transformation necessitates extensive planning and meticulous execution. Digital transformation implementation can lead to business transformation only if an ideal balance between digital innovation and organizational objectives is achieved.
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