Digital transformation has been high on many companies’ agenda over the past few years. But the mammoth task is not just about choosing the right technology, it can only be achieved when people are placed at the heart of change.
Sam Rudge, Managing Consultant and technology specialist for Consultancy+, says: “Technology is an enabler and isn't a complete solution. It allows for transformation and is a facilitator for change and ways of working, drives efficiency, improves user interactions, and ultimately the performance of a business.”
What is digital transformation?
Digital transformation is the process of integrating new – or modifying existing – systems and technological processes within your business to meet changing business and market requirements.
In today’s digital age, it is essential for businesses to adapt their technology to stay competitive. It impacts existing, as well as potential customers and employees. When it comes to customers, digital transformation enables your business to better meet their demands, improves their journey and experience, and provides greater engagement.
According to McKinsey & Company, digital transformation and a focus on customer experience can generate a 20-30% increase in customer satisfaction, and economic gains of 20-50%.
For your employees, it can improve productivity, efficiency, and talent attraction, as well as driving profits.
Examples of successful digital transformation in action
Understanding what a successful digital transformation strategy looks like is a good first step if you’re looking to transform your business’ digital function. Looking at what others are doing can give you examples of strategies that work, those that may not, and ideas of how you could adapt.
Here are some digital transformation case studies:
A great example of digital transformation is Disney’s launch of the streaming platform Disney+. With 86 million subscribers worldwide, the platform is tough competition for streaming giants Netflix and Amazon Prime and is officially Disney’s most successful digital product.
Prior to its digital transformation, Disney’s content was licensed to competitors such as Netflix. But now, it has retaken control of its own content. Not only has this put the power back in the hands of its own brand, but having ownership of the digital content and landscape means it now has access to powerful data.
Another example of digital transformation done well is construction and property services company Willmott Dixon. In a bid to connect employees across different construction sites across the country, as well as gain access to vital data, it upgraded its 5G connection points and deployed MPLS (Multi-protocol Label Switching) connections – a private connection that guarantees network performance, quality, and availability.
Outsourcing to BT, Willmott Dixon upgraded 40 of its sites, allowing teams to access files they needed and move to a new cloud-based system. Since the transformation, it has experienced increased productivity, with 26,000 days of staff time saved and over four million pounds saved in travel expenses.
Cosmetic giant L’Oreal describes itself as a digital-first company, where “digital transformation is a unique opportunity to create new relationships based on innovation, relevance, transparency, and trust.”
In partnership with Facebook, it launched an augmented reality app called ModiFace, allowing customers to try out products from their smartphone cameras through social media. In addition, it installed magic mirrors into stores, bringing augmented reality and virtual reality to the high street shopping experience.
The development of Audi City - the first digital, portable automobile showroom - is another fantastic example of best-practice digital transformation. In a bid to reimagine the retail experience with a virtual buying showroom, customers can use multi-touch tables to pick the options and colours they like, then project a life-size image of their Audi onto the showroom wall, which can be rotated and viewed from every angle.
Audi City launched in several major cities around the globe, with impressive results. Audi City London saw a 70% growth in sales, 65% of buyers purchased an Audi without a test drive, and optional equipment sales increased by 20%.
Different frameworks for digital transformation
A digital transformation framework guides an organisation through all stages of the digital transformation journey. Frameworks give businesses a starting point, and offer checklists of the tasks that need to be done in chronological order. While frameworks are great for guiding transformation projects, they should be adapted to each organisation and should not just be about technology. People are fundamental in delivering and driving change and should be at the core of any framework.
Below are some common framework examples:
PwC suggests that “companies need to align their business model and integrate both digital and conventional products, service, and channels, acknowledging that disruption has taken place.”
Working with organisations to provide a collaborative and integrated end-to-end digital consulting solution, its digital transformation model is based on five key factors:
• Evolving your business through digital and social enterprise
• Creating new value with innovative ideas
• Protecting the future from the risks associated with online security and cyber crime
• Accelerating through technology and web solutions, and
• Knowing your customers expectation and consumption through the use of digital data.
As you can see from the diagram above, its digital transformation roadmap shows the customer at the centre of the model, highlighting the importance of people being at the heart of change.
McKinsey’s framework is guided by 10 principles, separated into three stages, as demonstrated in the above image.
The first stage is centred on defining value. It suggests the first step is to secure senior management commitment. This should always be the first step, having complete buy in from senior stakeholders will help drive the project forward and ensure it remains top of the business agenda. The second step is to set clear, ambitious targets followed by the third step of securing investment.
Stage two relates to launching and acceleration. Firstly, McKinsey suggest businesses should start with lighthouse projects (small scale but big picture) and in step five, appoint a high-calibre launch team. This should then be followed by the promotion of the new, agile ways of working and nurturing a digital culture.
In stage three they focus on scaling up. The first task is to sequence initiative for quick returns, followed by building capabilities, and finally adopting a new operating model.
These are just two of many digital transformation frameworks that are available on the market. While they are a good starting point, it’s essential that the framework you choose is relevant to your business and covers all aspects of the digital transformation process.
Digital transformation in various industries and how it can differ
Although digital transformation in theory is the same set of principles, how it can be done, its importance, and the goals of transformation can vary greatly between different sectors.
Digital transformation in healthcare
Research by McKinsey found that the use of telehealth increased from 11% to 76% following the Covid-19 pandemic, and 37% of consumers were very likely to continue using telehealth in the future.
Statista suggested that the global digital health market will increase to over $500 billion by 2025. These statistics highlight the acceleration of the digital market in healthcare and how it’s only set to grow further. Now is a great time for healthcare providers to consider digital transformation to meet the changing needs of consumers.
Some examples of digital advancements in the healthcare sector include therapy sessions on smartphones, scheduling apps that send appointment reminders to patients, robots that disinfected areas during the pandemic, and virtual doctors’ appointments.
Digital transformation is key to keeping up to date with medical advancements. In 1950, it took 50 years to double the amount of medical knowledge we had, now it takes just 73 days. Introducing AI that can cross reference every peer-reviewed medical paper, and give clinicians easier access to medical data, is vital for the future of the sector.
According to a survey by Deloitte of technology executives of health systems, 92% of respondents say the greatest goal of digital transformation in healthcare is to achieve better patient experience. When asked about the drivers of transformation, 80% said leadership to be the key accelerator of driving digital transformation, and 68% said management of implementation. 60% said culture was a key barrier, and 48% considered communication ownership and transparency to be. Interestingly, all of these factors are centred around the people driving the change rather than the technology itself.
Digital transformation in banking
The banking industry is arguably one of the most well established when it comes to digital transformation. This is highlighted in Fujitsu's global survey which found that finance companies are the most advanced when it comes to digitalisation, with 89% working toward digital transformation.
Over the past few years, we have seen the fintech market grow rapidly. The launch of digital-only banks such as Monzo and Sterling have been incredibly successful, changing the whole banking experience for stakeholders. However, the digitisation of traditional banks is still ongoing and something they need to prioritise if they want to remain competitive, continue to meet customer demands, and match the pace of innovation.
According to Cornerstone Advisors’ 2022 ‘What’s going on in banking’ study, to date, three-quarters of banks and credit unions have launched a digital transformation initiative, and 15% plan to develop a digital transformation strategy this year.
Big Four accounting firm EY suggests: “Banks should focus on transforming their workforce and operations. With a clear sense of the path ahead, banks can reframe their future by placing people at the centre of their organization, leveraging new technologies to support them, and enabling innovation at speed and scale.”
How company culture relates to digital transformation
As shown in the above research by Deloitte, 60% of people believe workplace culture to be the key barrier to successful digital transformation. While this survey looked specifically at health organisations, it can’t be denied, company culture plays a vital role in your digital transformation strategy and can make or break it.
Research by BCG found that organisations that prioritised culture were five times more likely to accomplish breakthrough performance than those that ignored it.
A shift in perspective is needed, and digital transformation should be less about the technology, and more about how to drive change through the use of technology, with the ultimate goal to make your employees and customers’ experience better.
A digital culture encourages innovation, continuous improvement, boldness, and collaboration – which are all great things to embed into your company’s culture.
The importance of gaining buy-in from staff
A digitisation project cannot work if you don’t get buy-in from your staff – and to get that commitment you need to ensure you have a clear plan, goals, and objectives. In order for people to help drive the change you want; they need to be engaged and empowered.
Each and every member of your team should understand what your business is trying to achieve with the transformation - both the wider objectives and the smaller departmental ones. They also need to understand how they fit into the project and how they can assist in ensuring it’s successful. You should ensure that staff are regularly updated throughout the project, with any changes to their day-to-day job clearly explained.
The right employee mindset is essential, and should be prioritised, as it will impact the effectiveness and speed of the project.
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