Much has been said and written about digital transformation and its benefits. But as companies that have embraced digital transformation continue to be analyzed and studied, patterns emerge and the positive impacts of digital transformation can be summarized into three major benefits: the transformation of business operations, the evolution of customer-centric organizations, and the revolution of business models.
Key Benefit #1: Business Operations Transformation
Arguably, the most important and impactful benefit of digital transformation happens behind the scenes. The transformation of business operations lays the foundation for other key benefits of digital transformation.
This benefit can be further categorized into three types: the digitalization of business operations, empowerment of employees, and greater resource management.
Digitalization of Business Operations
Using technology to transform business operations reduces or even eliminates processes that do not require human judgment or strategic thinking. By digitalizing business operations, enterprises are freeing their employees from menial tasks and allowing them to focus on strategic tasks. Digitalization achieves this for enterprises through applications that make business operations less time consuming, and programs that completely automate business processes.
For instance, T-Mobile transformed its IT department by automating its testing process. By automating over 83% of its IT department’s test scripts, T-Mobile’s IT experts, programmers, and developers were able to focus on more complicated test scripts that require human judgment. At the same time, automation streamlined its testing process, leading to greater efficiency and reduced errors.
Greater Resource Management
Digital transformation has paved the way for enterprises to capture large amounts of varying information and transform them into deeper insights. Big data analytics provides enterprises with real-time information and greater visibility and insights into its operations, especially the performance of its assets. This allows enterprises to make faster and more objective decisions based on data.
As the ingestion and analysis of data become faster and more powerful, the level of detail that enterprises are able to capture and generate is also improving, allowing them to make even deeper and more informed decisions that were not previously possible. For instance, big data analytics has enabled the analysis of thousands of connected devices that make up the Internet of Things (IoT), which provide extremely detailed information on assets, operations, and processes.
Empowerment of Employees
Aside from being able to focus on strategic tasks, technology has also increased the mobility of employees and the collaboration and knowledge sharing among them.
Through the virtualization of work processes, many employees can perform their work regardless of location, even in the comfort of their own homes or when posted overseas. In the area of field service operations or aftermarket industries, the virtualization of processes is even more beneficial as it allows field service engineers and technicians to access the latest information even when they are on the field or when they are mobile. This also allows enterprises to reduce costs by saving on office space rentals and other related expenses.
Networking and collaboration applications enable employees to work together, even when they are remote. It also eliminates the inconvenience of having to find a meeting room and setting a schedule when the meeting proponents are all in one place. These applications also open the door for enterprises to communicate with third parties and even global partners. Finally, these applications can also enable and encourage the sharing of knowledge and best practices among employees leading to the overall improvement of the enterprise. This is what Marriott has done exceptionally well as it incorporated the best practices across its 15 brands into its entire company culture.
Key Benefit #2: Evolving into Customer-Centric Organizations
Among the three key benefits of digital transformation, elevating enterprises into customer-centric organizations is the most obvious and evident. The results of this key benefit are greater customer insights and a better overall customer experience.
Greater Customer Insights
Just as technology is enabling enterprises to gain insights on their assets, it is also enabling them to capture information and gain deeper insights on their customers.
With the rise of e-commerce and social media, there is an abundance of customer data for enterprises to gather. For instance, by listening to what people say on social media, enterprises are able to gain an understanding of what customers like and what leads to dissatisfaction.
By using applications and programs that can integrate with e-commerce and social media websites, enterprises are able to capture, utilize, and analyze these information and transform them into meaningful insights. For example, McCormick, one of the leading spice companies in the world, launched FlavorPrint. FlavorPrint captures customers’ flavor preferences and recommends recipes that they can try based on these preferences. Not only did this enable McCormick to engage with customers and add value, but it also put their customers at the center of their future product development and promotions based on the data they capture.
Better Customer Experience
Greater customer insights also lead to the transformation of the overall customer experience. By better understanding their customers, enterprises are able to deliver what their customers want. For example, using these insights and customer data, enterprises are able to provide customers with more personalized products, services, and even promotions.
Technology also empowers enterprises to provide their customers with a truly digital experience. For example, enterprises are now able to provide customer service through social media channels, thus assuring customers that they are heard and that their grievances are addressed as quickly as possible.
Key Benefit #3: Revolutionizing Business Models
Digital transformation is not only improving how enterprises operate from within and how they interact and engage with customers — it is also redefining their entire business model.
Creation of Digital Products and Services
Consumers are now willing to pay not only for physical products and services, but also for digital ones. Technology is also enabling enterprises to augment their physical products and services with digital offerings. Some companies use digital technologies to promote and sell their physical products, while others are even able to build businesses around purely digital products and services.
Under Armour has developed a fitness app that captures not only its customers’ health and fitness information, but also data on how its customers use its products. Knowing that the average running shoe breaks down after 400 miles of running, Under Armour is able to notify customers and recommend its products based on their activity and fitness regimen.
Opening the Door to Globalization
Finally, technology has truly connected economies of all sizes and opened the door to globalization.
Technology has allowed enterprises to operate in any part of the globe by enabling faster communication and by establishing shared services for their support functions (such as finance and human resources) and even their core functions (such as sales and manufacturing).
Massive improvements and transparency in shipping and logistics, coupled with easier and greater access to shippers, extended trade from advanced economies and large multinational companies to developing countries, startups, small companies, and even individuals.
While the opportunities presented by globalization are providing an incentive for enterprises to transform digitally, the competition that globalization brings also compels them to change.
Digital Transformation Starts With Integration
Digital transformation enables organizations to open up new sales channels, find new markets and opportunities, increase revenues, and improve efficiency. But in order to begin their digital transformation journey, enterprises must start with connecting and managing data to ensure the highest quality of data is supplied to the enterprise — and only then can enterprises fully harness the business benefits of digital transformation.