What is ‘Digital Business Transformation’?
Digitalisation, (also known as digital transformation, business transformation or digital business transformation) begins with identifying what is not working as effectively as it could within a business, then introducing necessary changes in the form of new processes, approaches, techniques and technologies to bring about improvement. It is driven by an understanding of how specific solutions can be applied across a business to bring about positive change.
Organisations undertake digitalisation to maximise their potential, create additional value, increase efficiency, reduce costs, increase market share, improve customer satisfaction and boost revenue.
In your business’ case, digitalisation could be focused on outsourcing to maximise your knowledge, business potential and a successful delivery. Perhaps it’s about developing and harnessing innovative technologies or creating intellectual property to grow your business, or maybe it is simply about being more efficient.
Whatever your specific business needs and goals, all digital business transformation projects aim to ensure the best, most appropriate and effective processes and systems are implemented across an organisation in order to improve performance and support overall business strategy.
Unsurprisingly, for most organisations this is not a straightforward process. The first step is to foster a culture that embraces and understands the need for change in an increasingly digital-first landscape.
Why Does My Organisation Need Digital Business Transformation?
- Digital Business Transformation drives improved operational efficiency by 40%
- 27% of companies now believe that digital transformation is a matter of survival.
- 55% of companies without a digital transformation initiative believe they have less than a year before they start to lose market share.
In the last two years we have all witnessed unexpected global upheaval due to the pandemic, and the accelerated uptake of digital technologies, particularly remote and hybrid working models, has been one of the pandemic’s lasting legacies. According to Forbes, we saw five years’ worth of global digital transformation in the first year of the pandemic, with 2020 essentially becoming 2025 in terms of digital acceleration progress.
That in turn has meant more need for organisations to have appropriate, fit for purpose technologies, tools, processes and policies in place to facilitate and support:
- Hybrid working patterns
- Revised business goals
- Improving efficiency
- Driving improved employee experience
- Improved customer experience
- Growing revenue
How Often Does Digitalisation Succeed At An Individual Level?
First, let’s get the bad news out of the way. Bear with us.
- Fewer than 30% of digital business transformation initiatives succeed, on average.
- 16% of survey respondents said they believe that digital business transformation in their organisations led to improved business performance and equipped them to sustain changes long term.
- 7% of respondents stated that although performance was improved, improvements were not sustainable.
The reasons given for the high level of failure include lack of employee engagement, alignment with goals and poor communication. A sobering set of statistics.
But here, we share some best practices to help your digital business transformation a fruitful, successful and sustainable endeavour.
It’s all good news from here forth, promise!
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How Much More Likely Are Digital-First Businesses To Achieve Their Business Goals Than Those Which Rely On Manual Legacy Systems?
Digital-first companies are 64% more likely to achieve their business goals.
The challenge businesses face is successfully implementing digital transformation in the first place, but once they overcome that hurdle, things get a lot easier and digitalisation pays off. To ensure that they do, companies need a reliable and experienced set of digital partners by their side (more on that later).
What are the key digitalisation statistics?
- Senior management figures state key benefits of digital business transformation include improved operational efficiency (40%), faster time to market (36%) and the ability to meet customer expectations (35%)
- Leading industries for digital-first business transformation strategies are services (95%), financial services (93%), and healthcare (92%)
- 71% of digitally mature organisations state they attract new talent based on their use of data
- Only 10% of early-stage digital companies say they attract new talent based on their use of data
- 45% of managers do not think their organisation has the right technology to successfully implement digital business transformation
- Digital-first companies are 64% more likely to achieve their business goals
- Digital transformation with a focus on customer experience can generate a 20-30% increase in customer satisfaction
- Customer-focused digital transformation creates economic gains of 20 -50%
Do You Recognise Your Organisation In The Above?
Perhaps you are interested in the potential benefits and advantages a successful digital business transformation could bring to your business?
Key Capabilities of Successful Business Digitalisation and Transformation
It is crucial that organisations focus on the key business capabilities that directly impact on the success of business transformation activities.
Although many factors must be considered, there are really only a few core capabilities that are critical and will play a significant role in whether your business transformation is successful or not.
Focusing on these will help an organisation deliver greater value and realise their ambitions.
One approach to defining and designing enterprise capabilities is provided by Deloitte’s Capability Hexagon model, focusing on 6 key areas.
- Mission– what is the purpose of each business capability, what is it the business does and what can it do? How does it operate, what value does it or will it deliver? The mission is derived from and supports the company’s strategy.
- Insights– what is the flow of information, analytics and decision making? Good, timely information helps drive informed decision making.
- Integration– it is important to establish clear roles, decision making ability and policies that support integration within and across the business, all functions and stakeholders.
- Processes– are all business processes integrated, efficient, optimised? Will they support or directly help with achieving desired outcomes?
- Technology– are the appropriate software, hardware, and supporting technology and tools in place?
- Talent– this is about skills, experience, competencies, infrastructure and planning of your workforce to optimise the talent base in order to carry out the business requirements.
How Do Businesses Build A Successful Digital Business Transformation? Our 12-Step Guide:
As aforementioned, the harsh reality is that many digital business transformation initiatives are unsuccessful.
Businesses that succeed in digitalisation will have put time and effort into focusing on the key areas that give them the best chance of success.
Here are our 12 key steps to giving your digital business transformation strategy the best chance of success:
Begin by understanding what the challenges are. Without a clear understanding of the current situation, it will be impossible to develop or implement effective business transformation. Before you can plan for an improved future state, you need to fully understand the current ‘as is’ state of the business.
This means evaluating all current processes, policies, workflows and practices across all business units, functions or departments you plan to transform. Even a small-scale business transformation project will often have interdependencies elsewhere in the organisation so it’s important to do a proper evaluation, regardless of the scope of project.
Once you understand the current situation, you can then start to plan how to address any problems, weaknesses or bottle necks, by introducing appropriate modern technologies, tools, processes and approaches.
Business transformation initiatives can be a hard sell to upper management, for a whole host of reasons including complexity, resources, timescales, impact, disruption, and cost.
However, it is vital to get senior management buy -in. Spending time and effort on this means you gain valuable support for the changes and ensures you have key allies who also influence, define and champion organisational values, culture and goals.
Senior management support can also help in fighting any battles and tackling challenges and in communicating and sharing the need for and value of business transformation in helping the organisation achieve its goals and ambitions.
As well as getting management on side, it is also important to get employee buy-in.
You need employees to support the change process and to collaborate and align with business goals. To gain their support, you need to help them understand the benefits of the business transformation, why is the business doing this, what and how will it change, what improvement will it make for their roles and for the business overall and what value will the changes bring.
Employees will want to know how it changes their situation and how any changes will benefit them and the business. They may have concerns and fears that need to be acknowledged and addressed.
Employee engagement at all levels, across all functions and age groups is key to successful business transformation. A vital aspect in building engagement is effective, consistent and regular internal communications so employees feel informed about changes, listened to and involved in the change process and fully aware of what is expected of them and how any changes implemented will affect them.
74% of employees feel that they are missing out on essential information at work.
We have said already that good, regular and consistent communication is an essential part of all successful business transformation strategies.
Employees need to understand what is happening at every stage – from planning to implementation and follow up. Open dialogue including two -way conversation around any changes should be on a regular, even daily basis.
There are many ways to engage your workforce in regular dialogue. It is about creating the opportunity for discussion around what is planned and happening so employees feel safe and confident in sharing their opinion, feedback and suggestions.
Organisations often struggle with this, through using the wrong internal comms channels, such as relying on emails and intranets which may not be the most appropriate tools to reach and engage with employees.
It does not have to be complicated; it is about thinking through the best, most effective options for your organisation and the people within it.
60% of employees occasionally, often or always ignore emails at work
New and improved digital technologies, tools, processes and policies are powerful tools to help transform a business – but they rely on people to use them effectively.
It is important to focus on developing informed, engaged and supportive people across the organisation and to do that, it is about focusing on and improving communication to maximise your digital business transformation efforts.
Focus on clear, ongoing communication from the start – within the project team and within and between management and employees at all levels and across all functions and locations.
As well as keeping everyone in the loop, informed about what is happening and why, what their role in it is and what resources are available to help, effective communication is one of your most powerful tools to laying the foundations for successful and sustainable digital business transformation.
Ongoing, consistent communication facilitates collaboration and teamwork, gives employees a voice and ensures everyone is informed and better able to deal with challenges.
Effective communication is key to business transformation. Statistics state that organisations who build effective and open communications, are over 3 times more likely to implement successful business transformation.
Successful ‘Digitalisation’ is 3X more likely in an organisation with great communication
Having a well thought through change management process means you will be able to track, analyse, measure and better understand any changes being implemented as well as gain insight into the impact of those changes across the organisation.
This links back to the need for effective communication. Those involved in change implementations need to have effective communication skills and use the right communications tools to ensure the right information is available to the right people at the time it is needed.
This also helps break down barriers to change by sharing why change is happening and the benefits and value change will bring.
It is important to set short and longer-term goals, and clearly communicate them.
People need to know what the goals are, how they are going to achieve them and by when. Having smaller short-term goals are good for motivation and seeing progress towards the bigger end-goal transformation.
Use milestones to mark key stages and achievements along the way to the bigger long-term goals. Remember to celebrate achievements along the way too, whether that is with the project team for a short-term goal successfully reached or with the wider organisation for reaching one of those major milestones or long-term goals.
It is also important to consider and state timescales and deadlines. This helps create a sense of urgency, useful for motivating and engaging project members, managers and employees.
Without this, it can lead to apathy or inaction particularly on a longer term, more complex transformation. Project leaders and managers should clearly communicate a sense of urgency and reason the business transformation project needs to be implemented now rather than kicked down the road.
62% of employees do not like being out of their comfort zone
Change often results in uncertainty and fear which can be major barriers to successful digital business transformation, or digitalisation.
Fear and uncertainty cause insecurity and frustration and can lead to silo thinking, lack of cooperation, hostility, lack of trust and at its worst deliberate attempts to slow or frustrate progress. Managers, project leaders and those involved in communications around the transformation are all responsible to help manage and address barriers, fears and conflicts that arise.
It is natural that people will be anxious when faced with change. Research shows that only 38% like getting out of their comfort zone, which means 62% are not comfortable with change.
For some, business transformation can prompt thoughts that their skills or experience will no longer be needed, or they will be left behind, unable to cope with new changes and technologies, particularly when it is a digital transformation.
Despite employee fears, research suggests 67.8% of companies say technology disruption has had a neutral-to-positive impact on job creation whilst 37.3% report a net increase in job creation as a direct result of digital business transformation initiatives.
Many different business departments, functions even locations, must communicate and collaborate to enable business transformation. Yet again communication is crucial to getting everyone on board, keeping them informed, dealing with challenges, celebrating achievements.
Particularly for larger organisations with multiple or global locations, being able to communicate and collaborate easily and quickly is vital. Having the right communication tools and technologies in place to create synergy and enable effective collaboration and communications is incredibly important.
Many large organisations use multiple internal communication channels – email, intranet, document sharing, Microsoft Teams, Zoom, Dropbox, Basecamp, Slack, Skype and more. Sometimes it can get messy as to where best to share information, to check for updates or collaborate, with different teams, functions and locations using their preferred options. That can result in some areas of the business missing out on key information or being left out of the loop altogether.
Having an effective communication strategy is not just important for getting your message out there. To maximise value to your business, your communications strategy should have clear goals that are understood and measured. If you do not measure you will not know what is most effective, which channels to use to deliver your message and who within the organisation is engaging.
Being able to track and measure data is particularly important and can help you understand the level of employee engagement and alignment with transformation goals and the most appropriate channels and messaging to use to support business transformation. Communications solutions like ours enable organisations to easily manage, track and assess in real time, what is working best in terms of engagement, reach, visibility, content and effectiveness.
97% of companies believe that cultural change should be integral to ‘Digital Business Transformation’
If your organisation is not agile enough or quick enough to change, chances are you will get left behind. In a competitive market those who quickly respond to and implement change, benefit the most.
Even better, if your organisation can foster a culture of innovation as well as transformation, you can accelerate change and the multiple benefits and advantages successful business transformation brings.
97% of companies believe cultural change is important for digital transformation. Over 47% of upper management say they are actively investing in creating a culture of innovation within their organisations.
Changing organisational culture and embedding new behaviours can be incredibly challenging but is made easier through effective leadership and effective, consistent, open and continuous communication across an organisation, using appropriate tools, technology and channels.
Another challenge many organisations face is around closing the skills gap around business transformation initiatives. Research suggests 90% of jobs in the future will require digital skills. At the same time, it is estimated 44% of the workforce in the UK & Europe aged 16 to 74 do not have basic digital skills.
Clearly there is a major skills gap.
A common thread throughout is the crucial role of both communication and employee engagement in a successful digitalisation project or ‘Digital Business Transformation’. Alongside that, ensuring you have the right supporting partners and technologies in place is vital.
At Neo Technology we offer clients experienced and dedicated Scrum teams based on a hybrid model of local and offshore teams.
These teams are structured to utilise knowledge and maintain experience within the group.
Our agile approach to upscaling and downscaling FTCs & FTEs, delivers increased specialist knowledge, fast onboarding timeframes, increased speed of turnaround and significant cost savings. To find out more reach out here https://calendly.com/meetwithstu