What Is Digital Transformation in Business, and What Advantages Does It Have?

The digital economy is a new reality that requires a business to revise the arranged processes within the company and change their approach to customer relationships.

Most businesses have already taken one of the decisions: either to stick to the usual business framework, or to embrace the changes that cannot be stopped. Therefore, it is crucial to use the available opportunities to ensure the further development of your company.

If you are among those people who are not afraid of change and are ready to put new ideas into practice, let us try to make sense of digital transformation together, find out more details about it, and learn about the particular features of this process.

What Is Digital Transformation and What Is Its Essence?

It is difficult enough to provide a precise definition that can be agreed on as an accurate term. However, in general, digital transformation is the process of a company changing its business model and transforming it operational processes, which are carried out using digital technologies.

The process involves creating new digital products or adapting existing ones to the needs of the company and its end customers. For example, many retailers are abandoning their plastic loyalty cards programs and switching to their own application in this regard. Other companies migrate to electronic document circulation with partial or full automation.

What we are talking here about is a complex process affecting lots of aspects of the company’s activities, including elements of its business model.

What Are the Advantages of Digital Transformation for Business?

To survive, companies, like any other living organisms, have to adapt to environmental changes. Companies neglecting the use of modern technologies are becoming vulnerable to new competitors who are actively utilizing technology in their activities (and strategy).

For example, a bright representative of the digital economy, Uber, has provided keen and tough competition for almost all taxi services, and Airbnb is causing more and more economic damage to classic hotel businesses. Implementing changes based on the active use of new technologies provides your business with the following benefits:

• Shorter decision-making and operation time
• Big data technology and artificial intelligence transform the user experience
• Increasing audience loyalty
• Digitalization and re-engineering of operational processes increase their efficiency
• Due to lower production costs, the company’s net profit increases
• Business model boundaries expand and it is possible to explore new markets.

The main objectives of digital transformation are:

• to shorten the decision-making time.
• to increase the flexibility of processes, depending on the customer’s particular needs.
• to reduce the number of employees involved in the process.

The Course of Changes: What Is Necessary for Transformation?

When we talk about digital transformation, we can outline four main areas to change:

1. The company’s operating processes
2. Customer interaction patterns and tools
3. Transformation of the product, which should meet current technological challenges to a greater degree
4. Most importantly – efficient methods necessary to make your employees and customers take full advantage of the transformation.

The team’s unavailability (or unwillingness) – namely, a lack of motivation and/or a lack of expertise – are often the main obstacles to successful business transformation.

It is difficult to imagine the success of such changes in a company relying on rigid subordination, conservative decision-making models, and processes bureaucratization.

To make everything work, you will need:

• employees’ and top management’s willingness to change, which is actually an indispensable prerequisite.
• availability of a competence center where employees are responsible for certain aspects in the process – they can be third-party contractors (IT outsourcing).
• to allocate enough time for your staff training and adaptation to maintain operational efficiency.
• to implement changes gradually, with clear change-tracking, and action adjustments if necessary.

Digital Transformation Challenges (and How to Overcome Them)

If it were easy to implement changes, almost everyone would do it  immediately, right? It is obvious that when transforming the company from analog to digital, you will experience lots of difficulties.  However, if you know about it in advance, you will be ready for anything and be able to easily avoid problems.

Challenge one – a critical lack of competent experts

The ability to continuously improve knowledge and upgrade tools is the main skill that digital transformation experts should possess. No technology, let alone digital, exists forever.

Trend analytics, digital systems architecture expertise, the skill to construct efficient operating and business models, as well as process management abilities, are among other necessary skills.

Few companies can afford to hire the required experts, especially if the workload is large, and a whole team is necessary to achieve the objective. Therefore, IT outsourcing will be the best solution for most businesses.

Challenge two – transformation rate limits

The company will never transform at once, and, for some time, digital products exist in parallel with analog ones. Digital and traditional departments of a company often enter into competition with each other. Professional management is needed for solving the issue.

Challenge three – conservatism of senior management conservatism

Digital transformation requires additional time, effort and money, and not everyone is ready for this. The management flexibility and its willingness to empower those employees who possess the necessary expertise to make changes are the key to success. Moreover, it is very important to really, and not just in principle, comprehend the potential of technologies and the inevitable necessity to implement innovations.

The process may prove to be long, complicated, and expensive, but the impact on productivity and business efficiency justifies all costs spent.

Summary

Any significant change requires some effort and coming out of your comfort zone. However, the mentioned changes are simply irreversible, and this is the direction in which it is necessary to start moving right now in order not to be left behind in a competitive market in the near future.

As part of the digital transformation, Lvivity tries to offer its clients an integrated approach involving both strategy development and convenient tools for its implementation.

You can always contact us for advice, and our experts will help you understand what advantages digital transformation can provide to your business.