4 Types of Digital Transformation

Which comes first, the digital transformation or the business strategy? If your company is looking for a silver bullet in the form of a digital transformation, it may be time to examine your IT strategy. A digital transformation can be a powerful business tool when used in tandem with effective IT strategy. Too often, business leaders expect the technology to tell them what the strategy for the business should be. In reality, digital transformation and IT are led by the overall business strategy. Without clearly defined goals, digital transformations will fail and IT strategies will become ineffective. The phrase "digital transformation" sounds so grand and comprehensive. In reality, most businesses can be transformed with just a fraction of all the tech that is available. Transformation doesn't have to be all or nothing.What does it take to transform a business? In some cases, the Covid-19 pandemic added a sense of urgency to automation and digital transformation as organizations looked to lower costs, support a remote, and increase flexibility in their supply chains. When used effectively and combined with IT strategy with specific objectives, the results can be powerful.Despite the benefits of digital transformation, for many businesses manual tasks remain prevalent. As organizations adopt automation, they're falling short in realizing its full potential and value.Every business should look for ways to use digital tools to meet its goals. Read on below to find 4 types of digital transformation and the potentially powerful impacts these transformations can have for your business.

1. Business Processes

Every day, your organization works toward project and team goals. But how does this work happen on a daily basis and what is the workflow in your organization? Knowing how the work happens in your business will allow you to have a strategic understanding of how digital transformation can streamline your processes. With some digital augmentation, a business can lower the costs to do the work, improve the quality of work, and speed the pace of work.Despite these possibilities, only about a third of tasks are automated across IT functions. This means that processes are still weighed down by unnecessary manual labor. Digital transformation can minimize this manual work, freeing up time for your staff to devote effort to priority-worthy work and make the most of their skills.Before their employment of digital transformation, oil exploration company, Riley Permian had:

• No remote capability. Staff had to physically service each tank in the field each day and access geological data through on-premise servers at the office.
• Reporting that required significant manual effort. Something as simple as an accounting report took days to assemble, but by then, the information had gone stale.
• Basic reporting, from consumption rates, inventory, production numbers, sales, etc., took many human hands to assemble reports—more human hands meant more human errors.

A 2009 digital transformation shifted processes away from consumption of hours of manual labor to automated processes. As a result, Riley Permian grew from three employees, legacy software and processes, to modern systems and the fulfillment of its growth potential. It is now a publicly traded company.

Business Model

Some businesses need a fundamental shift in how they provide value to their customers. Digital transformation can provide this value on a foundational level.

• Netflix

Netflix was faced with both a foundational problem and opportunity. After its beginning and subsequent growth as a DVD delivery service, Netflix was faced with the sudden doubling of internet speeds every 18 months and the proliferation of possibilities in streaming. Early company employee Ted Sarandos says, “we never spent one minute trying to save the DVD business.” Netflix embraced the foundational shift in its business model, offering streaming movies as soon as broadband internet speeds allowed, and upended the TV industry in the process. In Netflix’s case, embracing innovation was a play to both offense and defense. Their business grew and the digital transformation helped guard against competition and disruption.

• UnderArmour

The sports apparel company, UnderArmour is another example of a fundamental business model shift to help fulfill a company mission. UnderArmour was mired in apparel competition when it created new services with a re-focused customer approach, revisiting and fulfilling its mission of helping athletes of all levels improve their performance.UnderArmour purchased several sports-engaged digital services, including MapMyFitness, EndoMondo, and MyFitnessPal. By acquiring these digital assets the company created a whole new level of service for—and engagement with— their customers. With more than 200 million registered users, it has been a highly successful program, connecting people to the brand and guiding them to UnderArmour stores.

Domain Transformation

Many companies hit a plateau in their ability to grow within the space of their domain or class of trade. When this leveling occurs, companies that are slow to adapt often die. Domain Transformation is a type of digital transformation that future-thinking companies look to in order to transform and enter other markets. Entering a new market can allow the company myriad new growth opportunities and re-invigorate their foundational market space.

• Amazon

In 2017, Amazon purchased Whole Foods for over $13 billion and entered the grocery market. This purchase upended the grocery industry and forced a digital reckoning within an industry, seemingly overnight. Other grocers knew that this meant the digital shift was coming to their industry but found themselves behind the curve and scrambling to find ways to keep up with the shift.Amazon created waves in another industry when they created Amazon Web Services. For over twenty years IT organizations’ value came from the writing and maintenance of huge volumes of code. Amazon saw an opportunity to free up teams’ bandwidth and offered managed services for common IT challenges. These services also leveled the playing field of organizations from large to small. Allowing entrepreneurs to create value in their ability to piece together public cloud-based tools to make entirely new industry-altering functionalities.

Cultural and Organizational Transformation

Digital transformation, and specifically cultural and organizational transformation is incredibly powerful. However, cultural and organizational transformation is entirely dependent on the business and looks different for every organization. Technology continues to change quickly, and has created the opportunity for the faces of organizations to shift. A few common denominators for cultural and organization transformation are:

• Solutions come from the bottom up, rather than the top down. More than ever, leaders are getting feedback from customers and lower-level staff about what they need. This has blown up the lines of traditional communication and allowed for connectivity within organizations that would have been unheard of even two years ago.
• Incremental improvements are essential. Many tasks and objectives are occurring simultaneously. Rather than building one big thing to perfection, it's better to constantly achieve smaller goals and make incremental improvements.
• More freedom. This includes the freedom to experiment, give input, take risks, fail, and learn. Organizations need to embrace this freedom in order to achieve their full potential of transformation.

As digital transformation continues to fundamentally alter the business landscape, companies and organizations will need to have a firm grasp of their IT strategy and objectives in order to take full advantage of its potential. If employed with intent and direction, these powerful tools can offer organizations the potential for growth and positive change on a foundational level.