Digital transformation ensures survival of the fittest

In this fast-paced world, any organisation wanting to survive, thrive and remain relevant simply cannot ignore the urgent need to digitally transform.
Nathi Dube
By Nathi Dube, Director, PBT Innovation, PBT Group.
Johannesburg, 21 Sept 2021
Nathi Dube
Nathi Dube

One important lesson the COVID-19 pandemic has taught us is that digital transformation can no longer only be a concern for big corporates with big budgets.

Rather, all organisations, big or small, must consider digital transformation as a business imperative, and need to invest and take advantage of new technologies to improve their processes and pivot new products and services.

To successfully navigate a changing market landscape and consumer patterns, organisations need to have a well-planned digital transformation programme underpinned by a sound future-looking business strategy. A properly implemented business strategy may be the only thing that determines whether a business will survive.

There are many examples of organisations that have re-invented themselves by taking advantage of new digital technologies to respond to changing market conditions. Netflix is one such example. When DVDs were being replaced by video-on-demand streaming services, it quickly adopted new technologies, found new ways of doing business and this ensured its survival.

Some organisations, however, ignore all signs of a changing business landscape and a need to digitally transform. The incumbents are usually saddled with legacy systems with lots of shortcomings but that are still critical for the company’s day-to-day business. Replacing these systems is often costly and carries a lot of business risks. This may slow down the pace of digital transformation.

New entrants, on the other hand, enter the market as fully digital outfits. These new digital companies are mobile-first and app-driven, which makes them agile. They are innovative, and importantly, use the data they gather to effectively improve user experience and rollout new products and services.

In this fast-paced digital world, for any organisation wanting to survive and remain relevant, digital transformation simply cannot be ignored. It is about re-invention − an organisation disrupting itself before it gets disrupted by the competition.

There are four types of digital transformation:

Process transformation: Modifying the elements of a business’s processes to achieve new goals.

Business model transformation: Using digital transformation to transform existing business models.

Domain transformation:New technology brings with it new abilities to redefine existing products and create new products that would not have been possible before.

Cultural/organisational transformation: Employee buy-in to ensure the objectives are not only understood, but also met.

To successfully execute a digital transformation strategy, all four types need to be implemented. And to achieve this, a few aspects need to be considered.

Set out clearly-defined objectives

An organisation must clearly define the objectives of its digital transformation strategy, and at the centre of this is data. Data needs to be collected to establish baseline metrics against which progress can be measured. This should include measurable metrics like cost, time, number of manual processes being replaced, etc.

The following KPIs may be used to measure digital transformation progress:

Adoption and usability: How are the new digital tools being used and what are the bottlenecks impacting adoption?

Transactions performed on new systems: Measure/count volume of transactions being performed on the new system.

Productivity indicator: Productivity, defined as the volume or value of outputs relative to the time and resources invested, is an important indicator to measure impact of digital transformation to the business strategy.

Amount of new revenue attributed to digital investments: A business can measure how much its digital investments influence revenue.

Technological drivers

Digital transformation must be informed by the organisation’s overall business strategy. When deciding to implement new technologies, a company may consider factors like migration costs (if replacing legacy systems), skills availability, support of the new technology, and cost of maintaining the new technology.

New technology must also be compliant with existing government regulations and must meet all the organisation’s security requirements.

Impact of changing technological landscape

The advent of cloud technologies has accelerated the digital transformation journey of organisations by availing a plethora of new tools and providing capabilities to launch new services at a click of a button.

It is about re-invention − an organisation disrupting itself before it gets disrupted by the competition.

The cloud has introduced new services like software as a service and platform as a service, where software and infrastructure services are available to meet organisations’ specific needs with little or no development required. This greatly reduces human resource costs and ensures shorter go to market timelines.

New skills

With new technologies comes a demand for new skills, which far outweighs what the market can provide.

There is a lot of training available, both formal and informal, to try and plug the digital skills gap. However, training alone is not enough; this newly-acquired knowledge needs to be applied.

This is where internship programmes become important, and organisations must deliberately recruit young graduates and expose them to real-life environments where they will gain hands-on experience with new technologies and be able to apply the theory they have learnt.

Data is important

In a digital environment, data is generated at every touchpoint within the ecosystem. Organisations must develop capabilities to collect all this growing data efficiently, from all sources, and be able use it to inform and transform.

Digital transformation is dependent on data to:

  • Generate insights to improve customer experience in a measurable way.
  • Enable organisation-wide intelligence to identify areas where time and cost can be saved.
  • Identify new opportunities for growth.
  • Create new revenue streams.

Data literacy

Self-service data analytics tools empower all employees across the organisation − including those who do not consider themselves technical − to intuitively work with data. This has led to an increase in data literacy in organisations, which is an important contributing factor to a data-driven digital transformation strategy.

Data accuracy at point of capture

Data quality usually comes from data that is manually captured by human operators. When designing input interfaces, it is important to be mindful of how data is used by downstream systems.

To make systems flexible, it is not unusual to make use of free text fields instead of drop-down input lists. This flexibility, however, may lead to data quality issues when data with the same meaning is captured differently by different people. And poor data quality can lead to bad decisions, with monetary and reputational costs.

Single source of truth

Data is an important cog in digital transformation, and as such, it is important that there is single source of truth. This ensures there is data consistency across the organisation.

Maintaining different versions of the same data must be discouraged, as it leads to confusion and mistrust among departments and may undermine the effort to improve data quality, which will eventually affect the customer.

Fast-tracked digital transformation

Change is difficult. Even if it will benefit us, we tend to be reluctant to change, perhaps due to fear of the unknown or the effort required to learn something new. Cloud adoption is no exception. While some organisations saw opportunities in the cloud, some were sceptical and adopted a wait-and-see attitude.

When COVID-19 started to spread rapidly around the world in 2020, and was soon declared a pandemic, organisations had to align their business models to accommodate the ‘new normal’ of remote work – and the use of cloud-based communication technologies, like Microsoft Teams and Zoom, increased.

Organisations are starting to look at cloud technologies favourably, as online presence alone is no longer enough; companies also need to be able to transact online to survive.

Banking is one of the sectors that has digitally transformed significantly during the pandemic. A lot of banking services can now be easily accessed via a banking app – reducing the need to physically visit the bank.

In the retail sector, Shoprite recently announced it is trialling its first cashierless store in Cape Town. The shop will function, without cashiers, like Amazon Go, a chain of Amazon’s cashierless stores in the US and UK. In the era of social distancing, perhaps, this is the kind of innovation we require.

Digital transformation can bring with it improved efficiencies and new opportunities. It is important, however, to ensure the customer remains at the centre of the organisation’s digital transformation effort. And with this, companies must understand the integral role data plays in digital transformation.

Before organisations can transition to new technologies like machine learning and artificial intelligence, a strong data foundation needs to be laid. In these challenging and uncertain times, being able to adapt has become crucial to ensure survival.