10 things you need to know about digital transformation
There are 10 considerations that that will help companies on their digital transformation journey, says Sabby Gill, executive vice-president, International, Epicor Software.
Digital transformation isn't just a phase or a buzzword. Business leaders are now fast waking up to the important role technology is set to play in their growth strategies, with the latest report from Gartner showing a rise in the number of CEOs ranking IT as a priority, says Sabby Gill, executive vice-president, International, Epicor Software.
"The IT-related area rose from 19% mentioning it as a priority for 2016/2017 to 31% in 2017/2018." The recent explosion of connected devices and platforms, for example, has made it imperative for companies to quickly adapt their products, services and processes, and move towards the digital world. This, naturally, requires transformation of some kind.
Yet, transformation is different for every manufacturer. For some, it may encompass the adoption of the latest technologies - such as 3D printing, robots, sensor technology, and artificial intelligence, areas that some more traditional manufacturers have previously been slow to embrace. For others, their digital transformation journey will see them embrace the world of Industry 4.0, where all equipment in their production lines is online, connected, and capable of making its own decisions.
However, the reality is that digital transformation will require some tough choices to ensure your business isn't dragged along or left behind. But, we all know that change is not easy. You might be thinking how do you start transforming? Does it have to cost lots of money? Or perhaps you're experiencing resistance to change. What's the problem with doing things the 'old' way anyway? Here, Epicor outlines 10 considerations that that will help companies on their digital transformation journey.
1. Digital transformation will change your business, but focusing on the right level of change is key.
New digital technologies should be seen as an enabler for better, more seamless and streamlined business operations that make your business competitive - driving growth. Focusing on where digital transformation can deliver the most benefits and add the most value in your quest for growth should be where you begin the change process.
For example, in manufacturing, increased competition has necessitated a change in processes, and even sometimes a change in business models. Servitization, for example, is a transformation journey that involves firms developing the capabilities they need to provide services and solutions that supplement their traditional product offerings.
2. Technology investment is crucial to growth but just because the technology is new, doesn't mean it's right for you.
Sometimes less is more. The right use of technology can radically improve your business, but the deployment of technology for technology's sake can be self-defeating. Being open to the transformative impact of new technologies is the most important consideration for companies around the world.
Recent research on worldwide growth trends by Epicor found that companies in high growth markets demonstrated a strong inclination to invest in technology to empower their workforces, drive efficiencies and increase agility. In the study around three-quarters (74%) of Chinese firms, for example, cited IT investment as important, compared to a global figure of 54%.
3. Consider where your company is on its digital transformation journey
Growing your technology platform doesn't necessarily mean your business will grow too. Sometimes it's better to have fewer solutions than more, but it can be challenging for business managers to keep on top of the latest tech trends and new solutions being launched in the market.
Many competing technologies profess to drive digital transformation, however, the utility of solutions depend on the stage your company is at in the transformation journey. From mobile sales and field services, to wireless sales counters and warehouses, to advanced inventory management - different solutions provide new ways to reduce costs, improve the customer experience, and improve the bottom line.
4. Not everyone in your company will feel comfortable with digital transformation.
Society and technology are changing more quickly than most companies can adapt. From enterprise resource planning (ERP) to cloud computing, new tools, platforms, and channels are creating unprecedented opportunities to connect with customers and improve internal processes - but only for the businesses agile enough to transform and adapt to these new digital realities.
Even so, there's no single roadmap for digital transformation and the path is different for every company and industry. However, there must be attempts to get employee buy-in from the start. This requires a commitment to digital technology from the boardroom to all levels of staff. You should have leaders with the right mind-set and motivation to lead the digital transformation process.
5. It's no good having data if you don't know what it means.
Firms that undergo a true digital transformation programme put data and information at the heart of their technology focused business models. Many are shocked to see just how much information they had but were not utilising properly. The new data landscape provides you with unique opportunities to turn data into insights - the fuel for any digital transformation journey - with real-time updates providing opportunities for better business decision-making.
In fact, Forrester Research has found that more than 70% of decision-makers report planned or current initiatives to encourage more data-driven decisions, making unlocking the value of integrated business data critical to success in today's modern distribution marketplace.
6. Digital transformation won't grow your profits overnight - embrace change as part of a wider growth strategy with measurable goals.
Change is a constant in today's dynamic marketplace, but it's important to be realistic about what you can achieve in a short time. The survey sponsored by Epicor highlighted how high-growth companies embrace change. Seventy-six percent of high-growth companies prefer constant innovation to business stability, while only 49% of low-growth companies do so. In an age where innovation is driven by rising customer expectations, growing companies have distinct short-term goals that embrace innovation and business change as part of a wider transformation journey for growth.
7. Digital transformation should make your business more adaptable but it won't make you immune to competition.
It's never been more important for business leaders to carry the torch for digital transformation, but the most important factor is making sure digital potential is translated into competitive advantage. This requires top executives to champion the deployment of flexible, digital technologies that change the way they engage with their customers.
As Gartner rightly states, "technology shapes business strategy, but market, political and financial factors prevail". Nevertheless, embracing the right technology brings people together, allows businesses to land and expand into new geographic locations with minimum resources, and makes the product development lifecycle more responsive to consumer demand than ever before.
8. It takes more than just digital technology to encourage collaboration across departments and divisions.
To begin digital transformation, you need to look at your business from the inside out - consider the tools and systems you use, what works well, what doesn't and ways these can be improved. But when technology is heralded above all else, there becomes an even greater disconnect between employees and the challenges that their business is trying to solve.
There might be isolated investments that are doing very well, but they're still isolated. New solutions must be an enabler aligned with a bigger mission - to evolve internal processes, structure and culture, or to match the evolution in customers' behaviour. Consider how you communicate both internally and externally, the strengths and weaknesses of your staff and if their skills are fit for purpose. Do you need staff with more digital skills and will you need to recruit them throughout the process?
9. Your customers don't think about your digital transformation, but they do expect it to happen.
The digital trends that are impacting every part of business operations will not slow down, and it's the same playing field for all of your competitors, and every start-up that's gunning for a piece of your world. Your customers expect that you are embracing digital transformation because they are doing so, and they need you to join them on the journey.
10. You can talk the talk, but make sure you walk the walk.
To make digital transformation happen, high-growth companies don't just pay lip service to ideas such as new technology and innovation - they back them up with investment. The growth survey sponsored by Epicor found that in the coming year, 88% of high-growth companies are planning significant investments in technology and innovation, while only 49% of slow-growth companies are doing so.
Digital transformation is different for every business. While some manufacturers will have more challenges than others, and while some will also embrace more technologies than others, being aware of the ten considerations above will be helpful to every business that is embarking - or has already embarked on - this journey.
i Gartner, 2017 CEO Survey: CIOs Must Scale Up Digital Business (March 2017)
ii Gartner, 2017 CEO Survey: CIOs Must Scale Up Digital Business (March 2017)