The concept of digital transformation, taking a business and utilising technological advancements to improve efficiency and deliver an enhanced customer/supplier service experience, sounds relatively straight forward. But our experience of working with companies around the world going through the change suggests it is anything but straight forward.
Whilst there appears to be a solid understanding and knowledge at senior levels across a growing majority of organisations, there is significant inconsistency in the pace of change within businesses themselves, with different departments even reporting varying levels of readiness and ability to change.
Whether the factors that influence your ability to adopt DX are internal (people, strategy, processes and policies), external (supplier capabilities, customer demand and acceptance) or technology based (quality of data, legacy systems, siloes, disparate applications) it is clear that knowledge and desire alone are not enough to ensure smooth transition to a truly digital business.
Early adoption of a DX strategy can deliver competitive advantage and reduce barriers to entry into new markets. Conversely, the risk of not embracing digital transformation, financially and competitively, is huge – just look at the twin examples set by Google and Yellow Pages!
But like all major business projects, it is often better to approach the task of transformation as a series of mini projects or phases, rather than trying to affect wholesale change in one go – especially when you are changing existing structures and processes rather than coming at it afresh.
Having worked alongside thousands of companies worldwide, we know that this phased approach to DX works and allows the business to adapt, processes to evolve and, most importantly, give customers, suppliers and staff time to get used to a new way of working/interacting.
So, what does a phased approach to digital transformation look like?
Step 1. – Distil the knowledge and plan. An increasing number of firms have a team or individual charged with leading the DX project. As noted above, senior level knowledge levels and agreement on the need to change are positive, but distillation of this ambition and knowledge is vital. Furthermore, shop floor knowledge around the table will help identify potential issues earlier and help to ‘bring the people on the journey’.
Step 2. – Digitisation is the quick wins of transformation. It reflects the early bridges built between systems or the simple steps that can be taken to improve efficiency and/or productivity in one area of the business mainly by digitising analogue data or manual process. An example may be utilising existing functionality to increase the remit of an application, removing a manual process along the way. The result of this phase of the process is about creating expectation of a digitally delivered service in the mind of the customer.
Step 3. – Digitalisation starts to look at pulling the various technological threads of the business together, from supply chain and customer experience/interface to legacy systems and disparate data sources/applications. This is typically the most challenging part of the project, but careful analysis and use of solutions, such as HULFT Integrate, will avoid the need for wholesale change. Adding an integration layer assists with internal adoption, as most users will not notice a significant change in their day to day interface. However, behind the scenes an engine is working to pull everything together, integrate and merge data and format it ready for delivery to the ultimate customer.
Step 4. – Digital Transformation – the utopian situation whereby systems within the organisation and externally communicate in a seamless, timely and efficient manner. The supply chain is automated, data is unified, and all business systems actively support the actions, operations and expectations of the customer. From this point, the real work can begin, transforming the business model, driving value and using the streamlined structure to increase trade, profit margins, efficiency and productivity.