Cheat sheet: what business leaders need to know about digital transformation

No longer just a buzzword, digital transformation is something businesses have had to quickly get to grips with over the last few months. Want to get up to speed? Here’s what you need to know

What is digital transformation?

Digital transformation is the process of integrating digital technology into every area of a business to create new – or adapt existing – business processes, culture, and customer experiences to meet changing business and market needs.

“Digital transformation was never about executing a few random projects such as updating a website or launching a new mobile app,” says Frank Palermo in Forbes. “It requires a complete overhaul of your entire business – how you interact with your customers, how you drive operational excellence and how you approach innovation. It requires cultural change, new skills and the courage to shed legacy business models.”

Why does it matter?

“There is a tendency to see digital technology as an opportunity or choice,” says John Hagel, Co-Chairman of the Centre for the Edge at Deloitte. “However, the mounting pressures of a rapidly shifting business landscape are turning digital from a choice into an imperative. The longer a business waits, the more marginalised it will become.”

“Digital transformation can impact every area of business,” says TechRadar. “In the finance department, machine learning can automate manual processes like invoice tracking. For marketing folks, there’s no question that cloud computing will make an impact in how files are stored and accessed.”

What was the state of play before Covid-19?

Even before Covid-19, 92% of companies thought their business models would need to change, given digitisation, reports McKinsey. And while some evidence suggested 70% of companies had a digital transformation in place or were working on one, other research showed that, of the $1.3 trillion spent on digital transformation in 2018, an estimated $900 billion was wasted when initiatives didn’t meet their goals.

Digital transformation was coming, but slowly. According to research by Progress  62% of digital decision makers said their organisation was “in denial” about the need to transform digitally, with 59% worried it was already too late.

How was it affected by Covid-19?

“[The pandemic created] a before-and-after moment in the history of the economy and the digital transformation,” says Andre Filev in Forbes. “Digital transformation saved millions of jobs, helped slow the spread of the virus, and allowed businesses to maintain a level of normalcy amidst a chaotic situation.”

Speaking to CNBC, Laszlo Bock, co-founder and CEO of Humu and a former senior vice president of people operations at Google, says he knows of firms where overnight adoption of remote tools has gone from 20% to 90%, with even the workers who long resisted it finally having no choice but to embrace it.

“The Covid-19 pandemic showcased the value of IT and digital transformation, and organisations should use this time to accelerate the transition,” adds Dean Nicolls in TechRadar. “It’s essential that enterprises build in the necessary operational resilience to survive this new reality.

And what about now?

“Covid-19 will result in some lasting behavioural shifts… in the way we define and implement digital transformation,” says Hayati Alaluf, strategy director, OMD. “Many organisations are learning that the secret to successful digital transformation depends on how they organise and communicate to both their workforce and their consumers… Now more than ever, the actions organisations take to make their digital transformation strategies relevant to those employees and consumers will have a direct and permanent impact on their success as a business.”

So, what should I be doing?

If you haven’t already, consider making remote working a permanent state for your employees. “Whatever objections businesses have previously had to telecommuting, Covid-19 [may have shown] leaders that with the right technology, culture, and expectations, employees can be just as productive and effective from home,” says Andrew Filev. Flexible, shifted, or shortened in-office days could help minimise office sizes and reduce commute hours, and online collaboration practices will accelerate work cycles to offset those shorter hours.”

Embrace the cloud: “Without the cloud… companies would struggle to share and co-edit documents securely, access analytics and much more,” says says Blake Morgan in Forbes. “Even short physical distances would present a challenge for collaboration… Real-time wouldn’t be as easy, streaming would be a problem, smart phones wouldn’t be smart, and rapid data a challenge.”

Finally, keep evolving. “Companies start a digital transformation, but it’s never truly over,” says Blake Morgan. A true digital transformation is a state of mind for a company to continually evolve and adopt new digital solutions internally and externally.”

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