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Digital Transformation-Teaching an Elephant to Dance

THE DIGITAL TRANSFORMATION OF YOUR BUSINESS - Benefits and Challenges

Digital Transformation - Teaching an Elephant to Dance
Digital Transformation Graphic

Introduction

In recent years, digital transformation has emerged as a critical driver of success for businesses across all industries. In this fast-paced and rapidly changing digital landscape, businesses must adapt and embrace new technologies to stay competitive. This article will delve into the concept of digital transformation, its importance, and the various ways it is revolutionising the way businesses operate. It is especially relevant to family businesses and Family Offices.

Understanding Digital Transformation

Definition and Scope

Digital transformation can be defined as the integration of digital technology into all aspects of business operations to fundamentally change how companies operate and deliver value to customers. It encompasses the use of innovative technologies such as cloud computing, artificial intelligence, data analytics, and more.

The Need for Digital Transformation

In today’s digital age, businesses face numerous challenges that require them to transform their operations. This includes changing customer expectations, evolving competition, increasing regulatory requirements, and the necessity for enhanced operational efficiency. Digital transformation enables businesses to meet these challenges head-on and unlock new opportunities for growth.

Key Elements of Digital Transformation

Customer-Centric Approach

One of the key elements of digital transformation is shifting towards a customer-centric approach. This involves understanding customers’ needs and preferences, utilising data analytics to gain insights, and leveraging technology to personalize interactions and experiences.

Data-Driven Decision-Making

Digital transformation relies heavily on data-driven decision-making. By collecting, analysing, and utilising data, businesses gain valuable insights into customer behaviour, market trends, and operational efficiency. This allows them to make informed decisions, optimise processes, and uncover new business opportunities.

Agile and Collaborative Culture

Digital transformation thrives in an agile and collaborative culture. It requires organisations to embrace change, encourage innovation and foster collaboration across teams and departments. By creating an environment that supports experimentation and risk-taking, businesses can adapt to the ever-changing digital landscape.

Impact of Digital Transformation in Various Industries

Retail

Digital transformation has revolutionised the retail industry, enabling businesses to seamlessly integrate online and offline shopping experiences. E-commerce platforms, personalised recommendations, and mobile apps have transformed the way customers shop. This development has helped to influence their purchasing decisions and improve overall customer satisfaction.

Finance

In the finance industry, digital transformation has led to the rise of fintech companies, offering innovative services such as mobile banking, online payments, and robo-advisors. This has not only provided customers with more convenient banking options but has also forced traditional banks to adapt and embrace digital technologies to stay relevant. A personal observation is that some of them are dragging the chain on this and ultimately will suffer the consequence of the more tech-savvy and tech-needy consumers taking their business elsewhere.

Healthcare

Digital transformation in healthcare has improved patient care, remote monitoring, and tele-medicine. Electronic health records, wearable devices, and AI-powered diagnosis systems have transformed the way healthcare providers deliver services and interact with patients, resulting in improved healthcare outcomes and increased accessibility.

Challenges and Risks of Digital Transformation

Data Security and Privacy

With the increasing reliance on digital technologies, businesses must ensure the security and privacy of customer data. Cybersecurity threats and data breaches can lead to significant reputational damage, financial loss, and legal consequences. For instance, look at the backlash against such groups as Medicare when hackers accessed their highly sensitive customer database. And what a mess Qantas got themselves into with their systems! Hence, implementing robust security measures and complying with privacy regulations is crucial.

Resistance to Change

Digital transformation often faces resistance from within organisations. Employees may be resistant to change, fear job loss and/or lack the necessary skills to adapt to new technologies. Overcoming this resistance requires effective communication, training, and leadership to ensure employees understand the value and benefits of digital transformation.

Lack of Clear Strategy

Digital transformation requires a clear strategy and roadmap to guide the journey. Without a well-defined plan, businesses may invest in unnecessary technologies or fail to align digital initiatives with overall business objectives. A lack of strategy can result in wasted resources and an inability to achieve desired outcomes.

WHY should your organisation embark on the journey of digital transformation?

Well, for instance, the “why” of your organisation’s digital transformation might be around improving customer experience, reducing friction, increasing productivity, or elevating profitability.

Or perhaps, if it’s an aspirational statement, it might revolve around becoming the absolute best to do business with, utilising enabling digital technologies that were unavailable years ago. So, at this juncture, we should briefly highlight 7 Digital Transformation Challenges. They are:

Nevertheless, all these challenges can be met and remedied. So, please read on…. 

Why is Digital Transformation So Important?

Dystopian image of man with caption Prepare for the FutureMy first comment here is that its importance to the future success of a company should never be underestimated. It is very definitely part of preparing for the future.

Remember Blockbuster Video? It was a behemoth, the market leader in its field. Now, we can point to it as a prime example of digital transformation failure – one that failed to move with the times per se.

So, digital transformation all comes down to three fundamental aspects of an organisation’s future:

🟢 Improving the customer experience

🟢 Operational efficiency, and 

🟢 Innovation

The three essential components of a digital transformation are:

🟢 The overhaul of processes 

🟢 The overhaul of operations, and 

🟢 The overhaul of relationships with customers.

Digital transformation puts technology at the core of business strategy. This approach can reduce operating expenses and inefficiency. It could even change the course of your business.

With a unified model across business and technology, it’s easier to achieve future ambitions. The technology path you choose now will determine, more decisively than ever, your company’s success.

The benefits? Increased efficiency, greater business agility and ultimately, the unlocking of new value for employees, customers and shareholders.

How and Where Do I Start the Process of Digital Transformation?

View it as business transformation

Customers should be top of mind in any transformation. Companies should start by identifying the key friction points that customers may be facing – whether in equipment sales, parts, service or elsewhere. Companies across a range of industries are embarking on large-scale transformations as dramatic market shifts drive reinvention.

Develop your strategy and organisational change

A clear vision, an integrated approach and a focus on value are key to any transformation. Having the right transformation strategy and workplace—typically called a transformation office—is critical for all stakeholders.

If we look at how big companies with a successful digital transformation record, they likely have employed a dream team of specialists to make it happen. Successful digital transformation teams exhibit breadth across multiple disciplines – and depth in a few. But personalities matter, too. That is, you need a blend of business, technology, and process expertise.

Here are some extracts on this topic from an article published by The Enterprisers Project:

“It takes some forethought to set these teams up for success. Certain personal attributes tend to work better than others. The most effective digital teams have low attrition rates, are co-located near business users, exhibit breadth across multiple disciplines – and depth in a few – and tend to include more experienced professionals rather than recent graduates.

Certain IT-specific professionals, like software developers, are a given. Following are eight other types of folks – who blend business, technology, and process expertise – to consider recruiting for digital transformation “dream teams”.

The 8 key roles in digital transformation teams

  1. The digital transformation lead

This important player has good soft skills, accountability, and a proven track record of managing digital transformation. The lead will have a balance of tech and business-enabling skills to ensure both sound technical solutions and the achievement of business objectives.

  1. The change champion

These “evangelists” will market and sell digital capabilities both internally and externally.

This unusual person should have excellent communication, cultural, and organisational change expertise. The best ones have a positive presence that makes it possible both to influence enterprise leaders and connect with employees at all levels to advocate for transformation. These same evangelists will market and sell digital capabilities both internally and externally.

This VIP is someone who can adapt to changes and unexpected turns. This person recognises the need to change direction and quickly pivot to the new plan. They model how to effectively respond to change and will help others adapt as well.

  1. The technical engineer

These folks define the IT architecture required for the initiative. They not only understand the entire technology stack today, but they also can envision what it should look like in the future.

They have a good understanding of various technology architectures and integration patterns to leverage existing capabilities, and able to plug-in and plug-out both internal and external capabilities.

  1. The business expert

This is the subject matter expert on the particular function or process being transformed. This member of the lineup also serves as a conduit to pull additional experts on demand. This person becomes the voice of the business, working hand-in-hand with the technical engineer to make sure business requirements are satisfied. They can articulate business problems, opportunities, and value. They become the owners of defining required capabilities, encourage experimentation, and can quickly make decisions on what works and what doesn’t.

  1. The data architect

This clutch player will outline the different uses cases for data collection and guide how analytics projects will be implemented across the organization. They can connect data applications with top and bottom-line business results.

  1. The UX/CX professional

New systems are only as good as their adoption rates. The user or customer experience experts focus on making sure technology solutions are developed with the end-user in mind. They are experts in the field of human-centric design.

  1. The financial analyst

This team member is responsible for developing the business case and financial-value framework for the initiative. He or she provides an often-overlooked critical element for transformation.

The entire team’s relationship with this player and your organisation’s larger group of finance professionals should be a priority; continued digital project funding depends on it. A first step is presenting all IT projects with an ROI.

While many digital projects are moving targets that may not pay off until much later, you need to make the financial case. Articulate hard and soft benefits and present the accountability matrix for how these will be realised and tracked.

  1. The critical hacker

Beyond basic QA testing, these experts have a knack for breaking things and providing constructive criticism. They will ensure that the functionality is ready for pilots and meets the success criteria established by the owners of the project or program.”

Ultimately, what your organisation can achieve with digital operational transformation includes:

✅ Making your staff more productive and more satisfied with their work’s impact

✅ Delivering a more valuable experience for your clients

✅ Free up more time to do what’s needed. Such as training and coaching your staff, designing new services, winning new business, learning something new, or just taking some much-needed time off.

Here, you can see some relevant examples in the following. 

Any repeatable transaction or activity that involves a series of steps & multiple people (and typically multiple IT programs) can be automated. Such as:

When managed ad hoc, these manual processes typically involve multiple email threads, documents, and handoffs. Even minor human error can cause a cascade of inefficiency in your business such as communication breakdowns, bottlenecks, and missed deadlines. These issues multiply at scale. And cost you THOUSANDS of DOLLARS, or much, much more, as well as cost your business more TIME than with progressive IT Solutions.

On the other hand, successful digital transformation implementation can result in:

  • Reducing the possibility of errors
  • Freeing your staff for more productive work
  • Reducing, even eliminating, the time it takes to manually manage workflows
  • Improving your employees’ moral by reducing repetitive and frustrating tasks
  • Being able to focus more on your core work and profitability
  • Making your bottom line more profitable through extensive cost savings on otherwise unproductive work

Conclusion

Companies embarking on modernisation efforts are looking to improve their digital services, new business capabilities, and productivity/speed. Data accessibility feeds into these key drivers. For instance, insurance companies are exploring new business capabilities that leverage predictive analytics to replace fluid underwriting.

Organisations often struggle with integrations, testing, and conversion when modernising. Integrations are the most time-consuming part of the project. Developing a robust end-to-end test strategy and using automation testing tools ensures applications and integrations are working properly. Understanding the in-force block and developing a conversion strategy are imperative.

Teams should plan how they will address the legacy block at the onset of the transformation effort to alleviate uncertainty. This will enable the team to better focus on the initial implementation of the new solution without distraction.

Selecting the right service partner to help throughout the project can be valuable to many organisations. These initiatives are multi-year projects, so finding the right partner with compatible corporate culture is a critical success factor. Identifying roles and accountability upfront will avoid ambiguity and help eliminate redundancy and rework. Detailing project plans is a path to success for many companies.

Suffice to say, companies are finding success when they take the time to build and socialise detailed project plans and document their current state to develop effective new business processes and implement data governance programs.

Summary

Digital transformation is revolutionising the way businesses operate across various industries. By embracing new technologies, adopting a customer-centric approach, and utilizing data, businesses can unlock new opportunities for growth, enhance operational efficiency, and improve customer experiences.

However, it is crucial to address challenges such as data security, resistance to change, and lack of strategy to ensure a successful digital transformation journey.

With the right mindset and approach, businesses can thrive in the digital era and stay ahead of the competition.

This article has leant on the knowledge, experience and wisdom of several companies and individuals, notably – Red Hat Software, The Enterprisers Project, Equisoft, Accenture, Web App Consulting, Unicorn Consultants and Wealth-IQ.

How FBA Can Help You With Your Digital Transformation

At Family Business Advisory (FBA), our purpose is to help family businesses succeed on a sustainable basis. As such, we provide you with access to specialist family, business and technical services with a goal being to generate opportunities for families in business.

In order to complement our own particular specialised skills, over the past several decades, we have developed a network of trusted, professional advisers in such areas as:

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Moreover, we work at all times to give you peace of mind and proactive support to help navigate any changes in the market brought about by legislative changes, geopolitical events and general market conditions – all to maximise your personal wealth and security.

These services are provided by FBA, in association with the Wealth IQ Group.

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