4 digital transformation myths that hold back midmarket companies
INSIGHT ARTICLE |
The words “digital transformation” can strike fear in the hearts of the bravest business leaders—the whole concept can be bewildering and daunting. Yet when you boil down digital transformation to its core, it is simply a plan to achieve your business strategy goals by adopting new approaches to how you engage with your customer, support your employees and leverage leading technologies. It’s a broad framework that can help advance your business objectives.
Some people think digital transformation requires ushering in wholesale change, but leading practice has shown that while having the vision is important, you should start small and expand your efforts as you achieve your goals. Misunderstandings like this are understandable; however, because digital transformation is such an ambiguous term, it has to be defined for each organization in the context of their business strategy.
What’s holding you back from investigating what digital transformation could mean to your business? Have you fallen prey to one of the following four myths and been stopped in your tracks?
If so, consider these myth buster examples of what’s really possible.
“Digital transformation is for large enterprises. I’m more focused on day-to-day operations.”
Digital transformation results drive day-to-day operations improvements.
People, processes and technology are at the core dimensions of digital transformation. A digital transformation journey should result in the improvement of any one or all three of these domains through efficiency gains, revenue growth, support for a new business model, enhanced customer experience, reduced cybersecurity risks or lowered costs.
The good news is that many executives already recognize the need to transform. Nearly three-quarters (73%) of midmarket company leaders say that digital transformation has become more of a strategic priority in the past three to five years. Additionally, a recent RSM survey of board directors showed that 32% have had a significant acceleration in their companies’ digital transformation efforts.
Nevertheless, there’s a belief that digital transformation requires organizations to upend an entire business model to see any meaningful results. The truth is that digital transformation is all about innovating for streamlining processes so that day-to-day operations align better with strategic goals and key performance indicators (KPIs).
For example, a Texas-based computer and networking equipment firm with eight offices and a mail order operation recognized that it needed to streamline various disconnected tasks, such as wholesale purchasing, shipping and accounting, to remain competitive. The business also needed better reporting capabilities across sales channels and a point-of-sale system that delivered data and insight into customer behavior.
After moving to a scalable omnichannel model that enabled online commerce, CRM, and advanced order and inventory management solutions, the firm is now equipped to engage with customers faster, smarter and better.
“We would have to replace too much of what’s in place for digital transformation. Our systems are still valuable to us.”
Digital transformation often doesn’t require the wholesale replacement of information technology.
While there are certainly occasions where it makes sense to modernize the entire IT infrastructure, it isn’t always needed to gain benefits from digital transformation. It is important, however, to define a digital strategy that encompasses the five key domains of digital transformation: customer engagement, people enablement, business operations, data and integration, and secure and stable technology.
Through the process you should be able to know what to replace, how to connect systems and how to adapt processes and workflows. The approach to digital transformation defines an ongoing journey that’s business-goal driven, sustainable and affordable.
“We can’t start digital transformation until we get all of our data cleaned up.”
You can start small with data quality efforts as part of your digital transformation.
The good news is that automation makes enhancing, consolidating and managing data a lot easier than during the years of “big data.”
Powerful, no-code tools have emerged to improve data quality and support the use of data analytics without specialized training. Platform providers such as Microsoft now provide many of these tools at little or no cost to the end user. With a modern framework and the right tools, it’s also easier to manage and maintain the data—and adapt it for predictive analytics, machine learning and artificial intelligence automation. It’s also possible to embed capabilities that bake in critical features such as data cleansing and data governance.
“We don’t have the resources for digital transformation. We wouldn’t know where to begin and couldn’t sustain it.”
There is value beyond just added capacity of engaging a partner to support your digital transformation now and in the future.
Most companies aren’t in the business of digital transformation, so they don’t have the experience and the unbiased points of view to optimally navigate it. Midmarket companies that embrace continuous improvement as a strategic imperative should identify a partner who understands their industry-specific challenges. An experienced partner can help develop a journey map and provide support throughout the initiatives, ranging from advisory guidance to potentially fully managed service.
Digital transformation is about more than technology implementation—it’s about business outcomes. With greater experience and insight, an outcome-focused partner can help you align processes across operations, finance, human resources and IT, and even out to your external business partners and supply chain. This trusted relationship helps avoid organizational concern, delivery inefficiency and increased risks that too often result when multiple providers are engaged without orchestration.
For instance, a regional credit union recognized that it was spending too much time managing IT challenges and regulatory matters rather than addressing core business issues. After mapping out a digital transformation strategy with a partner, it revised its operating model processes to leverage a cloud-based technology platform to manage the tasks.
As a result, they are proactively managing IT operations and reducing the cost and risks of on-site servers located at individual branches. With the new operating model, employees can access files and technology applications at any time and from anywhere. These capabilities, along with improved operations management, allows employees to focus on customer needs rather than technology management.
Putting it all together
With the right core infrastructure and business processes, an organization can approach digital transformation in a more modular and strategic way. It can add, subtract and modify components as needed without disrupting the overall business. This framework helps support innovation and ongoing modernization.
In today’s world, the best way to think about digital transformation is that it’s a broad and generic term that addresses day-to-day challenges, improves business results and generates value. Technology merely supports the business framework. Your biggest challenge is the best place to start.
Are you still unsure if digital transformation is right for your business? The article, Defining a clear digital transformation strategy and thorough roadmap, starts off with three important questions to ask to evaluate your current technology framework.