How to Keep Up With Digital Transformation

In today's "do more with less" business landscape of market uncertainty, competitive pressures, and employee shortages, organizations of all shapes and sizes are embracing the idea of Digital Transformation to survive and thrive in the coming years. Customers have come to expect most, if not all, interactions with a business to be conducted digitally, with the clear advantage going to the organizations providing the most meaningful, personalized experiences. The dizzying speed of technological innovation to address these evolving demands has upended the business world, with winners and losers largely defined by their ability to successfully deploy new digital solutions. In order to stay relevant, business leaders are adopting a digital transformation strategy as a top priority, specifically the incorporation of digital technologies into their organization's products, processes, and strategies, fundamentally changing how value is delivered to customers. 

Forward-thinking companies now regard themselves as Digital First, meaning delivery of services is primarily driven by digital technologies. 93% of organizations have already adopted or plan to adopt a digital-first business strategy. However, less than a quarter of companies have completed the digital transformation strategies necessary to become a digital-first business. Worldwide, spending on digital transformation initiatives is expected to exceed $3.4 trillion by 2026, with more than half of the spending focused on customer experience (CX), the digital touchpoints with customers (websites, apps, etc.), and the supporting technologies needed to create meaningful and intelligent interactions. The other goals of digital transformation include: 
 
•    Reducing costs/inefficiencies
•    Improving employee productivity/collaboration
•    Enabling business agility/resiliency
•    Improving security
 
While the need is clear, those who have not yet fully developed a digital transformation strategy may see a path ahead that is ambiguous, overwhelming, and anxiety-inducing. But that does not mean digital transformation is impossible. Meaningful progress can be made with the right understanding of where your organization presently is and where you want it to go. The following steps outline an approach to digital transformation that yields results and bridges the gap between falling behind and becoming a Digital First company.

Step 1: Understand the current landscape

Whether you task yourself with doing the research or bring in a partner like Diagram to provide the education, having a basic understanding of the current technical landscape is essential. Rapid advances in cloud computing (where your data is stored and managed), customer experience platforms (how you digitally interact with customers), cybersecurity (understanding threats and ensuring adherence to new regulations), and, of course, artificial intelligence all dominate the digital conversation. A working understanding of these issues, including a competitive analysis of your industry peers, provides the foundational knowledge needed to move forward. This also includes having a good understanding of your current digital environment and existing processes to store, analyze, and share data. 

Step 2: Understand your business challenges

Every organization is different with a long list of unique challenges and solutions. However, as a part of your digital transformation strategy, there are some key areas to consider:

Understanding your customers

Your customers' problems are your problems. Understanding their specific context and behaviors when interacting digitally with your company requires advanced data collection and analysis. If you want to understand why a visitor to your site does not convert into a lead, sale, download, etc., you need to know who they are, what they're looking for, where they are in the buyer's journey, how they've previously interacted with you, and numerous other data points that help you create a meaningful customer experience.  The quality of this data, or lack thereof, should be a primary focus of your digital strategy.

Technology deficiencies

Are your platforms up to the task? Having an outdated customer experience platform, or worse, not having one, puts you at an immediate disadvantage. Taking stock of all the digital tools you employ should help uncover deficiencies and liabilities that will limit your digital growth.

Data gaps and silos

Connecting the dots of customer data is a challenging but essential part of creating a successful customer experience. But when you lack essential data, the data you do have is trapped in unshared silos, or you have duplicate sets of data without a single source of truth, you will not be able to create meaningful interactions. Leveraging unified data across departments is also an important ingredient in creating a collaborative organization all steering in the same direction.

Knowledge/skills gap

A lack of technical understanding and expertise at the leadership level and/or among employees tasked with the work makes the development of any sort of coherent strategy a challenge. However, it is a common challenge that should not deter you from building a strategy. Partnering with a skilled agency makes the most sense as it immediately provides the expertise needed to start making real progress in building your roadmap and executing your strategy.

Budget

Successful digital transformation is a challenging process in and of itself. Paying for it creates another level of complexity. More than a third of organizations cite budget constraints as a primary blocker to carrying out their digital plans. Costs are incurred through technology purchases (i.e., software licenses, cloud-based SaaS subscriptions, staff training), consulting/strategy partnerships, new hiring, and more. The key is to understand there is a definite return on this investment to be had through added efficiencies, reduced costs from eliminating outdated legacy systems, and ultimately increased revenue. Identifying and tracking the right metrics to measure this ROI is essential.

Security

If you deal with private customer data, not only is it your obligation to protect that data, but in most cases, it’s the law. As the industry moves to a primarily cloud-based environment, understanding the vulnerabilities and data integrity policies of each cloud vendor and how you manage protected data internally is vitally important.

This is by no means an exhaustive list of business challenges you need to consider, but it should provide a foundation to begin exploring your unique challenges. 

Step 3: Define your current digital maturity

Before developing a digital transformation strategy, you should understand how digitally mature your company currently is. Google and the Boston Consulting Group developed a digital maturity model to evaluate your company's current performance and provide a roadmap for your future digital transformation. They break maturity into four stages: nascent, emerging, connected, and multi-moment. Optimizely further translates these into: crawl, walk, run, and fly.

• Nascent (crawl) - In this initial stage, the company is not yet proficient at gathering or utilizing data from existing systems and has not developed an effective system of departmental collaboration or data sharing. Data silos, missing data, and lack of trust in data are common characteristics of this stage.  Moving beyond this stage typically requires enlisting the help of an outside agency.

• Emerging (walk) - The next stage sees a progression of the company becoming comfortable collecting and using quality data, improved data sharing across departments, and eliminating data silos. The idea of creating intelligent and connected customer experiences begins to take root at this stage. A strong partnership with an agency, including team augmentation, is generally present at this stage with a strategy and roadmap developed to progress to the next stage.

• Connected (run) - In this stage, data-driven practices shared across multiple departments/teams begin to yield real results in customer engagement, revenue, and profit. Online and offline data sources are seamlessly integrated and shared across multiple channels. Agency partnerships have reached their zenith at this stage as the company looks to maximize digital agility and progress.

• Multi-Moment (fly) - The final stage of digital maturity sees the company proficient at delivering the right message, to the right customer, in the right place, at the right time. Data is effectively shared across multiple channels with intelligent application of technology present throughout the customer experience. Application of AI and machine learning are common. Data-driven insights permeate the entire organization, and efficiencies are realized across multiple departments and processes. Reaching this stage is a challenge and many organizations are satisfied with remaining at the Connected stage.  However, the competitive advantages of a true multi-moment, digital-first organization cannot be understated.  

The key to this framework is the idea of progressing through each stage incrementally. A company in the nascent or crawling stage cannot make the leap to multi-moment or flying without having mastered the intermediate stages first. Your digital transformation strategy should be based on an understanding of where your company currently exists and what steps are needed to progress to the next stage.  Most organizations surveyed fall into either the emerging or connected stage with efforts ongoing to build maturity. However, the reward of digital maturity is not simply the destination. There are benefits to be gained along each step of the journey, from cost savings to increased agility to profit growth.

Step 4: Set goals and build a roadmap

Once your current level of digital maturity is understood, goals should be set to advance to the next stage. Building a good roadmap means focusing on the problems you're trying to solve and not simply the activities you intend to undertake. There are many shiny distractions in the digital space that sound appealing but may not add any real value to your organization if it's not solving any of your actual problems. A good roadmap will identify current areas of under-performance or hurdles that have kept you from maturing digitally and identify the solutions that will get you past them.

The question then becomes what does success look like for you and how will you get there? Understanding the metrics that matter will help you know when your initiatives are beginning to bear fruit. Each digital transformation initiative should include specific and measurable results you are trying to achieve that reflect your company's growing digital maturity. Some of the common metrics to assess your digital maturity include:

• Strategy investment: measuring the alignment of digital initiatives with overall business strategy.

• Customer experience enhancement: how well are you delivering personalized, meaningful experiences to your customers across multiple digital platforms using data collected over time from various sources?

• Digital adoption: measuring the migration to cloud-based platforms, mobile experiences, data analytics tools, etc.

• Digital culture: measuring employee engagement and buy-in of new technologies and digital processes and growing a culture of innovation throughout the company.

• Digital ROI: the ability to recognize and measure actual value derived from digital maturity, including revenue and profit gains.

Step 5: Align leadership and budgets

There is a common perception that digital transformation initiatives are simply a cost of doing business in the modern age. However, the stakeholders that stand the most to gain from these initiatives should understand that the opportunity unlocked by pursuing a digital-first strategy far outweighs the costs.

Put simply, an investment in digital transformation pays dividends. However, budgeting correctly to get the most ROI involves thoroughly understanding the many facets of a good digital transformation strategy. Here, investing in a good agency partner will make this process much easier and avoid the pitfalls of wasting money on redundant, unnecessary, or misaligned technology solutions.  

Step 6: Build strategic partnerships

Very few organizations not already in the multi-moment maturity stage are equipped to make significant progress with digital transformation initiatives on their own. Whether it's internal resistance, cross-departmental conflicts, or a lack of expertise, the time and effort of building an in-house team is often a heavy burden best relieved by forming outside strategic partnerships. Collaboration with a specialized digital agency provides the skills, insights, and people-power necessary to embark on this journey. From the earliest discovery and planning stages through implementation and beyond, having a capable partner to guide you through the complexities of this effort will increase agility, future planning, and speed of delivery. In many cases, team augmentation to extend and enhance your existing internal capabilities leads to the best results, with the client and agency teams working as a single unit to achieve business goals. 

Growing digital maturity also involves an entire ecosystem of platforms and technologies that must be evaluated and understood to create the best possible environment to help you achieve your goals. A knowledgeable partner will help you make the right decisions about which tools to use, how to integrate them with your existing systems, and future-proof your overall digital strategy.

Step 7: Manage ongoing change and iteration

An agile team with a fail-fast mindset is essential in making significant gains. Digital transformation involves an ongoing cycle of planning, designing, developing, testing, deploying, and measuring in short increments at a rapid pace. Making tangible progress in a short period of time is attainable but it takes dedicated effort to maximize impact. The agile process requires ongoing supervision and the right combination of partners, technologies, and a company culture that breeds innovation.

Digital transformation has become a critical strategy for businesses to stay relevant and thrive in today's fast-paced and technology-driven world. With customer expectations shifting towards digital interactions and personalized experiences, organizations need to adopt a digital-first mindset. However, many companies are still in the early stages of their digital transformation journey, facing challenges such as outdated technology, data gaps, and a lack of digital skills. By understanding these challenges and the opportunities available, organizations can make meaningful progress toward becoming Digital First. To learn more about how Diagram can help you develop a roadmap and navigate the complexities of digital transformation, let's have a conversation. Embrace the benefits of technology and take your organization's digital maturity to the next level.

Sources:

BCG - The Dividends of Digital Marketing Maturity
Statista - Spending on digital transformation technologies and services worldwide from 2017 to 2026
Foundry - Digital Business Study 2023
Optimizely - What's the Right Digital Maturity Model for Your Business?