What is digital transformation & why is it important for my company?
For many business leaders, the idea of digital transformation has become diluted due to being a buzzword. It’s a vague notion of modernisation.
Behind the jargon, digital transformation is beginning to create more value due to redesigning what technology they use and how they use it. Many point to the example of a shop going from paper bookkeeping and manual receipts to a POS system with a built-in printer. But, we need to go even a step further and deliver value.
Moving beyond the "paperless" myth
The misconception is that digital transformation is just an IT upgrade. Companies often think that just moving from local servers to the cloud, or implementing a new CRM, constitutes a transformation. This is digital optimization.
True transformation changes the logic of business operations. An equipment manufacturer might digitally transform. Yes, it may have added sensors to their machines (IoT), but they may also have shifted their business model from selling hardware to selling "uptime as a service". That’s a new value proposition, and they can use their newfound predictive maintenance data to charge customers based on performance (rather than just ownership).
The siloed data cannot remain contained but instead the sales, marketing and engineering must be unified. Feedback and cross-department discourse must flow. It’s when a customer support ticket triggers a design review in engineering.
Why technology is the easy part
There can be many barriers to digital transformation - not just software, but also personnel. You can outsource the project to a team of specialist implementers who come back with an AI-driven analytics platform, but if your middle management fears that automation will make them obsolete, or if your sales team refuses to input data because they prefer their own trusty notebooks, the project will fail. Adoption is going to be cultural.
A cultural overhaul isn’t easy, but it’s necessary. At first, it will be about the spirit of experimentation rather than perfection. After all, what use is the data if not to be played with and implemented?
The issue is, of course, is that it often means flattening hierarchies. This isn’t always popular, but digital tools must empower frontline employees with information that used to be the exclusive domain of executives. When a store manager has live access to inventory prediction models, they can make decisions without waiting for approval from headquarters. It’s a devolution in decision-making, in part because data is driving it.
Getting over the legacy trap
For established companies, the "legacy trap" is having decades of critical data in a rigid mainframe or on-premise systems. A full "rip and replace" is costly and risky, so a better approach is often the "strangler pattern". This is to build new, modern microservices around the legacy system which then slowly replace functionality until the old core is finally obsolete.
An architectural movement is needed from monolithic suites to modular, API-first designs. It’s a flexibility that allows individual components to be swapped out easily. It’s modular, and this business agility can help deliver long-term value.
Finding the right partner
With stakes and complexity this high, few companies tackle this alone. The digital transformation consultancy space is vast because companies from all industries can benefit from digital transformation.
For massive, global-scale organizational restructuring, it’s the industry giants like Accenture and Deloitte Digital which are often the go-to choices. And understandably so as they can provide large armies of consultants and a very standardized framework to steer Fortune 100 ships. On the engineering-heavy side, Cognizant and Globant do well with large-scale implementation and staff augmentation. Again, they provide a ton of skilled manpower.
But for companies looking for a balance of high-touch strategy and agility, mid-market specialists are often preferred. Making Sense makes itself heard by focusing on a business-driven mindset and taking a discovery-first approach that aligns technology with revenue goals. It’s not just about code, and it’s particularly popular in regulated sectors like healthcare and fintech.
The cost of standing still
Digital transformation's main goal is always to deliver value by making a company data-driven. Data used to be a byproduct but is now the main business driver. Even if we take the UK’s NHS, which is a very old, state-focused, non-profit organisation that is deemed inefficient, expensive, and done mostly for civility reasons: the NHS has accidentally accrued one of the most valuable databases in the world. There is no other national health data unified system. While impressive in one way, they haven’t undergone full data transformation. They haven’t used this data to its full potential, nor have they yet monetized it. Again, digital transformation is cultural.
By integrating technology into the very DNA of your operations, you can become resilient to how the market changes. When AI radically changes the workflow of our competitors, or the behavior of our customers, we already have the integrations to adapt.