Is digital transformation for you?
You've probably heard the term 'digital transformation,' which is one of the buzzwords that has shaped the business world in recent years.
Like many other terms in the business world, there are various understandings of the concept and different approaches to understanding what digital transformation entails.
The purpose of this article is not to provide a complete description of the concept but to offer you a practical entry into what digital transformation may involve. This way, you can assess whether there are elements that could be beneficially implemented in your company or organization.
What is digital transformation?
Digital transformation is fundamentally leveraging digital tools to achieve better outcomes in a company's business activities.
In many industries, existing businesses are increasingly challenged by new companies that are 'born digital,' giving them a business advantage in an increasingly digital world. Consulting firm Accenture has estimated that digital solutions are the reason half of the companies on the Fortune 500 list have been replaced since the year 2000.
Therefore, all companies are to some extent compelled to consider how digital technologies and tools can help them stay ahead of competitors or work more efficiently.
The question then becomes what a company or organization can practically do to gain the advantages that digital tools provide.
How to get started with digital transformation?
Digital transformation is often portrayed as a comprehensive upheaval of the entire organization, requiring an entirely new, intensive focus, new skills, profound changes to infrastructure, optimization of IT systems, significant investments, etc.
But it doesn't have to be so complicated. The first steps in digital transformation are actually relatively easy because there are many standard solutions, and there is no need for significant changes in organization and skills. Employees can be upskilled primarily through training and 'learning by doing.'
Some of the areas where digital transformation has a significant impact and where it's easy to get started include:
The company's work processes are one of the areas where digitization can help in all parts of a business or organization, streamlining operations and achieving better quality and structure in the work.
Many can thus gain significant benefits by automating repetitive workflows, especially those involving one or more approvals along the way, such as in hiring, procurement, and accounting. Digital tools can contribute to eliminating manual routines, minimizing duplicate work, and reducing the risk of errors.
Digitizing processes can help ensure that the right information reaches the right people at the right time.
Knowledge Sharing and Collaboration
Ultimately, all business operations revolve around collaboration – with colleagues, suppliers, customers, and sharing knowledge with them. Digitalization tools provide the opportunity to securely share information and enable collaboration across departments, locations, or national borders in new ways.
This can take the form of a shared document management platform, ensuring that documents and information are accessible to both internal and external stakeholders. Employees can work with documents based on predefined templates, edit online, and follow approval processes, ensuring that documents and information are handled efficiently.
It can also be in the form of customer portals, where you provide customers access to information about their engagements and make it easy for them to order products and services.
Business Intelligence (BI) is a concept that many may associate with financial reporting – key figures and financial overview. But data analysis is much more than that today.
Both large and small businesses now possess vast amounts of information – often more than they themselves are aware of. BI is about making it easier for you and your employees to collect relevant data and convert them into usable and accessible knowledge. So you can make better decisions based on business insight – not gut feelings.
BI can assist in all parts of a business. It can, for example, be in HR to ensure employee well-being, in the sales department to visualize customer behavior, in production to optimize your production, reduce waste, minimize downtime, and maintenance costs, or in the warehouse to ensure minimal inventory binding – and that goods are available when needed.
Is it worth it?
The Digital Growth Panel under the Ministry of Industry, Business, and Financial Affairs has estimated that increased digitization can provide the Danish society with a gain of DKK 87 billion and specifically benefit companies by DKK 33 billion. There are significant gains to be made by digitizing processes and working with digital technologies.
Several studies indicate a positive correlation between productivity and digitization. A study from Copenhagen Business School has shown that in companies focusing on investments in information and communication technology, productivity grows an average of 2.4% faster per year. You can read the full report here.
A 2016 study from PwC among small and medium-sized enterprises shows that investments in digitization contribute positively to revenue growth and that digitization projects are also profitable. Nearly half of the participants in the study responded that investments in digitization have contributed to their revenue growth to a high or very high extent.
There is, therefore, a solid basis for the argument that investments in the digital transformation of a company can be worthwhile.
Benefits of digitization often come in the form of:
Optimized decision-making basis
Increased employee satisfaction
Is digital transformation only for large companies?
Absolutely not! The entire concept of digital transformation originated from small businesses leveraging the benefits of digital tools to compete with larger and more established competitors.
All types and sizes of businesses can benefit from the tools and concepts involved in digital transformation. There are good examples of smaller companies that have either undergone a successful digital transformation or have taken the first steps on the digital journey.
Do you want to know more about digital transformation?
If you're considering whether elements of the above could work in your company or organization, feel free to contact us for more information.