Digital Transformation: 6 Keys to Success for Data-Driven Companies
Digital Transformation
Preparing Your Business for Today and Tomorrow
In today’s market, digital transformation is more of an imperative than a choice. Digitally mature companies are 23% more profitable than their competitors. That’s why digital transformation now accounts for 40% of all technology spending. Companies not investing in digital transformation are missing out on the incredible growth opportunities that their better-prepared rivals are capitalizing on.
The mandate for digital transformation is clear. But in order to offer the digital- first customer experience that today’s consumers demand, businesses must generate new efficiencies through digitization and automation. And yet, despite all of the spending, 84% of businesses still fail at digital transformation.
CIOs, CTOs, CDOs, and other leadership, can approach digital transformation with two mindsets. The first views digital transformation as akin to “putting out fires,” responding to imminent issues. The second mindset views digital transformation as an opportunity, a chance to “get ahead of the curve.”
Companies that are simply “putting out fires” undershoot the full potential of digital transformation. This reactive approach only allows companies to tread digital water. However, the “getting ahead of the curve” approach positions businesses for success in the long-term. This approach treats digital transformation not as a finite project, but as a product, anchored by an on- going, forward-looking iterative process that delivers continual improvements in a rapidly fluctuating market.
This eBook outlines how to “get ahead of the curve” when it comes to digital transformation. This guide is for data professionals who want to adopt the business technologies, processes, leadership solutions, agile development, and other initiatives that will ensure an enduring digital transformation.
What Does Success and Failure Look Like?
Digital transformation is one of the key technological challenges that businesses of all sectors face. As new technology makes customer acquisition more competitive than ever before, businesses must devote substantial resources and funding to building digital-first organizations that can compete in a crowded arena.
This is especially true of incumbent market leaders. A recent survey of board members and executives from these incumbent businesses ranked digital transformation as the top concern among them. They’re worried that “digital- first” upstarts will unseat them with their built-in digital efficiencies.
That’s why, in recent years, many companies have invested heavily in digital transformation. According to Harvard Business Review, companies spent $1.3 trillion on digital transformation in 2018. Based on just these numbers, the progress might appear significant. However, of the $1.3 trillion spent, an estimated $900 billion went to waste. That’s an astounding 70% failure rate.
This, of course, is the worst outcome: botching a necessary investment, and incinerating massive amounts of funding. So how, exactly, do companies implement successful digital transformations? First, the stakeholders must understand what digital transformation is and is not.
Digital transformation has different definitions, depending on the scenario, and no two such initiatives are identical. But in a fundamental sense, digital transformation refers to the digitization of business operations and business processes. This can cover anything from the automation of an accounting practice, to the migration of data from an on-premise database to the cloud. But the term is primarily used to indicate a broader, organization-wide push toward digitization.
A company can undergo a digital transformation for any number of reasons. Some seek to generate new efficiencies, such as reducing production time, boosting speed-to-market, and expediting internal communications. Others want to create and harness more data, such as generating new metrics or customer behavior data. Still others focus on improving the customer experience, such as automating billing processes. In short, there is no preset path. Each company will implement its own digital priorities.
This is not necessarily what executives want to hear. The more customizations, the more risks. Never mind the time and resources needed to implement a bespoke digital transformation. The deepest worry is that the transformation will do nothing, or worse, somehow diminish performance. After all, if a serviceable system is already in place, why rock the boat?
These are all valid concerns. And when $900 billion goes to waste every year, the choice of doing nothing or playing it safe starts to sound better. However, this is a false choice. Companies that refuse broad digital transformation now will become uncompetitive in the long-term. In order to achieve success, companies must approach digital transformation as a do-or-die initiative.
In our time helping customers undergo digital transformations, we’ve developed our own template for a successful digital transformation. The template is broad enough to adapt to any use case. With these six steps, companies can build a successful digital transformation for both today and the future.
6 Steps to Plan and Deploy a Successful Digital Transformation
1. Craft Your Business Strategy
Too often, companies start with the nitty-gritty technological aspect of a digital transformation. They search for individual technological solutions to specific technical problems. But to execute a successful digital transformation, one that will adapt as circumstances change, companies must first start with a broader view. In particular, companies must work off of a well-defined business strategy.
A business strategy encompasses a variety of components, from overall company vision, to specific operational tactics. In terms of digital transformation, the importance of a business strategy is critical. A business strategy allows teams to build a digital transformation around the company’s short-term and long-term objectives, rather than around technical issues that simply arise during operations.
Consider this example. If a law firm adopts a document digitization solution, the new technology eliminates inefficient, manual document analysis. However, this does not achieve the company’s overall strategic objective of creating a superior client experience. Clients want an efficient customer experience in the aggregate, not merely for document processing. Document digitization is helpful, but by failing to link it to a wider strategic goal, the optimization offers only an isolated improvement.
Developing a business strategy is a multi-pronged process, involving stakeholders across the organization.
By answering key business strategy questions, teams can crystalize the objectives of a digital transformation:
- What are our company’s goals, quarterly, yearly, and beyond?
- What is our current business model? How do we intend for it to change?
- What is our product, and where is it headed in the future?
- How does our company plan to grow in the coming years?
- How do we want to interact with our customers? What channels will we use?
- What could disrupt our company, technologically or otherwise?
- What do we want our customer experience to be like?
- What are the company’s opportunities, now and in the future?
These are just some of the high-level business strategy questions companies should consider before crafting a digital transformation.
2. Define Operational Objectives
After crafting a business strategy, translate those prerogatives into operational objectives for your digital transformation. Again, this is not the same as choosing technologies. Rather, this is defining the impact digital transformation will have on your business.
Consider some examples below:
Operational Objectives for Digital Transformation | Description |
Improve the customer experience | Many companies make the customer experience a top priority in a digital transformation. This can represent a variety of initiatives, from building a mobile-first customer journey, to merging in-store and online shopping, to digitizing support channels, to reducing customer wait time, to creating intuitive interfaces, and much more. These improvements not only fulfill the expectations of today’s buyers, but also increase efficiency and profitability. |
Cut costs | For most companies, digital transformation offers an opportunity to cut costs by eliminating inefficient processes and infrastructure. Automate rote tasks, from new registrations, to basic customer service, to cleansing raw data, freeing up to 80% of your data team’s time. Build digital-first, cloud-based infrastructures to bypass expensive, maintenance-heavy on-premise hardware. |
Reimage business models | Digital transformation enables companies to reimagine their business models. Take advantage of new delivery methods, more customer touch points, less purchase friction, more business unification, and more data-driven decision-making. Netflix is a well-known example of a business model reimagined by digital transformation. |
Enhance worker productivity | Through digital transformation, companies can empower their workers to be more productive. With new apps, systems, and processes, workers can become more efficient, impactful, and informed. Digital transformation also opens the doors for more worker collaboration, through digital workspaces and environments. |
These, of course, are just a few of the possible operational objectives for a digital transformation. Each company will have different priorities. By identifying the operational objectives upfront, a company can work toward the end goals of the digital transformation, rather than on isolated issues.
3. Build the Backbone: A Powerful & Flexible Data Operation
After identifying operational objectives, a company needs to build a solid foundation for the digital transformation. And data, of course, is the backbone of all digital transformations. The crux of many digital transformations revolve around delivering the right data, at the right time, to the right stakeholders. In order to accomplish this, many companies must overhaul their data operations.
In today’s digital landscape, companies often have difficulty centralizing, transforming, and operationalizing data. Most companies cannot manage their data effectively and efficiently, between online and offline databases, hundreds of data streams, data formatting requirements, and ever-growing volumes of data.
But three cloud-based data solutions, when combined as a single tech stack, are changing this paradigm:
Cloud-based Data Solution | Description |
Data management platform | Extract, aggregate, and transform all your company’s data sources in a single platform. With pre-built data connectors, ingest data from any data source, without requiring coding. Migrate data from offline/on-premise databases into the cloud without interrupting database usage. Perform full data orchestration, including in-database transformations to prepare data for deployment. |
Cloud data warehouse | Eliminate the need for cumbersome on-premise servers and mainframes. Cloud data warehouses are infinitely scalable, maintenance-free platform that store all of a company’s data in a single repository. Cloud DWHs operationalizes data by pushing it out to stakeholders, business processes, and technologies throughout the organization. |
Business intelligence platform | A business intelligence platform allows companies to visualize data to make key decisions, track ROI across all initiatives, and generate business insights. |
A digital transformation must also be able to respond to fast-changing priorities and objectives. To accomplish this, consider the DataOps methodology. DataOps applies the principles of DevOps to data management. DataOps combines technologies, processes, practices, and agile development to deliver data and analytics to stakeholders throughout an organization.
DataOps can power the data capabilities that ensure long-term success for a digital transformation, such as:
Data Capabilities | Description |
Data democratization | Allow any stakeholder, technical or non-technical, to access all data and analytics on-demand. This supercharges efficiency and improves ROI by enabling data-driven decisions at every level. |
Data governance | Develop the systems, rules, processes, and procedures to deliver data throughout an organization with consistency, security, and uniformity. Data governance ensures regulatory compliance, high data quality, auditing, consistency, and accuracy. |
Data lineage | Document the origins, movements, characteristics, and quality of data, including how data was changed to its final format. With data lineage, map data pipelines as they grow throughout your organization, enabling error identification, audit trails, and operational intelligence. |
Data fabric | Manage the collection, integration, and sharing of data across a single unified architecture. This is key if a company decides to use a hybrid cloud/on-premise infrastructure. |
4. Implement New Digital Technologies & Business Processes
Once a strong data foundation is in place, implement the new technologies and business processes to achieve your operational objectives. Each company will approach this task differently.
But regardless of the industry or use case, many companies will incorporate similar digital technologies and business processes in their digital transformations, including:
Digital Technologies and Business Processes | Description |
Big data & analytics | The world produces 2.5 quintillion bytes per day. And with new solutions such as cloud data warehouses and data management platforms, companies can finally derive key insights from this massive volume of data. For example, develop data models that generate granular, actionable analytics about customer behavior, intent, preferences, and more, to enhance buyer targeting and drive revenue. |
AI/Machine learning | AI is often implemented to perform digitizable human labor, such as call center support or administrative tasks, along with more advanced functions such as generative design and engineering oversight. Companies deploy machine learning within business processes and systems to execute repeatable tasks with increasing precision, such as data preparation and data model construction. |
Automation | Automating business processes and practices is a primary goal of digital transformation. From welding a door to a new car, to transforming raw data, to scanning client IDs, automation unlocks new efficiencies for companies and customers alike. More and more, AI and machine learning are also entering automation workflows in the form of robotic process automation (RPA). RPA workflows employ software robots to execute basic tasks, so employees can focus on cerebral work. RPA can also create hybrid human/robot workflows. |
Mobile | Today, 53% of all online purchases are made with a mobile device. The customer experience is the mobile experience. All departments must focus on mobile usage, from prioritizing mobile app development, to incorporating the marketing team in app design, to optimizing websites for mobile. Mobile transformation is also becoming more essential for internal teams. Internal mobile channels enable employees to scan packages, upload documents, monitor KPIs, and much more, using their own smartphones. |
Cloud computing | 70% of IT budgets are spent on maintaining legacy systems. For companies with on-premise hardware or non-scalable servers, migrating to a cloud-based infrastructure is critical for a successful digital transformation. Cloud-based infrastructure can scale rapidly and nimbly, providing the flexibility to grow operations without technical and logistical hassles. Companies should aim to house all digital operations in the cloud. |
Internet of Things (IoT) | With the advent of small internet-connected sensors, devices as diverse as cargo trucks, factory equipment, and video game systems can now transmit data. When combined with a cloud data warehouse and data management platform, this data can be mixed and matched with customer data to access a new dimension of targeting and analysis. Companies can also run the data through a BI platform to visualize important analysis, such as customer behavior and product trends. |
These are some of the key technologies and processes that can power a successful digital transformation. But, just as with DataOps, companies must also build these technologies and processes around an agile framework to meet evolving objectives. For this, companies should consider the agile transformation methodology.
Similar to DataOps, agile transformation pairs the methods of DevOps with digital transformation. Agile transformation is an iterative process built to meet the constantly changing digital needs of customers and teams. By combining DataOps and agile transformation in an integrated agile framework, companies can quickly and efficiently service all internal and external stakeholders.
5. Promote Training & Education
After the digital transformation is in place, a company must foster institutional buy- in through leadership and education. Oftentimes, digital transformations fail not because of ineffective technologies, but because the organization has not equipped stakeholders to leverage the solutions. To realize real ROI, leadership must prepare the organization for the digital transformation.
C-suite leaders must develop a consistent and comprehensive plan to prepare all relevant stakeholders and departments for the digital transformation. First, the technical team responsible for the process must clearly communicate to other C-suite stakeholders what changes are occurring, and how the transformation works. Second, the C-suite team must align on how to introduce employees to both the technical workings and the larger strategic goals of the transformation.
Once the C-suite is in sync, leadership can roll out educational initiatives to their respective teams, addressing issues from technical training to job security concerns. Since each transformation is different, the messages will vary between companies. But there are initiatives any company can undertake to ensure workforce readiness for digital transformation. One of these campaigns is data literacy education.
Digital transformations often unlock new depths of data and analytics, but workforces are not equipped to capitalize on the surplus. Data literacy initiatives teach workers how to read, understand, create, and communicate data. As data management platforms and other solutions eliminate the need for coding or technical skills, workers of any background can now create and harness data infrastructure such as data pipelines. These workers can function as citizen data scientists (CDS), operationalizing and analyzing data in the same fashion, if they are given the right training.
Here are some data literacy initiatives to consider:
By combining an executive leadership strategy with initiatives such as data literacy, a company can ensure the organization-wide success of a digital transformation. Additionally, the most responsive companies might also consider applying agile principles to this process as well. That way, as priorities and educational needs change, the organization-wide response can adapt.
6. Measure ROI
In order to judge the success of a digital transformation, a company must measure ROI. During the building phase of the digital transformation, a company measures success during sprints through operational milestones, such as meeting deadlines and technical performance. But once the digital transformation is live, business performance becomes the primary indicator of ROI.
Most companies will have to measure ROI on different tracks. Each company will gauge the categories and metrics of ROI differently. But every company can benefit from systematizing the process. This process should be cross- functional, aligned with the objectives of different stakeholders, from IT, to marketing, to C-suite. Some categories and metrics to consider include:
These are just a few examples of potential ROI metrics. Each company will choose its own unique metrics to judge success. However, there is a metric that all companies should pay attention to: revenue. It’s a simple test: did overall revenue go up or down after implementing the digital transformation?
If revenue went up, boost ROI even more by using these metrics to fine tune your digital operation. If revenue went down, pinpoint the cause with these metrics, and introduce new fixes into the agile pipeline. If the digital transformation is performing well, but revenue is still dropping, you may be tracking the wrong metrics, or have business issues that extend beyond the transformation.
A Product, Not A Project, Leads to Success
Digital transformation is essential in today’s digitized economy.
In the current landscape, companies in all industries will have to undergo digital transformation to remain competitive. But too often, companies treat digital transformation like a project, rather than as a product designed to evolve for the needs of stakeholders.
However, by following the steps in this guide, a company can build this very product: a digital transformation with agile DNA. Every company is different, and each use case is unique in its own way. But by harnessing the principles in this guide, any company can lay the groundwork for a digital transformation that delivers the best digital experiences for diverse stakeholders in a rapidly changing market.
