Digital transformation means different things to different people, depending on their role and organization. As a result, there is not a unified view on what digital transformation is and what it takes to get it right the first time. To begin to understand this term, let’s take a deeper look at digital transformation in the context of an overall transformation journey.
Digital Transformation vs. Business Transformation
Think of digital transformation as one component of a broader business transformation. Together, they focus on enabling business outcomes and delivering customer value through strategic digital innovation.
Business Transformation defines the overarching transformation journey, where business outcomes, customer experience (CX) strategy, and capability needs are identified and designed without the considerations of technology to maximize business performance in a future state. Business transformations can be achieved through both digital and non-digital methods. This article specifically focuses on the business transformations that require digital investment to reach the desired future state. Moving a bank or jeweler’s customer journey online to support emerging customer preferences is one common example. However, other business transformations might focus on different investment strategies, such as evolving operating models to cut costs or pivoting to a new product offering to increase market share.
Digital Transformation represents a key stage within this journey, where IT defines the technology and solution roadmap to enable the future business state. This includes identification of vendors for implementation, operational needs, and a roadmap for execution. These critical steps ensure that IT will execute the business's future state in the most agile, scalable, and sustainable way possible. In many organizations, digital investments have historically been guided by very tactical IT goals. However, the alignment of business transformation goals with digital transformation efforts can help maximize your outcomes.
The Difference Between Digital Transformation and Digitization
Most organizations began their digital transformation journey years ago when digitization of critical processes became a major strategic initiative for many of the world’s leading organizations. Digitizing processes and resources is a high-ROI element of the digital transformation journey, but it would be inaccurate to describe this one step as digital transformation holistically.
Digitization, while offering some conveniences to the consumer, does not allow for an end-to-end customer experience to happen online with appropriate CX journey considerations. Today, this sort of end-to-end digital experience has become an expectation for most customers, and many organizations continue to focus on digitization without a unified enterprise CX strategy. While these organizations have realized value from digitization efforts, many now are experiencing the value gap between a true digital transformation journey and simply digitizing processes.
The Importance of Digital Transformation in the Era of the Connected Customer
You may have heard us say that your biggest competitor is your customer’s last best experience. With each new seamless digital experience, your customers’ expectations for interacting with your business grow. Organizations thriving in the post-pandemic era share the same passion for meeting or exceeding customer demands through innovative customer experiences. While digitization delivers strong value for customers, it does not account for a unified CX strategy. The risk involved in digitization without digital transformation means digitization happens in silos. Many organizations execute digitization initiatives in a segmented fashion, often resulting in disconnected digital experiences and increased integration costs.
How does Digital Transformation Benefit the Consumer?
While digital transformation has become increasingly important to most organizations’ strategic success, the COVID-19 pandemic created new urgency in the market. As we transition to a post-pandemic world, we’re seeing more organizations than ever take the digital leap. Successful digital transformations tend to have a strong strategy in place to inform the process. Meanwhile, organizations attempting to pivot quickly — without doing their strategic due diligence — will end up picking up the pieces of a disjointed transformation at a later date.
Consumers have already shifted their expectations, making digital transformation more than just a “nice to have.” Businesses that maintain a largely offline presence are increasingly rare. Consumers find it frustrating to navigate experiences with them, leading to significant customer churn in the marketplace, as these customers leave to find competitors who have already shifted to digital.