Digital transformation involves the incorporation of digital technology into all aspects of a business, resulting in significant changes in its operations. Across various industries, organizations are reaping the benefits of digital transformation, as it allows them to modernize outdated processes, expedite efficient workflows, bolster security measures, and boost profitability.
Approximately 90% of companies have adopted cloud computing for their operations. While many businesses are transferring their data to the cloud, true digital transformation goes beyond this by fundamentally reshaping the entire organization. It establishes a technological framework that harnesses services and data to generate actionable insights, leading to improvements in virtually every aspect of the business.
Why Is Digital Transformation of Utmost Importance?
Digital transformation revolutionizes the way an organization functions, affecting systems, processes, workflows, and the organizational culture itself. This transformation impacts every level of the organization, harmonizing data from various areas to enhance collaboration and effectiveness.
Leveraging workflow automation and advanced technologies like artificial intelligence (AI) and machine learning (ML), companies can now connect the dots along the customer journey in ways that were previously unattainable.
8 Advantages of Digital Transformation
For many companies, the impetus for embarking on digital transformation is cost-related. Transitioning data to public, private, or hybrid cloud environments reduces operational expenses, freeing up resources previously allocated to hardware and software costs and enabling team members to focus on other projects.
- Improved Data Collection Although most businesses accumulate vast amounts of customer data, the true value lies in optimizing this data for insightful analysis that drives business growth. Digital transformation establishes a system for efficiently gathering and fully integrating relevant data for elevated business intelligence. This approach enables different functional units within an organization to transform raw data into valuable insights across various touchpoints, resulting in a unified view of the customer journey, operations, production, finance, and business opportunities. Protecting sensitive data is crucial during this process, with the implementation of robust SaaS data encryption for data flowing in and out of customer relationship management (CRM) software and other platforms.
- Enhanced Resource Management Digital transformation consolidates information and resources into a suite of tools that enhance business operations. Rather than maintaining scattered software and databases, it centralizes company resources and reduces redundancy among vendors. In 2020, the average enterprise business used 900 applications, highlighting the need for integration of applications, databases, and software into a centralized repository for business intelligence. Digital transformation is not confined to a specific department; it encompasses all areas of a business, fostering process innovation and efficiency throughout different departments, from sales and marketing to finance and the C-suite. It is imperative to optimize and secure data across its entire flow while providing user-friendly tools to empower teams.
- Data-Driven Customer Insights Data serves as the key to unlocking valuable customer insights. By gaining a deeper understanding of customers and their needs, businesses can formulate strategies that are even more customer-centric. Utilizing both structured data (such as personal customer information) and unstructured data (e.g., social media metrics), these insights can fuel business growth, enabling strategies that offer more relevant, personalized, and agile content.
- Enhanced Customer Experience Digital transformation can significantly enhance the customer experience by streamlining various aspects, from email communications to user portals, digital products, and the timing of interactions with prospective customers. With consumers accustomed to abundant choices, competitive prices, and rapid delivery, customer experience (CX) has become the new battleground for brands. Companies are increasingly competing based on CX, with even a slight improvement in CX scores potentially yielding millions in annual growth. One way to distinguish your brand is by demonstrating a commitment to data privacy, providing customers with control over their data collection and usage decisions.
- Promotes a Digital Culture with Improved Collaboration Digital transformation equips team members with tailored tools that promote a digital culture. While these tools facilitate seamless collaboration, they also drive the entire organization toward digital advancement. This cultural shift is vital for businesses to remain sustainable, necessitating the upskilling and digital education of team members to fully harness the benefits of digital transformation.
- Increased Profits Companies that undergo digital transformation experience enhanced efficiency and profitability. Notable results reported by the SAP Center for Business Insights and Oxford Economics include:
- 80% of organizations that have completed digital transformation report increased profits.
- 85% claim an increase in market share.
- Leaders anticipate 23% higher revenue growth than their competitors.
- Enhanced Agility Digital transformation makes organizations more agile, taking inspiration from the world of software development. It enables businesses to improve their speed-to-market and adopt Continuous Improvement (CI) strategies, facilitating rapid innovation and adaptation while charting a path for continuous improvement.
- Improved Productivity By providing the right tech tools that seamlessly integrate, digital transformation streamlines workflows and boosts productivity. Automation of manual tasks and data integration across the organization empower team members to work more efficiently.