Digital transformation: The growth engine for business in the modern day and age

By Hasrath Munasinghe

Digital transformation

Digital transformation is the evaluation of an organisation’s business models, activities, processes and supporting systems to compete more efficiently in a digitally enabled business world to increase customer interaction and satisfaction, profitability, for new markets and to improve employee relationships. More than automation, digital innovations are utilised to add value, to improve customer experience, to find and retain customers in a new way and to create a total new eco system of informed, empowered, connected and discerning customers including network of peers, influencers and audiences.

Digital transformation involves a change in leadership styles, and thinking patterns, the encouragement of innovation by adopting new business models, incorporating digitisation of assets and an increased use of technology to improve the experience of an organisation’s employees, customers, suppliers and other stakeholders.

A digital transformation strategy aims to create capabilities by fully leveraging the opportunities created by of new technology and their impact faster, better and in more innovative manner in the future. A digital transformation journey needs a staged approach with a clear roadmap, with identified milestones, involving a variety of stakeholders, beyond internal and external limitations. Digital transformation is not merely adapting new technology: changing business processes and adapting a new corporate culture are just as vital for the success of digital transformation. 

Digital transformation can involve many different technologies and the hottest topics now are Cloud Computing, the Internet of Things, Big Data, and Artificial Intelligence.

It is digital strategy that drives digital transformation and not mere technology. Technology though important, is just one element of the digital strategy. Digital strategy should be part of an organisation’s overall strategy, closely entwined with each other. Therefore it is important to develop the correct strategy in order to make digital transformation successful. 

To succeed in digital transformation it requires a shift in skill sets, and embracing a collaborative culture where people pool ideas and share expertise. External stakeholder interaction and engagement is a key element in digital transformation where engaging customers, regulatory bodies, analysts, consultants, technology specialists, vendors is vital. The organisations that are outwardly focused and are willing to take risks are most likely succeeded in digital transformation. 

Digital transformation is not only about outwardly focused customer experience but also about inwardly focused productivity, cost controls and employee leverage. Digital is not limited to technological companies or B2B businesses but are applicable to all types of businesses be it from the service industry or the product industry.

Digital transformation areas

Digital transformation in the integrated and connected form touch upon the transformation of:

• Business activities/functions: Marketing, sales, finance, operations, human resources, administration, customer service, etc.
• Business processes: Connected operations, activities and sets to achieve a specific business goal, whereby business process management, business process optimisation and business process automation come into the picture. 
• Business models: How businesses function, from the go-to-market approach and value proposition to the ways it seeks to increase revenue and effectively transforms its core business, tapping into new revenue sources and approaches.
• Business ecosystems: The networks of partners and stakeholders, as well as factors affecting the business such as regulatory or economic priorities 
• Organisational culture: Whereby there must be a clear customer-centric, productivity enhancing, cost saving objectives across the organisation
• Ecosystem and partnership models: Creation of collaborative and new business ecosystem approaches, leading to new business models and revenue sources. 
• Customer, worker and partner approaches: Putting people and strategy ahead of technology. 
• Therefore digital transformation is certainly not just about disruption or technology alone. It is also not about transforming for a digital age. It is organisational business transformation backed by selective and deliberate adaptation of technology.
• Broadly the digital transformation could be applied on following disciplines and practices across the organisation 
• Product and service innovation: Digitally enabled products and services
• Distribution, marketing and sales: Automation and value addition through digital
• Digital fulfilment, risk optimisation, enhanced corporate image: Greater control through digital 
• Customer relationship, customer experience and customer service management : seamless uniformed multichannel experience
• Marketing communications: digitally enabled advertising and promotions management information systems: Intelligent information management 
• Human resources and administration: Digitally enabled workforce engagement 
• Learning and education: Digitally powered training and development 
• Procurement, supply chain management and supplier relationships: Digitally empowered supply chain eco system 

By enacting digital transformation in above mentioned areas, an organisation could build digital synergies between various business units enabling end to end digitalisation of business processes thus improving an organisation’s customer satisfaction and engagement, employee satisfaction and productivity, leading to higher profitability and better competitive advantage.

Digital transformation success factors 

There are three important elements in successful digital transformation.

People: People are the most important element and change is the most important aspect in digital transformation. Before an organisation embrace digital transformation its employees have to accept the change and transform. However it is not easy as change is hard. But what is important is that people transformation should happen at all levels and across all business units of an organisation for digital transformation to be more effective and successful. Finding right people with the right attitude and right skills set is key in successful digital transformation. 

Products: Nowadays the product is not really about the tangible product alone, but is product plus the experience it provides, the combination of both tangible and intangible offering. Therefore as much as organisations concentrate on product innovation, new product offering and product value addition they also must look in to customer experience, customer service and customer relationship management. Intelligent customer data and real time customer relationship management data are very useful to dynamically market the product to potential customers and also to improve their experience thereby increasing their loyalty to the organisation and its products. 

Processes: Digital transformation must happen across the organisation, but it doesn’t have to happen all at once. Organisations must start where it will make the greatest impact coupled with a high probability of success. Also it’s not IT who should drive digital transformation in an organisations but the business units. IT should be the enabler providing the required technical knowledge and expertise. Simply the decision making in digital transformation should be from the business with the support of IT. The processes an organisation uses to drive digital transformation must be carefully balanced with the technology and the systems they are currently using and the maturity of the technologies and systems they are planning to implement.

Drivers of digital transformation 

As the traditional guardians of technology and technological systems, Chief Information Officers (CIO) tend to have a big say in digital transformation activities. However since of late organisations world over has created C-suite level digital specialists in Chief Digital Officers (CDO) to drive digital from a business perspective. The role clarity of the CIO and CDO as well as the engagement between the two is vital for well managed digital transformation. The line of business executives are good at identifying the business scope and the business requirement the CIO’s have the expertise in finding the right technological solution and integrating it across the organisation. 

Also many Chief Executive Officers (CEO) are choosing to lead the digital transformation themselves. This happens mostly in industries that are being heavily disrupted and competitive. CEOs also drive the digital transformation as it involves organisation-wide integration across all functions impacting the overall business. One such example is in the banking industry where creation of seamless customer experience across all channels involves digital transformation covering the branch network, corporate banking, business units (cards, remittances, trade finance, investment banking etc.) core banking system, operations, IT, marketing , product management, etc. 

However the challenge CEOs have in hand is dedicating enough time for this additional role within their already busy schedule. In some instances the CEO’s commences the digital transformation process in an organisation and once it’ s established hands it over to the CDO to take it forward together with the core management team.

It is evident that digital transformation is a must for any organisation if they are to succeed in the modern day and age of well informed, well conversant, demanding, value seeking consumers. For digital transformation to be a success, it needs to be driven by the business, covering all functions of an organisation and should be driven from the top be it the CEO or a C-suite officer. Digital transformation impacts the overall organisation and its performance hence the digital strategy should be part of the organisation’s business strategy closely entwined with each other. 

As much as adapting new technology, adapting a new corporate culture and new processes are very important in digital transformation. It is also important that employees of all levels of the organisation embrace digital transformation and become catalysts for the digital drive across the organisation thus bringing a competitive edge for the organisation in the heavily competitive business environment.

(Hasrath Munasinghe currently serves as the Deputy General Manager – Marketing at Commercial Bank of Ceylon PLC.)