The advent of modern computing has led to a renaissance period of new business strategies. As computers have become more ubiquitous, so has the idea of constructing a unique digital strategy for each company hoping to modernize, optimize, and capture a larger market share. Digital assets are not just used to reach broader audiences via the internet, but also to target and identify new audiences through data analytics and machine learning to make a business more potent. It is estimated that over ninety percent of organizations consider their IT and analytics practices as a core competency.1
Plainspoken Digital has worked on digital transformations in varying capacities for a half dozen companies in the last several years, and has crafted a focus around modernizing the existing assets of a business and creating new resources that allow businesses to break into new markets. The goal of this article is to walk through the major aspects of a digital transformation and to help determine how a digital transformation could provide value for your organization.
The decision to digitally transform your organization is an investment question. The word ‘transformation’ implies a radical change, and that definition holds true here. The operative question then becomes, for an organization spending valuable resources on radically reshaping business processes, what additional value can be unlocked?
Three main benefits of digital transformations offer the potential to generate strong return on investment (ROI) in appropriately selected transformation cases: improved operational efficiency, heightened customer experience, and newly generated business opportunities.
First, digital transformations can yield enormously improved efficiency for operations that could benefit from automation techniques such as human-machine collaboration or robotic process automation (RPA). One study by Xerox found that businesses can save over 500 hours per employee just by digitalizing data collection 2. The financial upside can be enormous as well: a 2014 study by Nucleus Research found that for every $1 spent on CRMs, companies earned back $8.713, with improvements stemming from higher sales volume, lower time per sale, and reduced administrative time spent per sale.
On top of streamlining your existing processes, digital transformations may also yield high potential for increased customer satisfaction. A dramatic example of the potential superiority of digital experiences is Netflix, who entered the video rental marketplace as an upstart and handily unseated incumbent Blockbuster by offering staple benefits of digital experiences: speed, convenience, personalization, and vast access based on extremely low variable delivery costs. Research by McKinsey suggests that this pattern holds broadly: digitally transformed companies have 20-30% higher customer satisfaction rates, with 44% of online customers stating that live support chat during online retail is one of the most important features a company can offer.4
Finally, digital transformations can unlock new markets using enhanced business dynamics, through improving how products are delivered to customers and even augmenting the substance of the product offering itself. Again, Netflix is an excellent example – their ingenuity in reimagining video streaming created an enormous market, expected to be worth over $1.6 trillion USD by 2029. Such a scale may have been impossible to reach using traditional brick-and-mortar methods.5, 7
Finally, data maturity can offer insights into corporate operational performance, competitors, and consumers in unprecedented ways. New insights can enable advertising and price optimization, bottleneck and inefficiency identification, and nimbler, data-driven market positioning. A famous example of the benefits that can be reaped from this strategy is Target, which increased its sales by 50% mainly by using data to better understand and target their customers. 6
Plainspoken Digital defines digital transformation as “the modernization of current digital technologies and integration of new digital technologies into the business, with the goal of unlocking new value within a company.” There are two key concepts to define before getting started: digitization and digitalization.
Digitization is the process of taking analog information, such as paper records or photos, and turning them into digital assets. Most businesses, with the exception of some government agencies, are currently on the path to full digitization.
Digitalization builds on digitization to enable a much more advanced step on the journey to native enterprise digital capability. Digitalization is the act of converting analog processes to their digital equivalents, with the goal of optimization. In most cases, this calls for a central data platform connecting dozens of business applications and tools. This could enable instant distributed collaboration within Google Docs, finding and tracking new customers in real time through a CRM and targeting system, or automating customer invoicing and surveying with online tools.
A digital transformation’s purpose is to evolve the overarching strategy of a company to take advantage of the superior operational and strategic capabilities enabled by digital technologies. A digital transformation can be broken into three separate stages 8. The first stage is modernization, the second stage is enterprise-wide adoption, and the final stage is the development of new digital assets. Critically, there must be a compelling vision and rational business case for the digital expansions of stage two; an uncoordinated expansion of a company’s digital footprint may result in costs outweighing benefits.
In the first stage, modernization efforts focus on simplification: digitizing assets and digitalizing business practices. This could involve: automating certain HR processes such as payroll, adopting a Knowledge Management System (KMS) or Customer Relationship Management (CRM) platform, or moving key servers from the company’s premises into the cloud. Often, modernization can involve migrating away from dated legacy databases and rearchitecting data management strategy. This can enable capabilities such as granular analytics, customer identity matching, and churn analysis, all of which serve to ameliorate inefficiencies and inform strategic decision making.
In the second stage, enterprise-wide adoption, the goal is to apply solutions and ideas from modernization to the rest of the company. Here, enterprises may expand or form a strong engineering department and associated Chief Technology Officer, hiring more technical specialists and integrating a modern product development lifecycle across the organization. For many companies, centralizing company data and increasing data collection, organization, and maturity is a critical component of enterprise-wide adoption. The key goals of enterprise-wide adoption are leadership oriented, ensuring that company-wide alignment on technical vision is achieved.
Finally, in the third stage, developing digital assets, our digitally transformed customers look forward into the future and ideate on how to solve current business challenges with new technologies or solutions. For one of our clients, this meant leveraging Web3 to open a vast gap between our clients products and their competitors to carve out a larger market space. For most of our clients, this third step involves rapidly increasing data maturity, leveraging the data modernization achieved in the second stage to gain additional insights. The key goals of stage three are to identify, create, and act on new opportunities that the digitally transformed company can achieve.
When done properly, digital transformations have the potential to unlock massive value in your business, by improving efficiency, increasing customer satisfaction, and uncovering new markets. Here at Plainspoken Digital, we break down transformations into 3 stages: modernization of existing assets, adoption, and development of new assets.
Digital Transformations are not for every business, and are not one-size fits all. We believe that transforming a company cannot be done agnostically - although many companies benefit from modernizing all assets, such a transformation is expensive, and many companies only need to modernize subsections of their company. Plainspoken Digital believes in simplicity: finding the least intrusive and lowest cost solution that still augments a business to bring it to the next level.
Plainspoken Digital is a boutique data consulting firm headquartered in the DC Metropolitan Area. Plainspoken strategically applies data transformation to problems in selected industries and government, producing leading-edge capabilities along with operating model transformations for clients. To find out more, visit https://www.plainspokendigital.com.
[1] https://www.gartner.com/smarterwithgartner/why-data-and-analytics-are-key-to-digital-transformation
[2] https://www.xerox.com/en-us/office/insights/small-business-digital-transformation
[3] https://nucleusresearch.com/research/single/crm-pays-back-8-71-for-every-dollar-spent/
[5] https://www.fortunebusinessinsights.com/video-streaming-market-103057
[7] Blockbuster was worth $5b USD in 1996, equivalent to roughly $10b USD in today's dollars. The expected market cap of $1.6t USD by 2029 represents a twenty-fold increase in valuation.
