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What is Digital Transformation for Businesses
When it comes to small to medium sized businesses digital transformation is a commonly used buzzword more commonly being used these days. In the simplest language, digital transformation is the use of technology, any sort of technology that improves your business. If you are a medical practice or dentist business that could be enterprise resource planning system. For small businesses, law firms and real estate agencies it could be customer relationship management system for ex. Salesforce.
If you are an accountant, it can also cloud financial and accounting software. if you are retail business it is using eCommerce to automate your sales, robotics and Internet of things. All types of technology including blockchain, artificial intelligence. In other digital transformation is the use of technology that allows you to be more efficient, more productive and more effective.
The origins of digital transformation can be traced back to the 1980s when the business started integrating technology with their business processes. Over time with the revolution in technology, the capabilities of software exceeded past just basic spreadsheets. These days digital transformation has evolved in technologies like machine learning, artificial intelligence and big data.
In the recent years, lots of new technologies have entered the scene which solve the same problem, to allow businesses to operate better and efficiently. Digital transformation has become the catch all term for all these new technologies and these is no single definition of what the term implies.
Technology is the driver of business modernization and innovation. Businesses can use technology to transform and provide better experience for the clients.
Key concepts for Digital Transformation for Businesses
Digital transformation success and failure
With a lot of technologies in the market, a lot of digital transformations fail. In fact, more technologies fail than succeed. Its not because the technology is not capable, its not that the advancement is good enough but it has to do with the fact that technology hasn’t addressed the business process well. So no matter how good the processes is, if we haven’t addresses the people and processes. The likelihood of failure rate is quite high.
Cloud vs on prem systems
Another key thing to understand is how your technology is going to be deployed. Is it going to be deployed within your 4 walls or is it going to be hosted off site by someone else? This is the difference between the on prem system and cloud systems.
Configuration Vs Customization technology
Businesses have the option to customize or configure technology. Customization is changing the technology to adapt it for your purpose. An example of this is when you write your own software to fit your need or customize part of a CRM for your needs. On the other hand, configuration is configuring the software to suit you the best instead of adding something new to it. Customization for businesses is a lot of risk. It is a much difficult process in terms of higher cost, increased risk etc.
Business requirements
One of the first step in any form of digital transformation is to define business requirements. Business requirements are definition of what you need your technology to do. What is the problem you are trying to solve with technology? It is usually based on the business processes; it is usually based on what you want you want to accomplish as an organization. It also gives consideration to your future state and what you want to accomplish in the future.
One thing to notice is that when you are defining your business requirements, not all requirements are created equally. There would be some that are on the higher priority because that are only unique to you or because there are the requirements that are going to differentiate you in the marketplace.
Change management
Organization change management is commonly referred to as communications and training in a limited form. When it comes to change management, it has mainly to do with people side of the business. Examples of this include how new roles are going to be redefined, new organizational structures, new organizational design this change impacts. Understanding how people’s roles and responsibilities are going to change. All of those things fall under change management. Also, worth noting is that, organizational change is the number one reason why digital transformations fail. Technology that does not adequately address change management fails in digital transformation.
Project governance
Project governance includes management of projects and making decisions which impact those projects. The overall framework that you use to run the project. This includes project charter, how decisions are made, who the key members are, what are their roles and responsibilities. It also includes your overall plan. What is the plan, what are the time lines and what are the resource allocations, how are major decisions made and escalated as well as defining measures of success for the overall project?
Agile vs waterfall
Another concept with digital transformation is the difference between agile and waterfall deployments. Waterfall deployments are the traditional way of deploying technology. You have very clearly defined sequential steps in an implementation process that start with defining your business requirement and then once everyone has agreed and signed off on the requirements you then move in to the design of the software. The you move in to the build, test, training and live etc.
On the other hand, modern software development is shifting to more agile development which is less sequential. Instead of rolling out updates at regular intervals, you just start building stuff and start getting people’s reactions and then you start modifying technology to meet the feedback you get. The idea is to deploy technology as quickly as possible so you can get immediate feedback and make adjustments.
Technology Integration
Integration is an important concept especially today in this technological day and age. Different systems need to exchange information and need to tie together and talk to each other. Integration is the way those system tie together and communicate with one another. The way they transfer data and the way workflows transition between systems. When a business has a CRM system to track sales and commissions, the data needs to be transferred to finance system to be able to track sales.
Technology Architecture
Similar to integration, but it defines what all your systems are, where the integration points are and where the data is going to flow between the system. A visual representation of what all your digital transformation systems are, where the data flows are, what are the touch points and how’s its being throughout the organization.
Master Data
Data in itself is information, financials and numbers that flows the business. Master data in itself is not transactional in that someone makes a sale and one off. Master data is the stuff you use over and over again and defines how you are going to render business. An example of this is you would have your general ledger and chart of accounts of technical side. That’s master data because it defines business workflow.
You also have product masters which are basically all the products that you manufacture and distribute. You also have customer masters that capture all the information about your customers and then when your customer buys from your organization, its captured as a transaction. Those are some of the examples of master data, which is one term that’s really important for digital transformation for businesses.
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