Running with the latest digital technologies to address urgent business issues can deliver a positive impact; there's no doubt about it. However, historically enterprise technology cycles went through ebbs and flows. When organizations invested in technology, they could be sure it would serve them well for at least several years. This is no longer the case.
In the digital age, technology is constantly evolving and improving. Cycles of innovation occur more frequently as companies respond to sudden, catastrophic events such as pandemics and financial crises, as well as broader, ongoing changes in workforce attitudes and values.
Organizations need to adopt new technologies quickly to stay ahead of the curve in this environment.
This reactive impulse can lead to disjointed tech stacks with multiple tools, all geared toward a specific use and with little to no interoperability. This results in duplicate or overlapping functionality as well as gaps where required functionality is lacking. Businesses shouldn't take a piecemeal approach to go digital. Instead, they should implement an integrated approach that eliminates siloed operations that actually stifle innovation.
This is where digital transformation frameworks come in. Keep on reading to learn what they are and how they help enterprises on their path to innovation.
Table of contents:
- What is a digital transformation framework?
- This is why you need a digital transformation framework
- Benefits of digital transformation
- What a digital transformation framework should include
- Wrap up
What is a digital transformation framework?
It's not technology that acts as the driver behind the need for an organization to digitally transform. Rather, customers and employees expect companies to offer products and services through digital channels, such as websites and mobile apps.
A transformation framework is a blueprint for how an organization moves through a period of significant change because of the current evolving business conditions. A framework is a tool that guides all levels of an enterprise through the journey. It ensures that no area of a business is left unattended during this period of change.
The framework provides a common reference point that can evolve together with the company, enabling the strategy and roadmap that allows an organization to succeed in rapidly changing market conditions.
Defining digital transformation
Digital transformation refers to the process of rethinking how an organization uses technology, people, and processes in pursuit of new business models and revenue streams. To accomplish that, many enterprises must build digital products such as mobile applications or an e-commerce platform. They need to operate at the cadence of software companies, most of which choose product-based models.
To enable digital transformation, senior leaders focus on cross-departmental collaboration and rapid application development models.
Digital transformation is a must-have
Most long-standing organizations have a way of operating that has enabled decades of success, and these ways of working are usually responsible for their survival to a point in time.
However, most companies are optimized for the environment where they already operate. When anything in that environment changes (quickly or gradually), they aren't equipped to adapt quickly enough to meet the changing needs of their customers and employees. This makes it difficult for them to keep up with newer, more flexible competitors who can respond more effectively to these changing needs.
As external factors continue to drive disruption within an organization – causing negative trends such as falling revenues – business leaders need to formulate a strategic response. Some businesses choose to tweak their existing ways of doing things in order to increase their efficiency, but this is rarely enough to propel them back onto a path toward sustainability.
A more revolutionary approach is needed here, and digital transformation strategies help leaders steer the business back onto a path that propels it forward. Regardless of the industry, common pressures such as profit margins, competitor activity, employee expectations, customer expectations, and digital technology drive the decision to start building a digital transformation strategy.
Digital transformation poses many challenges
A survey from Deloitte revealed that while 85% of CEOs accelerated digital initiatives during the pandemic, most of them failed to articulate their overall strategy and progress beyond making a tech investment.
Many companies start to deploy new technologies capable of changing the business and growing new business models, but they get stuck when they try to make the underlying cultural and operational changes needed to transform truly.
What's more, some companies haven't overcome the hurdle of getting digital technologies to work well together clearly and efficiently. As Harvard Business Review points out, different parts of your business model will have different needs and demands for your digital transformation efforts. Without firm leadership and a solid plan, trying to satisfy these demands individually can lead to a disjointed, ineffective digital transformation process.
Digital transformation takes time – it is not a linear process but one filled with occasional disruptions as part of the overall growth process.
This is why you need a digital transformation framework
To make a transformation initiative successful, companies need digital transformation strategies. It's not a matter of following a checklist and believing that once all the boxes are ticked, the organization has been transformed.
A digital transformation framework highlights the overlapping areas of the organization that must change. The right framework provides a guide in a time of organized chaos. A company undergoing this metamorphosis is in a state of flux and constantly changing. The framework will provide everyone in your organization – Board members included – with a sense of direction toward reaching your end goal: revitalizing your company into one that is successful again.
Benefits of digital transformation
Today's businesses need digital transformation frameworks to help them respond to technological disruptions and adapt to current technologies. A good transformation framework provides basic benefits such as efficiency and consistency, improved performance, increased employee productivity, constant communication across departments, and coherent business strategies.
There are many different types of frameworks to choose from, each offering a unique approach for responding to technological disruption and adapting to current technologies.
Higher profits and agility
Companies that pursue digital transformation often see increases in efficiency, profitability, and agility. A study conducted by the SAP Center for Business Insights and Oxford Economics revealed that 80% of organizations that have completed digital transformation initiatives report increased profits. Additionally, 85% say they have increased their market share, on average 23% more than their competitors expect.
Borrowing this concept from the world of software development, businesses can boost their agility with digital transformation to improve speed-to-market and adopt Continuous Improvement (CI) strategies. This allows for faster innovation and adaptation.
Having the right tools that work together streamlines workflow and improves productivity. And by automating many manual tasks and integrating data throughout an organization, digital transformation empowers team members to work more efficiently.
Smarter resource management
Digital transformation is a comprehensive, business-wide initiative that consolidates information and resources into a single repository. Rather than delivering dispersed software and databases, it integrates company resources and reduces vendor overlap.
The average number of applications enterprises used in 2020 was 900. Today, this number is likely higher. A digital transformation strategy integrates applications, databases, and software into a central repository for business intelligence.
Note that a transformation is not a department or functional unit. It brings together every area of various business models and can lead to business process innovation and efficiency across units. Every department leverages sensitive data – from sales and digital marketing to finance and the C Suite. It's important to optimize and secure data everywhere it flows while equipping teams with easy-to-use tools to get their jobs done with little manual support from IT departments or in-house developers.
Great customer experience
Consider how a digital transformation journey can unlock efficiencies for your teams and deliver seamless, intuitive experiences for customers. This includes email communications, user portals, digital products, and the cadence by which you reach out to new prospects.
Consumers have high expectations for digital experiences. They're used to having endless choices, low prices, and fast delivery. One way to differentiate your brand from customers is to demonstrate that you value their privacy by giving them control over how their data is collected and used.
Improved data collection
Businesses are collecting mountains of customer data, but the real benefit is optimizing that data for analysis so they can drive their business forward. Digital transformation develops a system for collecting the right data and incorporating it fully for business intelligence at a higher level.
Organizations use these workflows to translate raw data into insights across various touchpoints. By doing so, they produce a single view of the customer journey, operations, production, finance, and business opportunities.
It's vital to evaluate how that customer data is being collected, stored, analyzed, and shared as part of this process. When you're rethinking your tech stack – especially when sensitive data flows into or out of your CRM solution – make sure that you're protecting sensitive data with SaaS encryption from a trusted provider.
What a digital transformation framework should include
The best way to make a successful transition to digital business is to outline specific goals for your transformation strategy. These goals are both long-term and short-term, so a step-by-step approach works best here. Each completed step represents an achieved goal.
A cross-functional team should guide the company through this process and adopt new operating models. This team can be drawn from in-house personnel or outsourced for greater efficiency.
Dissect your current methods of doing things before beginning the migration to digital systems. This includes breaking down your workflow into steps, then seeing how software and digitization can improve each step.
Greater digital presence
Businesses undergo a digital transformation for two reasons: to streamline operations into a more cost-effective unit and improve customer expansion and retention. Businesses should increase their mobile and web presence, building stronger customer connections and encouraging feedback.
Are there new market opportunities or ways of reaching customers? Can any internal processes be reimagined? Create a step-by-step guide for changing the business environment.
A digital transformation framework should include a highly detailed plan to show how customer interactions and company workflows can be accomplished using appropriate software or other technical solutions. Keep in mind that this involves a great deal of trial and error before you find something that works effectively.
With the pace of digital transformation, many organizations are forced into a position where they must either deploy new solutions they may not be ready for or risk falling behind their competition. In their efforts to rapidly improve customer experience, enhance internal processes, capitalize on market opportunities, or optimize other operational processes, they often end up taking a more makeshift approach to digital transformation.
A digital transformation framework offers a way out by helping organizations structure their transformation initiative and set precise goals for each step.