10 Myths About Digital Transformation Debunked
In simple terms Digital Transformation refers to the integration of digital technologies into a business, resulting in fundamental changes to how the business operates and delivers value to customers. It is also a cultural change that requires organisations to continually challenge the status quo, experiment and learn from any missteps along the way.
Digital transformation can have its challenges, but if done well will yield huge value well into the future. Digitising a business coherently enables it to operate more efficiently, reduce mistakes and better serve customers’ needs. Digital transformation journeys can be daunting at the outset; however market research is increasingly telling us that it’s becoming necessary to stay competitive.
There are many myths that circulate around digital transformation, some of which can hold leaders back from fully adopting digital strategies. These myths include ideas about the level of expense, needing to let employees go, or that upskilling employees will be problematic. However, many of these challenges can be overcome with the right mindset and team in place.
Here are ten of the most common myths about digital transformation, either debunked or with thoughts on how issues can be mitigated.
MYTH #1 Digital transformation is not urgent
Consider this report by PTC stating that, of the companies they surveyed, 70% said that they either have a digital transformation strategy or are working on one. This strongly suggests that companies who aren’t fully committed to the digital journey are likely to fall behind unless they get the ball rolling now.
Also consider this McKinsey report from 2022 which concluded that the pandemic sped up digital adoption by several years. Findings like this have increasingly moved the subject of digital transformation from the realm of aspirational to being an essential part of remaining competitive.
Much of the shift has been driven by new market demands, which themselves have often come about as a result of the many disruptions caused by Covid, deglobalisation and widespread supply chain problems. In many industries customer needs were previously consistent over many years, but where external changes have shifted customer needs or expectations those who fail to act quickly are in danger of being overtaken by disruptive competitors. We all know that loyal customers are intangible assets that add huge value to a business, but even loyal long-term customers can’t be taken for granted in fast-moving times.
MYTH #2 Digital transformation is only updating your website or developing an app
While websites and apps are key parts of the digital world, digital transformation encompasses a great deal more. A true digital transformation is a holistic approach to the way a business operates, bringing together a range of technologies in an integrated way to increase the flow of accurate information and improve the customer experience.
Another important focus is often the mobilisation of processes, either enabling customers to get things done on their phones or putting digital tools in the hands of staff who, for one reason or another, do a lot of their work away from the office.
Digital Transformation journeys may involve developing new processes and custom software, as well as integrating existing technology into unified, and often carefully guided, processes that closely match the needs of the business. Other elements of digital transformation can include projects to unify data and leverage data-driven insights to inform better decisions and identify new opportunities for growth.
Generally speaking, businesses are looking to not just keep up, but to innovate in ways that will deliver a market-leading experience for their customers and staff, the latter of which has become a high priority in industries with widespread labour shortages.
In summary, digital transformation is not about any one technology, but about transforming the way you do business to be highly competitive in today’s marketplace.
MYTH #3 All companies need extensive digital transformation
Trying to figure out how to digitise your business processes can be challenging. It is important to remember that you don’t always have to start from scratch or introduce global changes all at once. If your business already has some effective processes, then you may not need to overhaul everything. Generally, it’s safer and easier to prioritise some quick wins that will return high value to the business and then iterate from there.
Taking a roadmap of incremental improvements approach enables change management to keep up, provides a lot of opportunity for feedback along the journey and means that later projects can be funded by the increased profitability provided by earlier projects.
Some of the most common focus areas when starting out are:
- Customer self-service. Modern consumers expect companies to be responsive and provide them with assistance quickly when they need it. This is where clear and easy-to-follow apps and web-based customer service processes can enable people to get what they need straight away. Such tools also usually reduce pressure on the phone-based or in-person customer service provided to those customers who still need to access services that way.
- Cost reduction. Many cost-reduction transformations are about automating back-office processes that are manual and repetitive, freeing up staff for higher-value tasks. Others are simply about creating efficient workflows that get the most out of personnel, whilst also reducing everyone’s stress levels. A key component of this kind of project also tends to be the integration of data between different systems to avoid duplication and create flow.
- Workforce retention. This has become an essential area of focus for many organisations because when employees leave there is a loss of internal knowledge and replacing people is often expensive and challenging. More unified and effective digital tools can have a great impact on employee satisfaction, whilst bad systems create stress and drag down culture. There are even efforts with a lot of modern software to gamify work processes to increase motivation and encourage friendly competition within a business.
- E-commerce. It is obvious to everyone now that consumers can shop online to an extent they couldn’t before. Their options are fairly limitless, and people often don’t need to go anywhere because most things can be delivered right to their door. Where relevant to a business it is now essential to keep up with the increasing quality, ease of use and empowerment of the consumer being delivered in this space.
- Data-driven insights. The management of a company can only be good as what it knows and increasingly businesses are using live dashboarding and data-driven analytics to gain deep insights into all areas of the business so that problems can be spotted quickly, and strategy can be well-informed.
MYTH #4 Digital transformation is only for the IT department, nobody else in the company needs to care
A lack of support from senior management is a frequent barrier to digital transformation. In some cases, this can be because the IT department is trying to drive digital transformation, but can’t deliver it effectively without the wider leadership driving organisational change.
When it comes to digital transformation, a good strategy is to recruit a specific team made up of people across business units and including representatives from the coalface through to top-level decision makers. This team needs to have the backing of the board to discover needs, innovate, seek professional consultancy services, pitch relevant products and services and drive change in lockstep with the delivery of specific initiatives.
As an internal digital transformation team drives change it is important too that they work hard on bringing everyone on the journey. People are far less likely to resist change if their voice is heard along the way and they believe the changes will make their lives easier. This requires frequent presentations, workshops and open discussions both at both small-group and company-wide levels.
MYTH #5 Digital transformation can be done quickly
The truth is that, when done right, digital transformation can be a lengthy process. Many people see it as something that can be completed quickly, but digital transformation is ultimately about improving all business procedures. That means it takes a great deal of time to fully understand the needs, design solutions and progressively roll-out a roadmap of changes that will result in the business becoming a powerful unified machine.
When you hear horror stories of digital transformation failing, a common reason is rushing the process. When you’re approaching something as important as transforming your business, it’s really best to go slow and steady. Depending on the size and complexity of the business, this may mean months or years. However, don’t forget that early wins will kick in far earlier than reaching the end of your roadmap.
MYTH #6 Digital transformation and digitisation are the same thing
It can be difficult to separate some very similar-sounding industry-specific jargon; for example, digital transformation and digitisation, which aren’t exactly the same thing.
Digitisation is taking a process and moving it from the physical world into the digital space. Moving a sign-up form at the gym from being a paper clipboard to being online or app-based is a great example of this.
On the other hand, digital transformation is a more involved process that aims to really bring large and unified change through the use of technology. Digital transformation uses a range of technologies to improve existing processes and create new value for customers.
Digitisation might make life easier in one area of the company, and is often a part of digital transformation, but digital transformation is about the complete journey.
MYTH #7 Digital transformation is relevant for tech and IT companies only
It is still surprisingly common for business leaders to downplay the potential benefits of digital transformation to their businesses. They may view digital it as only applicable to certain business types, in particular, the technology and IT industries when, in reality, tech industries mostly exist to facilitate the improvement of all other types of business.
An interesting example that may surprise many people is that cows are increasingly connected to the internet, sending all kinds of data back to the cloud via devices often described as ‘Fitbits for cows’. Many farmers now have a suite of apps on their phones used to display and capture information, as well as manage stock and supplies.
If something as traditional as farming can be revolutionised by the flow of up-to-date and accurate information, then it’s reasonable to consider that many other real-world businesses have the same potential. And if even cows are online, surely it’s not much of a stretch to consider that workers and clients in any industry will do things online too.
MYTH #8 Digital Transformation will result in termination of some employees
Many managers worry that digital transformation will lead to having to lay off experienced workers or that current staff members won’t be able to adapt to the new processes that come along with new technology. However, it doesn’t have to be this way.
Automating repetitive processes frees up employees to focus on higher-level work that requires more human qualities such as real thinking, empathy, planning and communication. Also, with an inclusive approach to change management people usually aren’t as resistant to using digital tools as is often imagined. Modern tools are also much more approachable and user-friendly than in the past.
What actually often happens in digital transformation journeys is that people within a business get promoted and paid more, whilst the business grows without having to increase its workforce as much as it would otherwise have had to.
Another common outcome is that, in moving people out of mindless jobs, businesses are able to allocate more resources to looking after and understanding their customers, which in turn assists their growth journey.
MYTH #9 Digital transformation only applies to large companies
This may have been the case in the past, but these days different forms of digital transformation exist across all levels of business size.
Small businesses will typically just stitch together low-cost off-the-shelf tools, whereas large businesses may build custom products and integrations that unify operations and deliver unique experiences.
The most exciting area in New Zealand currently is probably in the mid-market. More powerful tools, including low-code development, are increasingly democratizing high-capability digital innovation, taking it from being the domain of corporates only to being something that innovative leaders of mid-market businesses can leverage to gain unique market advantage.
MYTH #10 You will lose a lot of money with Digital Transformation
Many businesses are worried about the impact of digital transformation on their budget. In some respects, this is a fair concern as many digital transformation projects end up over budget or fail altogether if they were poorly planned.
This is where starting with one area that has the potential to deliver some quick wins can vastly mitigate risk. In all digital projects it is also important to focus on ROI above cost; if the return is going to be worth the cost, then not going ahead due to cost can be short-sighted.
It is also important that tech partners are conscious of leveraging the most cost-effective strategies they can. This may include the smart use of cloud infrastructure and low-code solutions, as well as the properly researched implementation of off-the-shelf software.
A key thing to watch with off-the-shelf software is what license fees will expand to with usage over time. There are many highly cost-effective products around, such as Xero, Google products and Trello, however specialised software is often still remarkably expensive. Make sure that TCO (Total Cost of Ownership) is clearly understood when weighing up options.
And then of course one of the most important ways to avoid overspending is to invest well in the research and planning phase. Going down blind alleys and then having to start all over again is a surefire way to burn through cash. There are also many highly technical missteps, or poor approaches to requirements gathering, that can be hard to rectify down the track. There is no substitute for ensuring the involvement of highly experienced technology professionals with a strong track record of delivering successful business improvement projects.
Now that 10 of the most common Digital Transformation myths have had more light shed on them, perhaps you are ready to find out more. Our team are specialists at working with businesses to unlock the innovative opportunities that exist in their space. We love working with people to understand their world and to discover the areas in which their businesses can be revolutionised. Feel free to reach out further for a chat.