What is Digital Transformation?

Digital transformation is a company-wide initiative to leverage technology to drive "cross-channel" transformational change.

Typically "Digital Transformation" involves efforts to:

1. Increase Revenue
2. Decrease Cost
3. Remove friction from internal systems
4. Enable a new end user consumption model
5. Enhance an existing end user consumption model

This may be within or outside an organization, front office or back office. 

If these points seem like "generally sound business objectives" -  they are. Digital Transformation is nothing new in the sense that the term implies a steady string of reinvention throughout an organization's lifecycle to adapt and grow to changing demands of internal and external customers. Technology has always been a key part of this.

If we look back to historical manufacturing, it was advances in "people, process and technology" that enabled new milestones to be achieved from a production, revenue and innovation perspective. The introduction of skilled workers(people), assembly line(process) and machines (technology) helped pave the way for the future we live in today.

If we look at industry disruption over the past few years - we note that digital devices and the internet have changes the way we do business in 2016. Indeed, most successful companies might also be thought of, in addition to the industry they serve, as technology companies:

• JPMorgan Chase,  by pioneering internet banking services
• QuickenLoans has gained differentiation within the mortgage industry with its Rocket Mortgage offering
• GE has invested heavily in the "Industrial" Internet of Things (IoT) - infrastructure and mechanisms to collect, analyze and store data produced by machines to make these machines and the associated manufacturing process more efficient
• Amazon and Alibaba have disrupted department store incumbents such as Sears, Kmart and even Walmart with "eCommerce," leading Walmart to recently purchase Jet.com 
• Taxi service revenue has been hit globally by ride sharing services such as Uber, Lyft, and Didi Chuxing 
• Pokemon Go has disrupted the gaming industry with augmented reality
• Tesla has disrupted luxury automobile manufacturing with high degrees of automation while making vehicles "smarter"
• The internet has disrupted traditional methods of news delivery with rich content (movies, sounds, blogs, applications).

The one thing these brands all have in common is digital transformation - that is, they took a look at the "legacy" way of doing things and improved upon those processes using technology.

Let's revisit the aforementioned bullet points with this new perspective.

Typically "Digital Transformation" involves efforts to:

1. Increase Revenue 
• Create a new channel via an e-commerce presence
• Identify cross-sell and up-sell opportunities
2. Decrease Cost
• Invest in areas of high sales synergies
• Automate inefficient processes
3. Remove friction from internal systems
• Utilize applications with modern code-bases and APIs for extensibility
• Augment existing legacy systems with reporting and analytics
4. Enable a new end user consumption model
• Develop ways to reach your audience on mobile devices
• Increase touch points with customers
5. Enhance an existing end user consumption model
• Update product lines according to customer feedback
• Provide enhancements to products based on a timely release cadence

One theme that every successful organization that has embraced "Digital Transformation" recognizes is the value of data. It's hard to get a pulse on the industry, competitors, products, services, customers - even employees without access to quality data. Data isn't just qualitative - it's also qualitative. The best organizations embrace these facets of data and touch on both in regards to strategy.

The first step to this is analyzing the people, processes and technology you have in place to identify opportunities for data-driven decision support. 

The next step is to analyze said data and make adjustments or changes. Are there things you can be doing more effectively? Is there waste or data gathering deficiencies within your processes? Are your people empowered to add value? Are your employees confident in your direction? Are your customers confident in your offerings? What are best practices? Is your technology helping people work more effectively, while capturing data you need now AND for the future?

Only once you have began to address the above concerns can you begin to understand areas where digital transformation may provide opportunities for your business. Taking a "technology" first approach without the necessary business process design and human capital arrangements will leave your organization with a paddle boat but perhaps no people inside. Direction is key. Let data guide that direction. And let people, process and technology usher in that guidance.