Digital transformation, once a cutting-edge business strategy, is now an ongoing objective for company survival. According to the KPMG 2022 CEO Outlook report, most CEOs (72%) continue to place a high priority on digital investments, in part due to worries about new and disruptive technologies, one of the top three risks to organizational growth. Executives are aware that if their companies don’t continuously alter through digitalization, they run the risk of being supplanted by rivals or destroyed by startups that are more effective, efficient, and customer-focused. The integration of digital technologies into all elements of corporate operations is known as digital transformation. This includes determining how to leverage technology to deliver new products and services, improve existing products and services, and expedite procedures. In this blog, we delve into the essence of digital transformation, its significance, and how businesses can navigate this transformative journey.
So, what is digital transformation?
The process of using digital technologies to radically change numerous aspects of a company, organization, or sector is known as “digital transformation.” It entails redesigning current strategies, operations, and procedures to make use of digital technology’s potential, ultimately resulting in increased productivity, superior customer experiences, and novel business models.
Key Concepts of Digital Transformation:
Importance of Digital Transformation:
- Keeping Up with Customer Expectations: Customer expectations have shifted as digital technology has advanced. Customers now want firms to deliver consistent experiences across all channels. For example, if you have a web app, you must develop mobile apps to keep existing consumers and gain new ones.
- Improved Efficiency: By automating manual operations, eliminating errors, and increasing productivity, digital transformation can greatly increase a company’s efficiency. Adopting cloud-based solutions, for example, can allow employees to access data and communicate more efficiently from anywhere in the world. If you manage a large e-commerce store, consider where your customers are from and choose cloud storage in a certain location to reduce latency time.
- Competitive Advantage: Several organizations can benefit from utilizing cutting-edge technology like artificial intelligence, machine learning, big data, and the Internet of Things to better understand consumer behavior, streamline operations, and make better decisions.
- Increased Agility: Businesses may become more agile and adaptive thanks to digital technology, which enables them to react swiftly to shifting market conditions and client needs. They could be able to outperform organizations that take longer to adjust as a result.
Examples of Digital Transformation
There are many outstanding examples of businesses that have mastered digital transformation. The following are well-known brands from various industries that serve as examples of what is possible.
Emerging in the 1960s as a traditional pizzeria, Domino’s has undergone a remarkable evolution into a ‘truly digital-first business’. Remarkably, in 2021, a staggering 91% of its sales derived from digital channels, a testament to its tech-driven transformation as reported by Marketing Week. A striking turnaround story, Domino’s, once on the brink of bankruptcy, experienced a pivotal shift in 2011. The then-CEO’s ingenious directive challenged the IT team to enable smartphone users to order a pizza within the brief 17-second span of a green traffic light. This mandate gave birth to the Domino’s app, an innovation that not only disrupted the restaurant industry but also streamlined the delivery process through the integration of e-bikes and autonomous delivery. This sweeping change culminated in an impressive revenue of $4.36 billion in 2021, showcasing Domino’s as a pioneer in reshaping both culinary experiences and business models.
Nike, a global giant recognized instantly by its iconic swoosh logo, recognized the imperative of a digital transformation to stay competitive and align with its online-savvy customers. Guided by robust leadership, Nike orchestrated a comprehensive shift in mindset, supply chain dynamics, and brand strategy. This included a robust embrace of data analytics, a strategic overhaul of e-commerce approaches, the inception of impactful digital marketing campaigns, and an elevated focus on direct-to-customer sales. The introduction of concept stores in 2018 and the expansion of membership offerings further underscored their commitment to evolution. Leverage of social media proved a potent tool for fostering brand awareness, engaging customers, and championing social initiatives to cultivate a robust community. A case in point is Nike’s Twitter campaign spotlighting Mental Health Awareness Week for athletes.
How COVID-19 Expedited the Digital Transformation Journey?
The COVID-19 pandemic triggered a remarkable surge in e-commerce sales, with U.S. consumers spending $870 billion online in 2021, marking a 14% rise from the previous year. Digital Commerce 360 highlights that minus the pandemic, this level of e-commerce sales wouldn’t have been reached until 2023, illustrating its unprecedented impact. In response to the crisis, businesses turned towards digital technologies and networks to engage and cater to customers, prompting operational expansions for those already established online and unexpected pivots for newcomers. McKinsey’s survey of executives reveals a dramatic acceleration of digitization in customer interactions, supply-chain engagements, and internal processes by three to four years. Furthermore, the adoption of digital or digitally enhanced products surged ahead by a remarkable seven years.
The COVID-19 crisis served as a catalyst, propelling firms to embrace digital transformation sooner than expected. E-commerce exploded, internal operations and consumer interactions were digitalized three to four years ahead of schedule, and product innovation was seven years ahead of schedule. This acceleration emphasizes firms’ resilience and potential to prosper in the face of adversities by implementing agile and technology-driven tactics.