The 3 Components of Digital Transformation

Has your company really begun a Digital Transformation process?

We talked in the previous article about What Digital Transformation is (and what it is not). A little introduction to the topic was necessary, so that starting with this article, we can go into more depth and understand what the 3 components of digital transformation are.

But who is the term Digital Transformation creditable to and when did it originate?

Some sources on the web, claim with fair conviction, that the reference year is the end of 2011 and the attribution seems to go unequivocally to the consulting company CapGemini in collaboration with the MIT Center for Digital Business.

Let’s start with the definition that the researchers of the aforementioned organizations gave and that is still particularly interesting today:

Digital transformation involves the use of technology to radically improve the performance or the reach of businesses.

This definition is particularly interesting to understand how, as usual, in Italy and in most of Europe we haven’t understood a f*** thing!

Indeed, many companies have interpreted the digital transformation process over the years by equipping their employees with mobile devices or simply creating cloud infrastructures to store their files.

It would consequently be very easy for me to say that this is not digital transformation, but let’s try to be concrete. How do we know if we have actually started a digital transformation process and if we are going in the right direction?  

The 3 Components of Digital Transformation

There are three measures and indicators of digital transformation in the recent literature that are commonly referred to as the 3 components of digital transformation:

  1. The processes
  2. The operations
  3. The relation with the customers

Transformation of the processes

Let’s start with the first point. I always have questions when I visit companies where employees still rely on paper, pen and file cabinets. Or in other companies, within which people communicate via email and cell phones. 

A successful digital transformation means implementing entirely new technology and processes. Sending a purchase order via email is not a new process; it’s simply a more modern way of doing something you’ve always done. Automating the submission of a purchase order, on the other hand, is.

It is because it saves time. Because you’ll be able to allocate your employees to other tasks. Because it will improve your business efficiency and customer satisfaction.

Transformation of operations

Let’s move on to the second point, those operations. I once approached a company that had a single supplier, not out of convenience but out of laziness. They called me and told me that the supplier was in trouble and had found themselves unprovided for, having no other business relationship.

What if they had had someone advise them early on that that business strategy was dangerous? What if they had implemented a system that automatically allowed them to track suppliers by individual product? What if they had automatically linked to their pricing list?

First of all, the entrepreneur would not be in trouble, having to resort to a new business contact on which there is no history.

He/she also wouldn’t have wasted time manually searching for other vendors, and let’s always remember: time is money.

Finally, it would have obtained higher margins from automated purchasing from the most convenient supplier at the time.

No more phone calls, wasted time or allocated resources. Automation of processes, certainty of agreements and independence of positioning.

Transformation of user experience

Let’s try to admit that in the first two points, with a dash of courage and a bit of luck in choosing the right consulting agency, it’s relatively easy to notice the impact of a digital transformation on your processes and operations. 

It gets more complicated when it comes to customer experience and satisfaction.

However, digital transformations have a enormously significant impact on how customers interact with your business and how they perceive those interactions. 

For example, have you ever wondered why you buy from Amazon? If you’re answering for the prices, you’re wrong. Amazon has prices today that are on average higher than the average competitor. You buy from Amazon because of the customer satisfaction, especially post-sale, that you have accumulated in the most negative experiences.

What happens, for example, when one of your customers doesn’t receive an order or wants to return it? If you have an automated system, in a few minutes the request will be completed and in a few seconds the final response will be packaged.

If you don’t have it, one of your employees will have to manually respond to the email and after hours will still not have solved the problem definitively, because they will have to wait and sort for example the tracking code.

The advantages of digital transformation for your business

Summarily analyzing the 3 components of Digital Transformation, we can say that embarking on a digital transformation journey offers 4 benefits:

  1. It increases the accuracy
  2. It improves the speed
  3. It reduces costs
  4. It makes your business more efficient

But if that’s the case, you can’t ignore talking about and making measurable RoI (return on investment. This is a step we’ll explore in one of the next articles. Because perhaps it is a representative indicator of how to apply digital transformation and how NOT to apply it.

Aloha!

Digital Transformation: what is it? And… what isn’t it?

A lot of people talk about Digital Transformation, but are we really sure we’ve hit the mark?

I’m going to try to take all the smoke out of your eyes!

I’ve been thinking a lot about how to start this article on Digital Transformation. First of all because it’s the first article of the newborn BiscuitWay blog; secondly because the theme is cool and…. cool things usually need cool words.

Then I realized that the cool stuff is usually done by marketeers, and if I’ve learned one thing over the years it’s that sometimes what comes hardest is getting to the gist of it.

So no secrets to success! No tools that no one told you about! Not even formidable advice that will tell you which book to read (with an invitation to buy it on Amazon and an affiliate link) in order to immediately become the innovator of yourself or your company or…. of your property.

What is not Digital Transformation?

Let’s break the ice! We give a dry answer on what Digital Transformation is NOT. Digital transformation is not a standardized website for a few euros, it’s not even e-commerce, it’s not wow management. It is not at all the opening of your fantastic company page on Facebook or LinkedIn. No, I guarantee you.

The good fortune and bad fortune of the web is that you need to be online, but that is not enough to get customers to find you. And even if they do find you, it is not necessarily helpful to your business, quite the contrary.

What is Digital Transformation?

But let’s try to say what Digital Transformation is. To me, Digital Transformation is a change in vision and approach, to put it coolly, a change of mindset.

Let’s take a practical (and not a polished) example. In Italy about 76% of companies are SMEs (so the whole universe starting from micro enterprises to go to small and medium-sized). But let’s try to imagine the case of a shopkeeper.

One of those who for 20 years raised his shutter, turned on the lights, worked inside a store of 36 square meters and waited patiently for his customers.

Well, today, this man, this hero of modern times (and I’m not kidding!) doesn’t need a website. He needs to open his mind to new paradigms for the growth of his business; someone to help him detect his potential and critical issues; someone to analyze with him what he really needs to reduce costs and increase profits.

So let’s start with some basic concepts. Digital transformation cannot be separated from the concept of innovation. And let’s kick off the first more than honest quotation:

Digital Transformation: Not just doing new things, but also doing old things in new ways
Innovation can be the way. But remember that innovating means not only doing new things, but also doing old ones in a new way. (Javier Goyeneche)

The excellent Javier, as we like to call him in convivial moments, in my opinion has hit the nail on the head. Many have spoken of digital, web and innovation as the Land of Toys and in recent years have also made a lot of money.

But I remember very well what happened to Lucignolo and Pinocchio, just as I know very well what happened to those entrepreneurs who plunged into these processes without criteria.

After the race to innovate, entrepreneurs and professionals terrified by investments with no utility or return have given up and retreated into their traditional shells, as a betrayed lover does.

Digital Transformation and Traditional Channels

After all, traditional channels have always worked, so why abandon them?

That’s exactly the point – you do NOT have to do it. Self-respecting Digital Transformation does not transform anything that is already working well. Digital Transformation only intervenes on what really needs to be optimized or on the creation of new sales and/or distribution channels and/or business process optimization.

But let’s be clear, the Digital Transformation compass must always be held by the entrepreneur or professional. It’s okay to be helped, supported, inducted. It’s not good that he/she suffers it, because it won’t change the famous and cool mindset.

The 4 phases of Digital Transformation

So really, how can we categorize a company’s digital transformation? I would say in 4 steps:

  1. Accurate analysis of the company’s history, its target market, its positioning, organizational characteristics, buyer personas, current sales and/or distribution channels;
  2. Identification of unexpressed potential, critical issues, emerging opportunities
  3. Planning of action areas with realistic RoI (return on investment) targets
  4. Execution, i.e. the realization of what was designed

In this introductory article to the topic, I made the effort to break down transformation from digital. In the next articles, I will recompose it by explaining why digital tools cannot be ignored today.

Aloha!