In recent years, a new buzzword has been gaining popularity in tech and business circles: digital transformation strategy.
And no wonder.
According to data by Google, 98% of consumers worldwide browse, research, and purchase things on the Internet. In 2020 alone, over two billion people bought goods or services online, and global e-commerce sales are expected to surpass $6.5 trillion in 2023.
Numbers like these mean one thing: As consumers become more tech-savvy by the day, businesses that don’t have a solid online presence risk fading into irrelevance.
The problem is, that alone isn’t telling you much. Just how do you get your business ready for the modern digital economy, and how much online presence is enough?
This is where the concept of a digital transformation strategy comes in. When done right, it can help you to:
- Identify and eliminate costly inefficiencies and bottlenecks due to legacy software or outdated manual processes.
- Plan a well-thought-out strategic roadmap for both your short- and long-term digital initiatives.
- Optimize resources and make the most out of your existing systems and human capital.
- Understand and better respond to customer expectations in today’s digital landscape.
So, without further ado, let’s answer these questions: What is a digital transformation strategy, and how do you build and execute one?
What Is a Digital Transformation Strategy?
A digital transformation strategy is a long-term, step-by-step plan for changing business models to make them more competitive in an increasingly digital economy.
This can include any of the following:
- Digitizing and/or automating previously manual tasks
- Using technology to detect and remove bottlenecks, streamline processes, and realize cost savings
- Swapping legacy systems for more modern solutions
- Adopting emerging technology
- Making products and services available online
- Leveraging digital marketing to reach more customers
- Continually improving the digital user experience
In practical terms, your digital transformation strategy may involve anything from revamping your website and building a mobile app to better connect with customers, to creating dedicated e-commerce and digital marketing strategies, infusing your products and services with more digital value, upgrading internal software systems, and much more.
The exact components of your digital transformation strategy will be unique to the nature of your service offering, your specific business objectives, and customers’ needs.
Digital Strategy vs. Digital Transformation Strategy
The terms “digital strategy” and “digital transformation strategy” are sometimes used interchangeably, but this is misleading, as they are two different — albeit related — concepts.
To put it simply, the main difference between the two is the amount of digitalization going on.
A digital strategy focuses on using digital technologies to improve a particular business process — such as operations, marketing, customer service, finance, or HR — or better serve a specific group of people — such as employees, customers, or suppliers.
Digital strategies often have a relatively narrow scope, such as leveraging a specific technology to automate manual, paper-based document processing.
In other cases, the scope can be broader, such as when developing a digital marketing strategy using digital tools like social media, email automation, CRM platforms, content marketing, etc.
In contrast, digital transformation strategies are intensive, large-scale endeavors that seek to build entirely new business models using a combination of:
- Digital technologies, such as artificial intelligence (AI), machine learning, predictive analytics, and cloud computing.
- Digital tools, such as robotics, sensors, mobile apps, and digital communications.
- Best and emerging practices, such as continuous improvement, continuous innovation, DevOps and Site Reliability Engineering, lean methodologies, and business process management (BPM).
The goal of a digital transformation strategy is to radically overhaul your entire business model or create a new one from scratch to make it competitive in a digital economy. This can involve multiple or all departments and business processes. In that sense, digital transformation strategies are like digital strategies on steroids.
How to Develop a Digital Transformation Strategy in 6 Steps
Creating a digital transformation strategy takes time and concentrated effort, but if done right, the results will be well worth it.
While all businesses are different and no two strategies are 100% alike, most digital transformation strategies will involve the following steps:
1. Answer Your “Why”
Before you start, you and your team need to be crystal clear on why you’re embarking on a digital transformation journey in the first place.
To answer this question, consider the main setbacks you’re currently experiencing and rethink today’s problems as future digitization opportunities.
Do you continue to rely on time-consuming manual processes? Is paper-based document processing slowing your teams down? Are customers frustrated with slow communication or low response rates?
As you carefully inspect your existing workflows, you should identify various process bottlenecks and customer pain points that could be solved using modern technology.
2. Define Your “What”
After pinpointing the areas that need improvement, go ahead and define what it is that you want to achieve exactly.
What key performance indicators are you looking to improve? By how much do you hope to boost revenue growth?
Use numbers and metrics to set clear, measurable goals and break them down into smaller, actionable, and time-bound steps.
3. Encourage an Enterprise-Wide Mindset Shift
For optimal results, digital transformation projects should involve your entire team. To ensure that everyone is on the same page, you want to step up internal communications.
To start, explain the why and what of your digital transformation initiative, including the expected business benefits and desired outcomes. As the process unfolds, send company-wide updates to keep everyone in the loop.
Don’t forget to get feedback from your team as well. A digital transformation strategy isn’t set in stone, and it pays off to integrate new insight as it becomes available.
4. Collaborate with Partners and Experts
Unless you’re an expert yourself, you’ll likely be better off partnering with digital transformation specialists.
Define the expertise you need — for instance, replacing legacy software with modern cloud-based solutions — and evaluate whether you have it in-house. If not, hire new people or partner with third-party providers that have the required experience.
If you’re struggling with defining your needs at this stage, consider our digital transformation strategy consulting services. Our digital transformation experts will carefully inspect your processes and business models to suggest the most impactful digitization projects for your organization.
5. Share and Educate
Introducing new technological solutions won’t be of much help if the relevant stakeholders don’t use them properly.
As your digital transformation advances, continue to keep your teams informed. Share your progress, set expectations, answer questions, and provide training on leveraging the new digital tools.
6. Continually Adjust Your Processes
Digital transformation should never stop. You want to continually tweak your processes as new technologies become available — otherwise, you risk lagging behind the innovation curve.
Digital Transformation Case Study
For a real-life example of a successful digital transformation strategy, click here to read about our collaboration with Steinbeis, Germany’s largest private university.
To better meet customer demands in a post-COVID economy, Steinbeis wanted to build an innovative online education platform from scratch, including fully accredited degrees taught exclusively online.
We helped the team at Steinbeis define their goals and plan their digital transformation in detail. Then, we assembled a stellar engineering team with full-stack skills three times faster than it would have taken Steinbeis to hire directly.
Want to Build Your Own Digital Transformation Strategy?
Your competitors are going digital, and you don’t want to get left behind. Sure, digital transformation can be daunting — but the good news is you don’t have to go it alone.
With our innovation outsourcing services, you can bring radical new ideas to life and get your business ready for the digital age.
