The notion of “digital transformation” has become almost ubiquitous, yet many business professionals still grapple with its true meaning and implications.
On the surface, the concept is straightforward – digital transformation is an organizational transformation that harnesses technology at scale to enhance stakeholder experience, efficiency, and insights, among other objectives.
The more intriguing question, and one that often impedes understanding, is “how do we systematically approach digital transformation – what kind of initiatives are there?”
While there is no universally accepted taxonomy of digital transformation initiatives, here are six broad categories:
- Digital Marketing – as businesses diversify into online sales channels (or are “digital natives” to begin with), whole new ways of acquiring and engaging customers need to be established.
- ERP (Enterprise Resource Planning) Implementation/Upgrade: Large corporations often utilize multiple ERPs due to acquisitions, local market preferences, etc. Some of these instances may be outdated legacy versions. Consolidating these multiple instances into a single, modern version is often desired, but it is an exceptionally complex undertaking.
- Application Development/Modernization and Platform Solutions: While ERPs form the backbone of large corporations’ IT systems, they cannot address every aspect of an enterprise’s front-to-back technology needs. Various applications need to be developed and modernized (e.g., to provide APIs) to offer specific solutions. Platform solutions aim to be systems of engagement, sitting atop ERPs (as systems of record), and connecting different systems, processes, and stakeholders. For instance, a procure-to-pay platform might enable buyers and sellers to transact based on a predefined catalog of goods and services, with procurement records flowing downstream to support accounts payable and accounts receivable activities.
- Infrastructure Solutions: Typical examples include cloud migration (public/private/hybrid) and virtualization. Virtual infrastructure played a pivotal role in facilitating work-from-home arrangements during the COVID-19 pandemic.
- Data Solutions: These solutions encompass getting data into data warehouses/lakes, enabling data cleansing/transformation, applying data governance/privacy, and generating insights through analytics and visualization.
- Artificial Intelligence and Automation: Automation ranges in sophistication from Excel macros and Robotic Process Automation to platform-based automation and AI. AI is undoubtedly the hottest topic in technology today, with virtually every business exploring how to leverage AI to gain a competitive edge. In today’s world, no discussion on digital transformation is complete without a dedicated segment on AI, which is why we coined the term “intelligent digital transformation” in the title of this blog to emphasize the inclusion of artificial intelligence in the business world’s approach to digital transformation going forward. Intelligent digital transformation is driving improvement in customer acqusition/engagement in the front office through employee experience/efficiency in the back office, and we will explore its use cases further in subsequent posts.
While most business professionals recognize the value of digital transformation, according to McKinsey and BCG, only around a third of digital transformation programs succeed. We will explore the reasons behind this in the next post of this series.