What are the main areas of digital transformation within companies?

digital transformation

Digital transformation: what does it mean and why is it important?

Digital transformation is a very relevant phenomenon nowadays and it couldn’t be otherwise. Innovation plays a key role within companies, no matter about the business size or sector, and it includes a wide overview concerning the adoption of new technologies, the change of business models and processes and the development of a brand new culture and mindset in terms of organisation.

But what is digital transformation exactly? In another article related to this topic we already wrote about the meaning of this concept, providing The Agile Elephant’s definition of digital transformation. In this article we’re going to focus on a deeper level which concerns the challenges and the opportunities for companies approaching digitalization, taking into account the main four areas to work on and the top three trends leading the way.

Digital transformation and companies: challenges and opportunities

Let’s take a quick look to some key data about digital transformation:

These data make easily clear that digital transformation entails both challenges and opportunities for companies and it’s up to entrepreneurs and managers to evaluate a proper balance between these two categories.

McKinsey shows that one of the biggest challenges refers to the risk, as activities and projects aiming to digitalization don’t always produce the expected effects and results; so, companies must develop good risk management skills in order to approach new business evolutions. Another big challenge is the popular poor mindset concerning digitalization, probably the highest obstacle to overcome: according to many people, even those in business, digital adoption is enough to move on with digital transformation; they’re wrong instead, as introducing new technologies into an organisation without mastering knowledge and skills about them, and without a larger strategic overview, easily ends up as a cost producing no real positive outcomes.

As for the opportunities, clearly firms that decide to invest into digitalization are the ones competing to lead the digital markets in future. That’s why is key for companies to have a digital transformation strategy based on a solid framework, a fundamental tool to guide the organization towards innovation and the successful use of digital potential. A good digital framework helps companies to achieve goals and go on with wider growth initiatives, setting a few milestones like:

  • pursue concrete and measurable goals, even better if divided into short-terms and long-terms goals with different priorities;
  • plan the best strategies and actions to take in order to achieve goals;
  • plan the overall costs of each activity in order to be prepared on different levels;
  • consider aspects like customer expectations, customer care and customer journey as key factors;
  • evaluate the overall commitment of human resources involved into the digitalization;
  • identify the main obstacles and how to overcome them in order to introduce a common digital culture within the whole company.

Digital transformation: the main 4 areas within companies

There are 4 main areas concerning digital transformation within companies:

  • Process Transformation – it aims to renew traditional processes and systems to improve effectiveness and efficiency of business operations, representing a key step as moving towards digitalization needs an overall firm update;
  • Business Model Transformation – renewing and/or completely changing certain aspects usually puts companies in the position to experience new business models or completely stick to a brand new one (for example, full remote companies learned how to develop a new way to think work);
  • Domain Transformation – a general business transformation due to technologies and innovation clearly entails the opportunity for companies to expand their activity to new sectors, perhaps even entering them as a disruptive force able to redefine the rules of the market and play as a leader;
  • Cultural Transformation – last but not least, obviously to pursue big and effective transformations in business it’s required to adopt a brand new mindset and define new values for an innovation-oriented corporate culture.

Digital transformation: the top 3 trends within companies

Digital transformation revolves around 3 top trends which will be key to succeed within the next few years. They are:

  • Change Management – an approach aiming to enforce change skills in individuals, groups, companies and societies and making the transition from a current situation to a desired future situation possible, playing a key role in the making of a proper corporate mindset and culture to face digital transformation;
  • Cloud Migration – it refers to the process of moving business elements from a physical to a cloud computing environment, or rather between different cloud systems, including assets, services, databases, IT resources and applications;
  • Advanced Technology – there’s no digital transformation without digital adoption, so it’s clear that the introduction and use of advanced technologies can give a powerful push to businesses willing to grow and improve; the greatest technological trend is artificial intelligence for sure, as we explained in another article.

Digital transformation: successful examples

Let’s take an overview on interesting and successful examples related to digital transformation. We’re talking about:

  • IKEA – the famous furniture company keeps improving customer experience by implementing technological supports in the process, such as dealing a partnership with a specialized web platform connecting people who bought furniture and people willing to assembly it at your place and exploring the development of augmented-reality solutions to support clients purchases in store;
  • LEGO – the famous toy blocks company experienced several interesting steps in the process of turning the business to digital, like the introduction of the first themed video games in the late ‘90s (now they’re still key products and a great marketing lever), the exploration of the 3D printing market and the involvement of customers in the making of new block-sets through specific platforms;
  • AUDI – the famous automotive company was the first one to launch a very innovative showroom concept, redefining the rules of the market and how to promote cars; in fact, these micro-showrooms were designed to be set in the city centers, a key place where no other physical showroom would have the possibility to be, and allow customers to learn about the whole brand’s catalogue while interacting with the different models through interactive smart screens.
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