Depending on who you ask, digital transformation is either the future of business as we know it, or the latest brand of snake oil sold by consulting agencies.
It’s one of those buzzwords that sparks the imagination, yet it’s an intangible and nebulous concept.
Loosely, “digital transformation” refers to the use of technology to advance a business. From gaining customer insights to optimizing internal processes, digital transformation is usually intended to help a business operate more efficiently and seize new opportunities with more agility.
Most C-level leaders envision a total technological overhaul that revolutionizes their business and catapults it over some mysterious technological horizon.
Usually, the most impactful changes are deceptively simple. The hardest part is getting your arms around what digital transformation means for your business and implementing measurable strategies and goals to get you there.
You probably don’t need as much digital transformation as you think.
In fact, most businesses who want digital transformation are using nearly obsolete legacy systems. They don’t need to step into the future; they need to catch up to the present.
But forget about the technology for a second. Your digital transformation starts where you are right now, in these five areas.
Technology does not drive transformation. Strategy does.
What is the strategy of your business, and what is your business’s approach to executing that strategy? What is your key benefit or competitive advantage?
Traditionally, this question doesn’t really cross the line into the IT realm, but your IT vendor, partner, or department can’t be proactive and effective if it doesn’t know the specific, measurable end goals it should help achieve or the problems it should solve.
The relationship between IT and non-IT leadership will continue to improve as the mindset around IT becomes more strategic and less reactive. Any discussions around digital transformation must be a group conversation.
However, businesses without a firmly defined strategy are ill-prepared to enact a digital transformation of any size.
Consider how your business gets work done and delivers value to your customers. Digital transformation should integrate technology more deeply with your workflow and business departments.
Think about how faster decision-making might improve the business and what it would take to adequately inform those decisions.
Often, decreasing the decisioning window is enough to revolutionize a business on its own. At Vudu, we helped a client move from weekly reporting to hourly reporting. This helped them lower the cost of their work product by 500%.
Compiling reports, entering data, and other administrative tasks are meticulous and time-consuming.
Implementing technology that lessens this manual burden can make your workflow more cost-effective and allow your staff to focus on broader operational goals.
Siloed departments end up working toward off-base KPIs that fail to set other departments up for success.
For instance, let’s say your marketing department hits a goal of 100 leads to pass on to sales. Yet they turn out to be flimsy leads and none of them turn into sales or customers. Sure, marketing has hit its KPI, but their efforts aren’t actually effective. If sales never communicates this result back to marketing, marketing will go right on collecting bad leads.
Digital transformation should enable cross-departmental functionality and identify misalignments that sabotage productivity.
Take stock of your staff and vendors, and gauge whether you’re getting the best ROI for their services. You may need to make some changes.
Next, think through the skills you’ll need to acquire to bring about the desired future state of your business. From there, you can consider whether to hire in-house staff for those services or outsource to a vendor.
Don’t just evaluate whether they serve their purpose now. Think about the future. Your IT solution should be able to scale alongside your business to meet emerging challenges. They should give strategic input on achieving the goals of your IT strategy and implementing your business strategy.
Data is the lifeblood of any digital transformation. At Vudu, we believe data is the lifeblood of business itself.
Though businesses have become adept at collecting data, they rarely know what to do with it.
Volume isn’t value. Data doesn’t speak for itself, and it can’t make a decision for you.
You need someone to translate the story your data is telling you. No one is better than Vudu at distilling data into insights, insights into knowledge, and knowledge into wisdom.
When we begin working with a client, our first big step is getting holistic, high-quality data from all parts of the business flowing into one normalized data set. From there, we can draw insights that were previously hidden and track metrics that were previously invisible.
Over time, the insights provided by data will not only support business objectives but inform and evolve them. This is where true IT magic begins to happen.
Now you’re ready to examine your technology and systems. To reiterate, the tools you have now and the tools you might acquire are not strategies. They’re instruments that afford you the tactical advantage you need to achieve your objectives.
Many businesses use legacy systems teetering on the brink of collapse. These obsolete systems won’t sustain the needs of the business, or new tools won’t integrate with them—whatever the case, they pose a liability to your business.
If that’s your situation, don’t neglect to define the broader strategy in a rush to fix your problem. You’ll just trade one headache for another.
By now, your goals should be defined in terms of IT and the business at large. Which technologies and systems facilitate these goals? Consider your architecture and how well your systems work together.
Everyone at your company believes that changing the IT approach is vital to its future success, so it should be no problem to acclimate them to your new system, right?
Almost everyone who strives for digital transformation underestimates the amount of training, hiring, and project management it takes to get their staff to use the new system the right way.
Digital transformation is more than a technology update — it’s a business change and a culture change. Your operational structure may have a greater capacity for change than your people.
Your way of doing business will change, permanently. A digital transformation will allow for the incorporation of new, emerging technologies, skills, goals, challenges, and strategies.
A digital transformation’s main goal is to make your business willing and able to adapt to change. That includes your people.
In this way, your digital transformation has no real end. Digital transformation isn’t an evolution, but a better way of evolving.
Domino’s initiated a digital re-vamp in 2008, when its stock price hit a lull of $4.71 and customer complaints about cardboard-tasting crust became too loud to ignore. At the time, third-party delivery services were beginning to chip away at the pizza chain’s market share. They could offer food from anywhere with the same speed and convenience.
Though Domino’s improved its pizza recipe and expanded its menu, the chain’s ultimate competitive advantage has always been speed and convenience of delivery. Therefore, its business and technology strategies revolved around the ordering experience.
Domino’s used these new tools to bolster key strategic moves in the fight against new delivery service disruptors. The strategy came first. The tools came second.
The strategy worked. In 2021, Domino’s stock price reached $385.71, a 2,151% increase from the start of its digital transformation journey.
In 2020, 65% of Domino’s orders came through a digital platform. Delivery times in fortressed markets can average as low as 16 minutes. At the onset of the COVID-19 pandemic, Domino’s altered its app to enable curbside service with great success.
Domino’s leaned so heavily into technology that it now describes itself as an ecommerce business that sells pizza. But the real takeaways here are between the lines. Here’s what Domino’s did right.
Intimate self-knowledge - Domino’s knew its real competitive advantage. If it had invested in factors outside that advantage, like an elevated dine-in experience or top-shelf gourmet pizza, they wouldn’t have been as successful.
Total strategic alignment - From the top down, all leadership and departments understand the strategy and the specific, measurable goals along the way. The technology supported the business’s overall goals.
Clear competition - Domino’s had a deep understanding of its competition, even though their biggest threat (third-party takeout services) came from an adjacent industry, rather than a rival pizza delivery chain.
Long view - Domino’s rolled out its order tracker in 2008, its app in 2011, and its delivery drone in 2016. This wasn’t a one-year or even five-year strategy. No digital transformation is.
Belief in data - Domino’s tech tools gave impactful, data-driven insights at every stage of the workflow. Everyone from execs to store managers could make better-informed decisions quickly.
Funded its strategy - Domino’s put its money where its mouth is. Of the 1,000 or so corporate Domino’s employees, 600 of them specialize in IT. In the fortressing push of 2019, Domino’s opened three new stores per day on average.
These factors are essential to executing a digital transformation for a business of any size, in any industry, for b2b and b2c businesses alike.
The return and success rates of digital transformation projects are dismal. According to Forbes, around 84% of digital transformations fail. From Ford to Hershey’s to GE, no business is immune from a catastrophic failure in their attempt at digital transformation.
In fact, it’s striking how the points of failure are so consistent across a wildly diverse range of industries.
Let’s be honest, C-level leaders hate to admit they don’t understand something, whether it’s a pain point, an objective, or a piece of technology. At worst, their personal or departmental priorities are at odds with other leaders, or with the business as a whole.
Similarly, some leaders may think digital transformation is an IT-only project, which couldn’t be farther from the truth.
Transformation starts from the top down. Digital transformation only happens when everyone takes ownership of it and everyone is rowing toward the same North Star.
The goal of your digital transformation isn’t to “go digital.” The goal is to equip your business to thrive in the future by optimizing your workflow, using data more effectively, and making better, faster decisions.
In doing so, your business can drive revenue, expand its footprint, increase market share, and move forward prepared to adapt to the inevitable changes the future brings.
Going digital for digital’s stake may indicate that your organization doesn’t understand how the digital economy affects their business, or the expectations and habits of their customers.
Alignment doesn’t begin and end with the C-suite. Everyone at your business must play their part in executing the business strategy.
Not only should you communicate why the business is taking on a digital transformation, you should paint a picture of how your transformation will improve the lives of your staff on a daily basis.
That includes evaluative metrics and departmental goals. Your employees should know exactly how their performance will be measured and how those measurements support the bigger goal.
No holistic change goes completely according to plan, and no change happens overnight. If you impose too tight a timeline on your transformation, you won’t have time to make adjustments. Under the pressure, your staff will reflexively return to the old way of doing things.
It’s crucial to take an iterative approach to your transformation, with clear objectives and milestones. Even if an iterative approach extends your timeline, giving your team small wins along the way will stave off the fatigue that can come with such long-term projects.
The power of technology has never been more accessible, and the average worker has never been more digitally capable. Yet there has never been a wider divide between the average worker who can use digital tools and strategists who can exploit predictive data.
At Vudu, we call this the “digital divide.”
As technology increasingly becomes a strategic necessity in the world of business, break/fix box-checking IT vendors will become more and more obsolete.
At Vudu, we’re business-minded first and IT wizards second. We do more than our due diligence to understand your business and make recommendations that clear the path to your goals.
It’s one thing to formulate a strategy, but it’s another thing to bring it home.
We bring the project management practices of the big four to small- and medium-sized companies to fully execute your digital transformation and train your staff to work better.