How to Develop a Digital Transformation Strategy: Step-by-Step Guide
Each business has its own way to implement innovations. But all of them face the same challenge — digital transformation. It is a complex process which requires serious investment and comes with risks.
To move toward a digital future, companies need to have a clear vision with an elaborate strategy for digital transformation. The sound strategy based on in-depth analysis can help predict possible risks, calculate the budget of such enhancement and ensure desired results. Unfortunately, most businesses start their digital journey without a useful plan.
According to Gartner, more than 125,000 enterprises launched digital initiatives in 2016 expecting to increase their revenue by more than 80% by 2020. However, Forrester says that only 27% of businesses have a coherent digital strategy.
Creating an effective transformation strategy requires a clear structure. The following 5 steps will help you lay the foundation for making the most of digitalization.
Step 1. Create a vision
At the very first step, you should determine your vision for implementing digital transformation. But rather than looking at the problems you’re trying to solve with innovations, focus on your end goal. What do you want to achieve? Consider long-term goals and concentrate more on the experience you want to create for your customers as well as employees.
It’s crucial to come up with the global vision that addresses the future. On the other hand, this vision should deal with reality. So, build your strategic vision on the short-term objectives and resources available to your business today. While focusing on your competitive advantage, identify gaps in the current structure and create implementation roadmaps to optimize it.
Step 2. Analyze market
Before making any digital transformation effort, carry out a profound analysis of the market dynamics. Because of rapid technology development and industry changes, this step is essential for creating the relevant and up-to-date strategy.
Not long ago, the largest yellow cab company in NY, which was a leader for ages, turn bankrupt because of Uber as a competitor. Today, almost every organization in the automotive industry invests in self-driving technologies and electric cars. Otherwise, they risk dragging behind.
As the boundaries between industries continue to blur, you can find practical solutions and a massive portion of inspiration in other fields. Go beyond your industry and explore success stories in other verticals.
Step 3. Design the experience
Once you create a vision and analyze the market, it’s time to focus on an experience you want to create for your customers and employees. According to the report prepared by Actual Experience, 93% of business leaders believe that their business’s success directly depends on customers’ digital experience. Besides, 88% have the same opinion concerning their employees’ experience.
Instead of focusing on the limitations of existing technologies and new digital solutions, pay special attention to the experience you want to deliver. What value can you provide to your users? Is it convenient for them to interact with your company? How can you change the way employees engage in business processes?
The primary goal is to build the right intuitive experience that allows your users to reach their end goals anytime, whether they work or do shopping. Consider how an employee’s tasks can be done quicker and easier via new software, app or digital platform. Analyze how your client can have a better purchasing experience through a web or mobile application. Remember that the main focus is not on the new technology but on the experience it can provide.
Step 4. Assess a current standing
While the first three steps define what your business wants to achieve through digital transformation, the fourth step shows where you are now. To find out where you are beginning your journey and identify the gaps needed to be filled, you have to stay critical.
At this stage, examine your digital infrastructure and analyze how well software, apps, and other tools you use address your current and future needs. Discover the critical components required for your strategy, areas where you’ll need to develop new functionality, and the integration necessary to bring it all together.
This evaluation will help you find out what specific technology needs to be updated, what process should be optimized or automated, and what digital tools you should change. As a result, you will prioritize the efforts and investment in your digital transformation strategy in the best possible way.
Step 5. Adjust infrastructure
And last but not the least step on the way to digital transformation is preparing your infrastructure. First of all, you have to surround yourself with a dedicated group of digitally competent experts. Establish professional leadership such as Chief Information Officer (CIO), Chief Digital Officer (CDO) or other specialists qualified to ensure the successful transformation. If you can’t have an in-house team, find a reliable partner to implement the digital strategy for your company effectively.
Secondly, help your team develop skills needed for the future changes. Launch training, qualification upgrades or hire outside agencies to help. And finally, it’s significant to make digital transformation an essential part of the company’s DNA. Build a new digital culture that would come in line with the transformed business processes.
A brief afterword
In a highly competitive business environment, implementation of digital transformation is a sure-fire way to business development. Use these 5 steps to build a solid foundation for the cost-effective digital improvement of your business. Establishing sound digital transformation strategy will surely help your company find new opportunities, open up powerful sales channels, and, as a result, increase revenues.
Want to prepare your company for digitalization? To implement digital transformation successfully, learn more about Change Management.