Managing Digital Transformation

An excerpt from the bookDIGITAL MARKETING MANAGEMENT — THE ROAD TO SUCCESSby Haris Machlouzarides

Digital Transformation refers to the evolution of a business through the deployment of data analysis tools towards the attainment of its objectives. The process of digital transformation entails an understanding of customer needs and environmental challenges as well as an identification of business’ internal environment. Digital transformation enables the development of digital strategies and plans, which aim at delivering customer and business value towards guiding long term growth.

1. Digital Transformation model

Businesses need to develop an understanding of the fast changing environment and digitally transform to take advantage of opportunities available by satisfying customers’ expectations. Digital transformation entails reconsidering the whole of the business as an interconnected web of processes and models that serve towards the attainment of business objectives. By looking into every business process digital transformation aims at optimizing business models and refocusing them around maximizing customer satisfaction.

Digital transformation is challenging traditional management theories by examining every aspect of the business. Its impact is not limited to the individual business, but extends to cover cross-industry business models. Managers as well as marketers should constantly challenge their business models to ensure they stay ahead of competition by optimizing business processes towards delivering exceptional customer experience.

1.1 Development of Business Objectives: In order to be in a position to pursue digital transformation, businesses need to follow a three step process that will guide them towards developing their objectives. These steps involve:

a. An analysis of the impact of digital developments on their industry: The degree of digital developments as well their impacts will vary depending on the industry the business belongs to. The opportunities and threats arising from the digital developments in the industry should be closely monitored and acted upon so as for the business to stay up to date with current developments.

b. An identification of the business’s digital readiness: Once the business sets up the processes that will enable it to monitor digital developments in the industry, it will need to set up those mechanisms that will facilitate the identification of its digital readiness. Digital readiness refers to the ability of the business to change in order to adapt to new opportunities arising from digital developments. This ability will derive from the business’ strengths in the relevant digital domain. Hence, a business needs to make sure that it has a high degree of digital readiness so as to be able to seize the digital world by taking advantage of available opportunities.

c. The development of a digitization plan towards digital transformation: The first two steps in the process of developing the business objectives focus on analyzing the digital developments in relation to the external and internal business environments. The third step involves the deployment of the knowledge acquired from the analysis performed in the first two steps towards guiding the development of the business’ digitization plan. This plan should reflect all the acquired knowledge to guide the business towards digital transformation. It should aim at digitally disrupting and redefining the business processes for encouraging digital transformation. Enabling digital transformation through disruption requires from the business to envision new ways that digital developments will improve overall business performance. Fundamental to enabling digital transformation is for the business to develop a vision of its future state based on the knowledge acquired from the analysis performed in the first two stages and not to just try to find a use for the new technologies. This vision should enable the transformation of the business by defining what the business would like to be in the future as well as how it will reach that future state.

1.2 Development of Marketing Objectives: The development of marketing objectives entails a three step process that will enable the business map the customer’s journey by identifying their interactions with the business, understand their expectations and refine the their journey by redesigning their interactions with the business. More specifically these steps involve:

a. Map customer’s journey: The customer interacts with the business at different points in time, with different business departments, and through different communication channels. The business should be able to identify these points of contact with the customer and create a customer journey map that will define the different customer interactions and the purpose of every interaction. During this step the current situation of the business is captured, which will enable the identification of possible weaknesses along the customer’s journey across the business.

b. Understand customer’s expectations: Analyzing the customer’s journey enables the business to get insights into customer behavior and attempt to understand customer’s expectations by looking into the customer’s requirements at every interaction with the business. The drivers of customer’s interactions can be defined by evaluating every interaction, which will enable the business to understand customer’s motives. Customer’s expectation identification is very important for the business as it provides the knowledge required to redesign its processes towards optimizing customer’s experience at every interaction with the business.

c. Redesigning customer interactions: This final step towards business transformation aims at modifying those business processes that were identified through the customer journey mapping process not to meet customer expectations at a satisfactory level. Redesigning customer interactions to meet customer expectations is a very critical step to digital transformation as customer journey optimization is a key to customer satisfaction. The business needs to aim at maximizing customer satisfaction through optimizing customer experience at every point of interaction. This will facilitate the development of its marketing objectives which will enable business transformation.

1.3 Deployment of data analysis tools: To achieve digital transformation, businesses need to activate those processes that will enable them to derive knowledge from the plethora of available information, by using data analysis tools. The deployment of data analysis tools will enable the business to distill information and transform it into valuable knowledge that will facilitate the process of digital transformation. Knowledge derived from environmental analysis will reveal opportunities available for pursuing, as well as possible threats to be avoided. Internal business analysis will uncover weaknesses that need to be strengthened as well as strengths that need to be exploited. By combining the knowledge derived from internal as well as external analysis the business will be able to devise strategies to digitally transform aiming at optimizing customer and business value creation.

2. Digital transformation strategies

Businesses have a number of different options when they need to formulate or implement a digital transformation strategy. These options relate to the focus of strategic directions:

a. Technology deployment; technology deployment is related to the business’ approach regarding technological advancements as well as the business processes deployed for the infusion of technologies. Hence, it is up to the business managers to decide the business’s technological direction in the process of digital transformation. Technology should be considered as an enabler of digital transformation and as such it shouldn’t become the priority during the implementation of digital transformation. Alternatives should be evaluated and informed decisions need to be taken by evaluating all relevant trade-offs.

b. Value creation processes; these relate to those processes that relate to the value chain of the business. The alternative strategies available for enhancing the value creation processes will guide the business towards the selection of those ones that will enable its strategic direction by facilitating the creation of customer value.

c. Business structural changes; structural changes relate to the business’ alterations in organisational setup, that reflect the changes proposed by digital transformation strategy to be pursued. The business will need to form into a new structure that will be able to adapt to new environmental changes and facilitate the attainment of the business objectives.

d. Business financials; for the business to be in a position to implement a digital transformation strategy it needs to ensure that it can finance all requirements in the process. Failure to finance the business’ digital transformation strategy implementation will result in disastrous outcomes.

Conclusions

Businesses need to evolve to make sure they remain competitive by facilitating customer needs. Digital transformation enables the evolution of business models by deploying digital strategies and plans towards delivering customer and business value. The deployment of digital transformation will optimize business processes towards maximizing customer satisfaction and guiding the business to long term growth.