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Digital transformation: opportunities, risks and success factors

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Digital transformation: opportunities, risks and success factors

Digital technologies are developing at a rapid pace. This is already clear if you take a look at the past decade. There is an app for almost every concern these days. Analog documents and heavy binders disappeared from most offices a long time ago. Digital transformation is having a lasting impact on our everyday lives and our society.

Digital Transformation: What is it anyway?

Digital transformation" is the term used to describe new Internet technologies within the corporate world, but which have an impact on society as a whole. In order to increase the performance of a company, it is necessary to continuously develop ongoing processes. This also applies when the Business successful is. Keyword: Disruption.

Disruptive interventions are innovations that completely replace the technologies currently in use and thus drive them out of the market.

Digital transformation is driven by two key factors. In technical jargon, we talk about so-called enablers:

  • Infrastructure (digital technology)
  • Value chains, business models (digital exploitation potential)

Key players in the Digital Transformation area include:

  • (Business) Company
  • Communities and individuals
  • Government agencies
  • Scientific, teaching and research institutions

The 3 key elements of digital transformation

In the reference book "Mastering Digital Business" by Nicholas D. Evans, the following three key elements are listed for a successful digital transformation:

  • 1. strategy and vision
  • 2. people and company culture
  • 3. processes and control

Let's take a look at the three elements in detail:

1. strategy and vision

The digital strategy should exactly match the Company goals be coordinated. Every company sets its priorities differently. The financial possibilities and IT capacity utilization can also vary. Therefore, an objective consideration of the goals and realistic possibilities is essential.

The digital focus is elementary in order to build the desired customer loyalty with the help of technical innovations. Here, the company takes the customer's point of view: What would they want? How can we make it technically easier for the customer to use our service? However, customer requirements are changeable. Therefore, this step must be repeated regularly.

Digital transformation does not work without a certain Investment readiness. After all, the technical innovations have to be financed. In order not to miscalculate, thorough planning and preparation, as already described in the first step, is absolutely essential.

2. people and company culture

The second key element of the digital transformation comprises the topics of Leadership, a reinvention of the business model, and the optimization of digital competencies.

In order for the "Digital Transformation" project to work, a strong Executive of great importance. The latter must ensure that the departments are made aware of the issue and, if necessary, offer appropriate assistance.

Another aspect is the elimination of information silos. Every department and every employee must know how to drive digital transformation. Digital work cultures often have little in common with traditional Business Models together. It is therefore important that the targeted Change not only discussed in theory, but really internalized by employees.

The required digital competence places high demands on the company's change management. It is important to train employees accordingly so that they can deal effectively with the new Technology can work.

Processes and control

The last key element involves the change and Innovation Management as well as the corporate governance guidelines.

The introduction of new technologies often requires a rethinking of established operational processes. The necessary changes must be pursued holistically and must also be practically implementable. For this, the Change and innovation management responsible. For a smooth process, it is important to communicate the changes across departments.

digital transformation company

Examples for Digital Transformation

In recent years, numerous companies have succeeded in using digital transformation to drive competitors out of the market and establish a unique selling proposition. These include the following groups, for example:

  • Facebook
  • Uber
  • Airbnb
  • Alibaba Group

Even though they are completely different industries, all of the companies mentioned have something in common: they do not manufacture products, do not create content, and/or do not have their own inventory.

What purpose does Digital Transformation serve?

Digital transformation is the industrial revolution of the modern age. With its help, it is possible to optimize business processes. This includes, for example, the use of state-of-the-art software and hardware. The more processes that can be automated, the more time employees have for creative and and sales Tasks. Above all, monotonous processes should no longer be completed manually.

Ultimately, the goal of digital transformation is to work more efficiently and thus increase customer satisfaction. Is the clientele happythe company's sales increase. In the end, that's what matters in business.

The basics and success factors

Digital transformation is not a rigid concept. Rather, it is about testing out different options. Not every innovation is compatible for every industry. Sometimes the options available to internal IT are also limited. The fact that most of the changes are not urgent can also block success. Digital transformation is fundamentally a complex undertaking.

But how can digital transformation be successfully implemented? What success factors can be identified? This question was addressed by the Global Digital Transformation Survey Report engaged in 2018.

Key success factors

The study compared companies around the world, all of which had implemented a digital transformation. While some companies thereby successful and were able to maximize their profits, digital transformation did not bring about any positive changes in other companies. In some cases, the measures taken even had a negative impact.

Based on the findings of the study, the following six success factors for a successful digital transformation could be identified:

  • Agility
  • Involvement of qualified employees
  • Integration of corporate partners (ecosystem)
  • Organization in the management floor
  • Business Integration
  • Data Analysis

The companies that were best organized in the above-mentioned areas were able to implement the digital transformation most successfully. The greatest differences between the successful and failed companies were evident in the areas of ecosystem, agility and employees. A shortage of skilled workers had a particularly negative impact on the implementation of the digital transformation.

Digitization and Digital Transformation: What's the difference?

The terms digitization and digital transformation are often used synonymously. Although there are certainly parallels, this is not entirely correct.

Digitization" refers to the insertion of new technologies into an existing system. This applies, for example, when you install new software in an existing computer system.

As the term "transformation" implies, digital transformation involves the complete restructuring of established processes. Put simply, old business models and practices are completely replaced by new methods.

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Digital Transformation and the COVID 19 Pandemic

The COVID 19 pandemic has changed the world. For all the horror that the pandemic has spread, it has nonetheless positive change forced. This applies above all to the area of digitization and digital transformation:

1. rethinking of companies and employees

With the first lockdown, many workers were brought into the Home Office sent. In some cases, this required a complete restructuring of workflows. Technical tools that had previously been just an optional extra suddenly became indispensable. Companies were required to adapt their technology accordingly.

2. expansion of technical customer support

The Corona pandemic eliminated the possibility of face-to-face customer service in many industries. Suddenly, alternative communication channels such as video calls or chatbots were required. These techniques are not new in principle, but they took on a different significance in the wake of the pandemic. In some cases, they became irreplaceable in order to keep business going at all.

3. automation of work processes

In the Corona era, contact restrictions played a major role. This drove the expansion of automated work processes - after all, as few people as possible should come together.

The topic of automation is not entirely new either: in numerous manufacturing centers, computers and machines were already performing the essential routine tasks before Corona. This leaves workers more time for Personal initiative and creativity.

4. testing of the digital prerequisites

At the latest with the onset of the Covid 19 pandemic, all companies were forced to bring their technology up to date. Deficits that may have impaired effective work results for many years were identified and could be eliminated.

Conclusion

Digital transformation plays a crucial role in the modern economy and is likely to become even more important in the coming years. Companies that want to survive on the market in the long term absolutely have to deal with this issue.

Digital transformation goes far beyond the use of new technologies. Rather, it involves a complete detachment from familiar workflows. From a business perspective, this requires a certain willingness to take risks, but in most cases this will pay off. At this point, it is worth recalling the success factors listed in the article.

With the right implementation of Digital Transformation, profits can be maximized. At the same time, automation makes day-to-day business much easier for employees.

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Reviewed by Dr. med. Stefan Frädrich

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