Best Practices for Addressing Digital Transformation Challenges

October 21, 2020

One of the most popular IT – and business – goals today is to achieve digital transformation. Everyone’s talking about it, but how many organizations are actually doing it? How have the overcome challenges in the digital transformation process? As with many buzzwords, maybe it has become a catch-all phrase encompassing all kinds of digital initiatives. It is helpful, however, to clear up the confusion and set the boundaries between what’s truly business transforming and what is simply a digital upgrade.

When companies upgrade or even vastly improve their technology, they may refer to it as digital transformation, although what they’re really doing is digital modernization – more of the same, only better. Digital transformation, however is just that, using automation to totally transform the business you are in to create a radically new revenue stream – it’s a game changer.

There are several well-known examples of this. Take Amazon for example. It started as an online bookstore. But savvy executives realized that they were doing more than just moving a brick-and-mortar store online; they created a technology platform enabling vendors to sell anything online and manage fast deliveries. Amazon’s value proposition to sellers was a huge marketplace to sell their goods, and for customers it was convenience in a one-stop shop. But Amazon didn’t stop there. After they developed the tech infrastructure and servers for business operations, they realized they had another new revenue stream – selling cloud storage and its developer platform, Amazon AWS – disrupting its business once again through technology.

On a smaller scale, consider a towing company that developed its own software to help it manage its fleet of roadside assistance vehicles. It realized its software provided critical value that could be monetized, providing value for other companies as well. In this way, the company morphed from a towing company to a software provider. The company is essentially making money while the team sleeps – the holy grail of SaaS companies.

Digital transformation is the brass ring

There’s no question that being able to improve workflow and processes is absolutely critical for the customer experience and overall business success, and it might even be a great first step, however, it’s not enough. It’s important to take a good hard look at digital transformation and consider ways that you can exponentially move your business forward. If you don’t do it, a competitor might, and then you run the risk of becoming an industry laggard or worse, obsolete.

Digital transformation challenges are rarely easy to tackle and they require time to overcome. Heavy investment in legacy systems, which can be mission-critical, can bog organizations down with technical debt. Further, companies may be grappling with competing priorities or lack the executive and stakeholder buy-in to support the initiative.

Strategies to Overcome Digital Transformation Challenges

With careful planning and strategic approaches, companies can begin the process of evaluating digital transformation initiatives to determine if they are appropriate.  Here are four ways to address digital transformation challenges:

  • Engage executives and stakeholders. As with other major initiatives, getting buy-in from executives requires making the business case. With the potential for new revenue streams and competitive advantage, it can be a compelling case. Once you have buy-in, make sure you keep executives and stakeholders engaged throughout the process. By increasing collaboration, you can be sure that all needs are being considered and generate better ideas.
  • Take a design thinking approach. Design thinking is a human-centric way of looking at problems, challenging assumptions and brainstorming new solutions and approaches. By speaking with customers and end-users and understanding their unique business challenges – including their pain points, frustrations and wants — you can find your way to the digital transformation initiative that will resonate. The design thinking process includes creative problem-solving workshops to engage participants and encourage them to think beyond the status quo to whole new ways of doing business.
  • Use innovation sprints. Instead of committing a lot of resources into a digital transformation initiative, you might want to test the waters to make sure it is an appropriate undertaking. An effective way to do this is to undertake an innovation sprint, or condensed proof-of-concept exploration into whether a larger initiative makes sense for your organization. The sprint, which conducts design, prototyping and idea testing in a matter of weeks, can rather quickly deliver the validity for moving forward.
  • Begin with modernization. The road to digital transformation begins with modernization. Modernizing traditional applications or legacy systems can be a great first step to realizing the benefits of digitalization and carrying them forward in an incremental approach.

While there’s a reason digital transformation is often called disruptive, the results are impossible to ignore. It can bring in new streams of revenue and deliver critical competitive advantage. The key, however, is not only to discern between digital transformation and digital modernization, but also to decide to go bold. Only through true digital transformation can you radically evolve what you are offering to the marketplace and discover new opportunities that will help future-proof your business.

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