What Is Digital Transformation?

by | Apr 24, 2021 | Digital Transformation

The term “digital transformation” is being used a lot these days.  But what does it mean if you are a small or mid-sized software company?

Defining Digital Transformation 

“Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance,” says George Westerman, MIT principal research scientist and author of Leading Digital: Turning Technology Into Business Transformation.

A recent MIT Sloan Review article “The New Elements of Digital Transformation”  updated the original work, adding and clarifying the areas of your company’s business that can be impacted. These include your company’s business model, customer experience, operations, employee experience and digital platform. 

Why Digital Transformation?

Most businesses are always looking to find an edge.  While it may not jump off the page, the goal of digital transformation is to create an edge for your business.  Depending on the focus of your initiative, the goal could be:

  • Disrupt your segments with new ways to deliver your product or service digitally
  • Drive more prospects and revenues to you through an improved experience
  • Scale faster by increasing your operations process and capacity
  • Increase speed to market through gaining faster feedback
  • Increase employee satisfaction by removing manual processes and freeing them to higher uses

In other words, like any initiative, it needs to be done for the specific goal and should have a measurable outcome.

So how and where do you start?

Consider the People and Interactions You Want to Transform

As you consider Sloan Review framework, note that the main elements deal with humans and interactions.  Many people think of digital transformation as technology first, but business is about people, relationships, and the value that is brought to both.  Focusing only on the technology, the “digitization” or on a platform, without the people and process can lead to missteps.   

Prioritize the Focus

While it would be great to achieve all the outcomes noted earlier, each takes strategy, time, and resources.  Most small and mid-size software companies do not have resources sitting around, so it is important to get clear on the specific goal and outcome you want.  This will help prioritize, based on what it will mean to the business and the potential return in a tangible way.  It is important to think of this as an ongoing process, not a one and done initiative.

Before starting any digital transformation initiative, it is a good time to take a step back and consider the overall health of your business.  If there are areas where you feel stuck, focusing efforts there would be the first place to start.   

Don’t Jump to Solutions 

With any transformation, it can be tempting to jump to a solution. For those who love technology, this can be even harder as just the words “digital transformation” sound cool.  A word of caution, though.   

In order for any change to be successful, you must involve people and get their buy in.  For that reason, before focusing on the answer, it is important to first consider “Who” the initiative will impact and then identify “What” we want as the outcome.      

Start with the End in Mind

By way of example, if your goal for considering digital transformation is to “drive more prospects and revenues to the business, you may want to focus your first step into digital transformation by focusing on “customer experience.”  Taking that a step further, you may want to focus the initiative on your interaction with prospects through the process of the “buyer journey.”  To do this well, you will want to map out the interactions you have with a potential buyer at each step, how you can serve up digitally what they need, and how that will improve the experience for them.

Have the Right People in the Room

For digital transformation, the initiative will likely impact groups across your company.  It is important to establish a core, cross-functional team and include those that can provide insight and feedback.  It is also important to identify who will be the champion for the initiative and who will be managing the plan. 

Having the right people in the room means considering both the strategies as well as executional side of the equation.  Back to the example, for an effort focused on the buyer journey, it is important to review or get clarity on who your target customer is, what they look like, what the buyer journey is today and what it could look like tomorrow.  From a team perspective, you will want to include members that can bring the customer perspective, including sales, marketing, account management and client support. 

Create a Road Map

Whether done internally or with outside help, creating a document that spells out the key elements can save a lot of time down the road.  The document can be used as a road map for the team to review and rally around.  Some questions you will want to consider include:

  • What will be moved to digital form?
  • How will these digital items be delivered?
  • What systems will be needed or impacted? 
  • What processes will be changed?
  • How will you gauge the level of interaction and engagement?
  • Are you missing technology, content, or capabilities to change the process? 
  • What data do you plan to collect from the process?
  • Where will the data be captured and stored?
  • How will you use the data going forward?

Define your Success Criteria

In order to measure the success of an initiative, it is important to identify what you want as the outcome and how you will know it has been achieved.  Take the time to write down the specific, measurable outcomes.  Review the outcomes with the team, then get their feedback and buy-in.  Ensure you capture key requirements when reviewing any technology platforms to make sure they can meet your needs. 

Set the Path and Milestones

As with any project that is cross functional, putting together a high-level road map of how things will proceed and when the items identified will be completed is important.  Regular communication on a defined cadence is also important.  While this may sound like common sense, this is an area where initiatives tend to break down.

Test and Measure Your Outcomes

When making a significant change, it often takes iteration and feedback.  Assuming you have it right out of the gates is often a mistake.  The earlier you can engage and get feedback, the more likely your change will succeed.  Before you fully adopt the change, take a test and learn approach.

So if you are exploring digital transformation for your business, considering the above steps can make your path much smoother and your journey much shorter.


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