What is Digital Transformation and What Does It Mean for Digital Assets and Collateral?

A global digital transformation has been in progress for a lot longer than most people would imagine. It didn’t start in the new millennium, nor did it begin with the introduction of cloud computing or the advent of the World Wide Web. It didn’t even start with the earliest intranets or the adoption of the personal computer.

Believe it or not, the world started transforming into a digitized society three-quarters of a century ago with the publication of, “A Mathematical Theory of Communication.” The article written by famed mathematician and early digital communication expert Claude Shannon is considered a foundation of information theory. Just a few years later, both the microchip and semiconductor transistor were invented, and the digital transformation had begun.

Just because the digital transformation started in the 1940s, that doesn’t mean it’s been a consistent path toward mass digitization. For decades, cost and lower skill prevented a more rapid adoption of business technologies. 

Even as the world moved into the 21st century, plenty of traditional business professionals still balked at the thought of cloud storage, a remote workplace and a paperless society. Still, by 2016 companies spent well over a trillion dollars a year on digital transformation technologies, according to the International Data Corporation.

Then came COVID-19, and the process of digital transformation kicked into overdrive. Businesses had to adapt to survive— and if management wanted production to continue in many industries, employees had to work remotely. In fact, 59% of IT decision makers surveyed by IDG Research in July 2020 said the pandemic accelerated their digital transformation efforts.

What is digital transformation?

What exactly is a digital transformation? There’s no single formula or method, but it boils down to the integration of digital technology within all areas of a business, an organization or even a society. 

The process brings with it many changes in how entities operate and provide valuable products, services and experiences to their customers. In the most basic of terms, through digital transformation businesses can transition into the digital age.

Aspects of digital transformation range everywhere from paperless banking and self-check-out technology at the grocery store to the adoption of cloud computing and a remote workforce. Other common digital transformations include in-store to online shopping, taxis to ride-share apps, customer service phone numbers to chat bots, print advertising to social media marketing, DVDs to streaming services and even the massive generation and use of consumer data among all sorts of industries.

In a business, a digital transformation takes on any or all of the above, as well as a host of other transitions from analog to computer-based processes that simplify tasks and boost productivity. Through digital transformation, technology also adds value to every customer interaction. As newer and more sophisticated technologies are constantly evolving, the possibilities for digital transformation are practically endless.

Digital transformation is “about automating operations, about people, and about new business models,” Johnson & Johnson Chief Information officer Jim Swanson wrote in 2018 when he held the same role with Monsanto. “Wrapped inside those topics are data analytics, technologies and software— all of which are enablers, not drivers.”

How is a strategic digital transformation beneficial to a company?

While digital transformation can benefit businesses in a variety of ways, success requires strategy. You can’t just start transitioning random processes without any sort of plan or roadmap. 

Through a digital transformation strategy, however, businesses can effectively introduce and drive their technological initiatives. Because of constant advancements, a successful digital transformation strategy will be fluid and easy to adapt. 

And like other major projects, a company needs a purpose and a budget. It also should be able to measure and analyze results, which means the transition roadmap should not only include goals, but it also should define metrics by which to measure progress and identify opportunities.

So, how does a digital transformation strategy benefit a company? A successful digital transformation can provide a positive return on investment in the following ways:

• The use of technology can increase productivity while reducing costs associated with labor. This can happen by automating processes previously completed by employees, as well as simplifying other roles to boost employee productivity.

• A digital transformation can provide better customer experiences and engagement, thereby improving customer satisfaction, increasing sales and customer loyalty, while reducing churn. 

The modern consumer doesn’t just appreciate digital engagement, they expect a company to participate in e-commerce, while providing valuable content and live assistance through various social media outlets, as well as options like paperless billing, mobile apps and video demonstrations.

• If one company hasn’t started its digital transformation, it can bet its competitors have. Any traditionalists still dragging their feet from an analog-based business are only sending potential sales down the road… or down the information highway, as the case may be. Perish the thought that if the world ever repeats 2020 and storefronts again shutter, any companies not prepared with a digital strategy will be left behind by those better-equipped businesses.

• By adopting Big Data, companies can use technology to make better-informed business decisions based on an analysis of customer, company and market trends rather than relying on human abilities or even the best gut instinct. Analytics software provides insights into enormous databases to help companies improve marketing efforts, increase sales and provide in-demand innovations.

How can businesses apply digital transformation to their roadmaps?

There’s no one-size-fits-all digital transformation strategy. In fact, one might be safe to gander that any full and effective digital transformation roadmap will be unique to each business. 

After all, how many companies have identical structures, product lines, target customer and business strategies? Likewise, a successful roadmap will be thoroughly detailed and involve practically every aspect of a business.

Still, there are best practices and tips business owners, executives and managers can follow to greatly increase their odds of success, including:

• Align digital transition objectives to specific business goals. Don’t just blindly introduce whatever digital technology you come upon. What do you hope to accomplish, and how can various tools and processes help you to achieve those goals? Every element of the roadmap must serve a purpose toward meeting a goal.
  
  
• Go big. Don’t stop with digitally transforming one or two aspects of a business. A truly effective digital transformation roadmap will encompass practically every part of a company. If the journey isn’t completed, it won’t provide a similarly positive ROI.
  
  
• Focus on privacy. When customers engage with a brand via digital resources, they depend on that company to protect their privacy. If a company can’t protect its data, its digital transformation is doomed to fail. In fact, a breach is likely to send customers straight to a competitor.
  

• Encourage employees to embrace the digital transformation. Too often, reports have instilled within employees the idea that adopting technology will replace human labor. 

Workers are unlikely to enthusiastically adopt digital tools if they fear their job will be replaced by a machine. It’s imperative that business leaders clearly explain the ways a digital transformation will allow employees to better utilize their special skills and expertise rather than focusing time on menial tasks.

• Include augmented intelligence in your digital transformation strategy. By enabling humans and machines to work together, companies can maximize both their investments in technology and the productivity of their workforces. 

While artificial intelligence boasts data collection and analysis abilities far above and beyond even human genius, employees can augment that knowledge and determine how best to apply it.

• Define goals and metrics within a company’s digital transformation road map. Divide the overall project based on the goals it should accomplish, and then define what tasks and tools will help meet each goal, as well as what people or departments are assigned to each one. Then determine key performance indicators for each task, defining metrics that can be used to measure the success of each task and the progress toward meeting each associated goal.
  
  
• Monitor the progress of each goal using the defined KPIs. Based on results, determine opportunities for improvement, while making sure to adapt goals and tasks as needed.
  
  
• Determine the budget for the digital transformation just as you would for other major projects. How much should be designated for each goal and task? What is the desired ROI? The progress within the budget can then be measured and monitored along with KPIs.
  
  
• Provide ample communication resources to remote employees. Whether you offer your employees a fully remote workplace or a hybrid model with time spent on site as well as at home, communication and collaboration are vital, so offer plenty of innovative ways to promote the efforts. 

Online tools such as Slack, Google Meet and Skype provide remote employees with instant communication. Likewise, cloud-based storage solutions like Dropbox and cloud-based software like Google Docs for word processing and Beautiful.ai for presentation design allow users to seamlessly and instantly collaborate on shared projects and tasks. When one person updates a document, a PowerPoint alternative visual presentation or a shared spreadsheet, every member of the team will see the updated file in real time.