Digital Transformation: What It Really Is, and Why Your Business Really Needs It
According to a 2020 McKinsey survey, only 11% of business executives surveyed believe that their current business model will be economically viable by 2023—just two years! Sixty-four percent of executives agree, they must build a new “digital business” if they hope to compete in the new world order.
To me, the question of “Do I need digital transformation?” is like asking, “Do I need a cell phone?” It has become moot. Of course you need a cell phone. You also need digital transformation. So, let’s move beyond the “easy” question and get to the important stuff.
What really is digital transformation?
I’m not sure digital transformation been defined in a way that makes sense to those outside of the technology industry. Put simply, digital transformation is a complete rethinking about the way your business uses YOUR PEOPLE (first and foremost), the processes you have in place, the initiatives you undertake, the strategies you employ, and the technology you use in order to manage or even completely rethink the business model and go-to-market that defines you. In other words, digital transformation is a big deal.
It is not a thing. It is certainly not a one-time event. If you take the word “digital” out of the title, it is ultimately about transforming your business.
One thing I feel compelled to state, right at the beginning, is that the COVID-19 pandemic did not cause any of this. But you would be very mistaken if you assume it did not accelerate everything. In fact, based on surveys and studies by Mackenzie, IDC, Gartner and others, the global pandemic has accelerated the need for business transformation by up to seven years. The sense of urgency is incredible, and so is the need to understand the impact of digitally transforming your company.
It doesn’t really matter what your company does, digital transformation is probably required. For example, major retailers had to retool their strategies to allow for “curbside pickup”. Distributor supply chains were decimated. Many distributors found that they had to sell directly to the consumer (eCommerce), and they had to manage just-in-time inventory or even direct from manufacturer to consumer. Manufacturers were hit hard because unless they were deemed essential, many had to shut down facilities or work with skeleton crews. And everyone is finding it almost impossible to find new employees to replace those that are not coming back. The list goes on and on.
When you look at ways of quickly, effectively, and profitably changing your entire go-to-market strategy, you can see just how pervasive and complex all of this becomes. And you can see why technology (the “digital” in digital transformation) is a key component.
Before we discuss the “how”, let’s also make sure we are clear on the “what”. Digital transformation is not one product or solution. It is not one event. It is not one strategy. It is an on-going process that will, for all intents and purposes, become part of your on-going strategy and investments forever. Acumatica CEO Jon Roskill discusses this very thing in Digital Transformation Doesn’t End at Go-Live. “[A] real digital transformation is part-and-parcel of the business; it doesn’t stop with setting the business and its processes on top of the software and moving up a level. It’s being able to grab opportunities as they present themselves because of digital resiliency and business agility. And this resiliency and agility continue to manifest throughout the digital transformation journey.”
Future proofing with digital transformation
Again, remove the “digital” and you are left with transformation, which is not a single instance. Digital transformation is equivalent to “business resilience”. Or put another way, digital transformation helps you become future proof. This is how you protect yourself from the next “event”—the next pandemic, natural disaster, or other unforeseen event. What the pandemic taught us is this: It is our responsibility to prepare for the next unforeseen event.
This may be the single most important lesson learned in 2020 and beyond. This is something that will be taught in MBA programs going forward. How do we protect ourselves from things we could never have foreseen?
This is where the concept and strategy of “moving to the cloud” comes in. By now everyone has heard of the “cloud”. You may know it as “software-as-a-service”, or a dozen other acronyms. The whole idea is always being available. Always being “up”. The cloud allows your company to deliver a stellar experience to your customers, prospective customers, employees, and strategic partners no matter where they are, no matter what device they are using, no matter what time zone they are in.
Your data can exist anywhere, and your people can be empowered to use that information to make essential decisions when they need to. You don’t need huge staffs managing complex internal environments. All you need is a browser. You can deliver a personalized experience to anyone with the authorization to gain access to your systems. They see what they need when they need it. They can make decisions immediately. They can service themselves. They can check the status, make a payment, and obtain the content and information they need to purchase from you—not the competitor.
Designing a digital transformation strategy
We have talked about what digital transformation is and what it represents. Now the question is, How do you come up with a digital transformation strategy?
First, you need to find yourself a true partner or a trusted business advisor. This is someone that can look at your business in its entirety. Not just an ERP publisher but a true value-added partner. Someone that can work with your cloud ERP solution, your infrastructure, your integration needs, and your key strategic partnerships. In short, you need someone that can focus on the entire journey, not just one aspect or component of it.
Secondly, you need a partner that represents a truly open solution, one that is built from the start to be delivered in the cloud. Your goals are really pretty simple here:
- You need to become a truly connected business. Your people, customers, and key partners need access to the information that allows them to make decisions in your favor immediately. The information must be available, accurate, and constantly updated.
- You need to be able to rapidly integrate to the world. Your business probably has the need to communicate with other systems, equipment, resources, software, etc., which means your trusted advisor will need to ensure your cloud environment is not only connected (the easy part), but it must also be integrated (the not-so-easy part). But when you combine always connected with fully integrated, the power of your “competitive advantage” is hard to deny!
- Your cloud-based ERP solution MUST allow for remote collaboration. One of the things that the COVID-19 pandemic clearly demonstrated was that we could go from working in an office to working from home in a matter of hours—not months or even days. Digital transformation means elegant, timely, and accurate communications regardless of where someone physically sits. In addition to working remotely, we also need to be able to work from a mobile device. Again, this has become a requirement, and few business solutions offer an elegant method for accomplishing this.
- As mentioned above, you also need to become digitally resilient. Does your cloud ERP software allow you to quickly, effectively, and profitably change your model? Can you find ways to prosper when others fail? And if you were a company that thrived in the pandemic, can your system manage hyper-growth?
- Finally, a successful digital transformation strategy creates a future-proof platform. No matter what the market throws at you, you are prepared. No matter what natural disaster befalls us, your company is ready. No matter what kind of restrictions are encountered, you are flexible. Being “future-proof” is your responsibility to everyone in your company. They are counting on you to be ready for that next unforeseen reality.
Digital transformation is here to say
Digital transformation is real. It is here. We are in the midst of dealing with it. And more importantly, the need for digital transformation is a part of our business reality. It is not going away based on “herd immunity”. It is now part of the requirements for building a successful business.
Jon dedicated time to the importance of seeing digital transformation as a journey at Acumatica Summit 2021, an amazing event that encouraged Acumatica customers, partners, and developers to come for the community but stay for the digital transformation. During the Day One keynote, he said, “Everybody is talking about digital transformation.”
And they should be. Jon provided a digital transformation roadmap to aid customers on their unique journeys. The roadmap includes Business Process, IT Process, User Engagement, Customer Engagement, and Competitive Differentiation, and you can learn more when you watch the keynote, which is available on demand.
In the meantime, reconcile yourself to—and get excited about—the fact that digital transformation is here to stay.
This blog was originally published by Acumatica on September 9, 2021. See the original post here.