There are only a few people who haven’t heard of the digital transformation yet. It’s been talked about for over 30 years when companies first started computerizing, lately it has become a buzzword, but the truth remains the same - it is as relevant now as it was in the 1990s and 2000s.
Nowadays the world is changing faster than we can imagine. With the rise of IoT (internet of things), machine learning, artificial intelligence (AI), cloud and blockchain technologies, AR and VR Informational Technologies became a core component of all kinds of businesses, making the need to innovate and transform a necessary part of being competitive in the market.
What is a digital transformation?
To put it simply, digital transformation is a process of implementing and using new and fast-changing digital technology to solve problems and improve business practices. It often relates to the use of cloud computing to reduce hardware, automation to reshape the workplace and integration of technology into all areas of business.
As focused as it may be on the technical side, digital transformation doesn’t leave aside company culture and people, which need to adapt and be open to experimenting in order to successfully incorporate new technology.
Digital transformation fundamentally challenges the way businesses provide value for the customers. Even though it uses access to loads of data, services and new technology, but it is important to remember that people are at the center of it. A customer-centred approach helps to optimize business operations and correct them on the way.
Successful digital transformation, when carried out correctly, allows companies to launch, analyze and adjust digital initiatives that help it adapt to the changing market conditions and better meet customer needs.
The importance of digital transformation
The integration of digital technology with business is termed as digital transformation. Digital technology is rapidly changing the business dynamics and it is requiring companies and organizations to continually evolve according to the changing needs of technology.
Digital transformation is becoming essential and important for all businesses irrespective of their size and nature. Now there is no counter-argument against the significance and inevitability of digital technology.
Transforming customer experience
With the evolution of the latest technology and social media apps, customers look for easy, quick, and valuable solutions to their problems.
The customer's experience is the real purpose of digitalization. So the major focus of digital transformation is to improve the customer experience by using cutting-edge technology.
According to McKinsey, the real factors that improve the customer’s experience in the context of digital transformation are:
- Designing and digitizing customer journeys
- Enhancing the pace and agility in insights
- Achieving customer adoption of digital journeys
- Establishing speed in delivering journey transformations
Improving data-based insights
Digital transformation improves the capability of businesses to track and interpret the information that is collected during digital marketing campaigns and daily operations. Moreover, this information enables organizations to optimize their business strategies for better results.
Expenses and revenues are the two things that reflect how sustainable businesses are. The integrating of data-based insights into the company culture can make huge changes to costs and revenues.
Digital transformation provides an opportunity for unity throughout the employees. To maximize the probability of a successful transformation there needs to be strong communication.
With encouragement, employees can break down age gaps and social divides to engage in conversation and learn together. Solid leadership at this point will improve the digital intelligence of the workforce.
New skills and knowledge
As new technology takes over the demand for specialized skills will also grow and evolve. New technology in the context of digital transformation will require understanding and application of a number of new skills like:
- Augmented Reality
- Machine Learning
- Cloud Computing
- Artificial intelligence
- Growth Hacking
- Data Exploration
We can say that we cannot ignore the significance of digital transformation and businesses need to adopt technology in order to keep themselves competitive otherwise they will be wiped out of the scene. The scope of digital transformation is so vast that it covers all the aspects of our social and economic life so businesses need to develop clear strategies that are reflecting the changing demands of digital technology.
What drives digital transformation?
When we think about the digital transformation we tend to focus on the technological side of it. And it’s happening for a reason - without evolving technology digital transformation simply won’t be possible.
With the rise of AI and machine learning, it’s only a matter of time until we see insights-driven companies taking the lead in the market. The whole concept of IaaS (Insights-As-A-Service) is becoming the next big thing in data analytics and defining the significant advantage for the companies implementing it.
Digital Reality being led by VR and AR has already entered a number of industries to set early adapters apart from the competition. Cloud and blockchain technologies follow closely, becoming the foundation for a number of startups that are aiming to bring new vision to the market.
However, there is another element that drives the change. Above all, it is driven by strategy.
As appealing as AI and other cutting-edge technologies may sound, they cannot be implemented in a company without a precise blueprint that covers planning, deployment, and management. Without a clear plan companies are left with nothing but chaos ruling the process which not only complicates innovation but can also result in significant revenue loss and costs more than it could have gained for the company.
We can’t overlook the power of technology to transform industries and people’s lives, but in terms of digital transformation, it becomes a supporting tool rather than the leading instrument. Digital transformation doesn’t happen from bottom-up, it is dictated by the business goals where technology become the tool to enable growth to reach those goals.
Technology and strategy are two inseparable factors that drive digital transformation. To feed growing consumer expectations, improve user experience, remain competitive in the market and adapt to changing work environments companies need to push for the right balance of both factors.
Digital transformation framework
Like any other process of change, digital transformation requires businesses to map out a clear plan of action that can explain the processes and help every part of the businesses seamlessly integrate new technology or adopt any kind of required change. Failing to have a digital transformation framework may result in complete confusion and drop revenues due to interrupted business operations.
A framework that explains the process of digital transformation within the company is a requisite, rather an option. An MIT Sloan Management Review explains exactly how it helps to keep up with the rapid changes in the digital environment.
The process of digitization is happening faster than most industries can keep up with, which makes the company leaders search for optimal ways to adopt new technologies. It’s not always about doing it faster, but about finding the ultimate solution for your company to enhance growth and simplify the process of change.
The digital transformation process is unique for each and every business out in the market and there is no one-fits-all solution to bringing the latest technology onboard, but without a strategic approach, companies risk not being able to catch up with the fast pace changes and miss out on emerging solutions.
The simple goal of a digital transformation framework is to eliminate chaos bound to the introduction of unfamiliar technologies to daily business practices. It covers everything from the usage of old laptops and legacy data to implementation of cloud technology in the departments that don’t know about it. And the bigger the company is, the more complex this process becomes. An improvisational approach that may work for smaller entities and tech-savvy startups fails before the seasoned business giants.
An effective framework not only provides the whole company with a clear explanation of the processes and the changes to be done as well as the KPIs to measure the performance of new practices and the business goals that it aims to achieve, but it also addresses the role of the employees in the transformational processes and the company culture and how it is being affected by the novelties.
To ensure the success of transformational endeavors, digital transformation framework follows 5 core principles.
- Start with the vision. Learning about what horizons new technology can open up for your business will help you measure the progress and make adjustments to optimize the business process and make the most out of new-generation technology. Without a bigger vision the company would lack the direction for development.
- Build digital customer engagement. Industries change and adapt towards customer’s needs and digital transformation creates new ways to connect and engage customers to drive new business opportunities and meet customer expectations through improving the experience with help from social, cloud, data, and mobile.
- Manage digital security. Growth of the digital space doesn’t only mean positive change for the businesses. The development of new technologies does promotes growth of cybercrime. To ensure cyber security digital platforms opt for flexible and secure solutions to help businesses grow while lowering their security risks through encryption and other security methods.
- Drive insights with data. To make informed decisions, data visualization becomes a priority for the businesses that aim at competitive growth. It helps to better understand and communicate information and creates meaningful and fact-supported insights.
- Choose digital agilityThe agile approach helps to create a competitive advantage in a fast-changing environment, where traditional business models fail due to rigid approach and extended timeframe, during which market requirements may change. Digital agility supports innovation by giving the companies a possibility to adopt real-time changes and be more maneuverable in the face of changes.
You can find different frameworks that serve the same goal - to provide an organisation with a clear strategic plan for digital transformation and an explanation of how to put it into action while minimizing the mess that it can create. Choosing the one that fits your specific business needs is the foundation of successful implementation.
Learning from the experience of other organisations will help to determine the key points to direct your own business, but it is important that the framework addresses your company’s needs first, rather than copying what worked for another business. As it has been said before, all businesses are unique and should approach digital transformation in the way that would benefit them specifically.
What role does software engineering play in digital transformation
When we speak about digital transformation we can’t leave out software engineering as it is the base of all technology known to humankind. It’s duty is to bring the ideas of new-age technology to life and make sure that not only is it functional and can drive growth, but at the same time is meeting ethical standards and maintains positive impact.
Just as software engineering plays a huge role in the world’s current digital transformation, digitization presents challenges (technical and organizational) that threaten the successful execution of successful projects.
Time to Market
The 21st century is a dog-eat-dog world. Companies will do anything to stay ahead of the competition. What this does is enable customers to expect new innovations to be available as soon as possible. The same goes for new features for existing products. This challenge of increasingly reduced time-to-market keeps companies on their toes.
Let’s assume that a company manages to adhere consistently to the strict time-to-market pressures, it still has to plan for changing customer needs. The competition pounces on any opportunity that it sees. Therefore, companies have to produce flexible and agile product models that can take up new functionality or they may fall behind the competition.
In a world where new devices and technologies are launched regularly, software developers and companies have to prepare for relatively new concepts to stay competitive in the market.
With the rapid supply of new technologies come heterogeneous devices. Companies have to standardize the interfaces between completely different technologies
Since the advent of smartphones, software development has shifted most of its focus from functionality to customer experience. This forces companies to keep user-interface in mind at all times when developing consumer applications.
These are the main challenges stopping digital transformation from taking off in full swing. Fortunately, these challenges were exactly what software engineering was designed for.
Solutions to Digital Transformation Challenges
In a nutshell, microservice is a group of little autonomous services that work together. Microservices fixes three of the aforementioned challenges instantly. It reduces time to market because each small service is autonomously designed by separate development teams. Hence, new functionalities can be released without a central restriction.
Supports technology heterogeneity with its use of service interface. That is, different technologies can be used within each microservice. It enables flexibility as each microservice can take up new functionality of its own.
Application Programming Interface (API) is what connects microservices. API is a big deal in software development. Big social media platforms like Google cannot function without an API. The API offers business functionality, gives flexibility to content creation and allows developers to transform new use cases for services.
The ability of a company to drastically reduce the time and effort dedicated to recurring tasks is what determines its success. Companies like Amazon are successful because they continue to deploy new applications that reduce time-to-market.
Most of the time, a digital product (service) will stand out from the competition due to its design. By design, we mean a potential customer’s first impression of a product. And this could go beyond the user interface. A good design will always satisfy the customer’s requirements.
There wouldn’t be a high demand for software developers if all new technologies had the same design and functionality. It is in fact, this heterogeneous technology landscape that motivates companies to adapt their services to new technologies. For any company to undergo full digital transformation, its software engineering team must work and learn new, modern and rapidly changing technologies.