Digital Transformation – 5 Key Benefits and Trends in 2023
Why Are Businesses Experiencing a Digital Transformation: 5 Key Benefits and Trends to Look Out for in 2023
The guide to why data-driven digital transformations are the only way for businesses to stay relevant and competitive today.
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Content Topics:
What is Digital Business Transformation?
The Importance of Digital Transformation in Business
Why Businesses Need to Embrace Digital Transformation Today
What Digital Transformation Means for Businesses – 5 Key Benefits
Digital Transformation Trends to Look Out for in 2023 and Beyond
Key Elements of a Successful Digital Transformation Strategy
Digital Transformation – Choosing the Right Partner
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Only 11% of executives believe that their business models will be economically viable through 2023. So it’s no surprise that 64% agree that they need to build new digital business models to change that.
There’s no doubt that data-driven digital transformations are the key to making this possible.
So, let’s explore exactly what digital business transformation means and some of the biggest trends that are revolutionizing how we do business in every industry:
- What is Digital Business Transformation?
- The Importance of Digital Transformation in Business
- Why Businesses Need to Embrace Digital Transformation Today
- What Digital Transformation Means for Businesses – 5 Key Benefits
- Digital Transformation Trends to Look Out for in 2022 and Beyond
- Key Elements of a Successful Digital Transformation Strategy
- Digital Transformation – Choosing the Right Partner
What is Digital Business Transformation?
Digital Transformation is a fundamental shift to a sustainable, digital-based business model that enhances the capabilities of a business. The transformation can create new revenue opportunities and impact how the company delivered value to its customers.
Delivering a strong end-to-end customer journey is crucial to success for any business. Hence, optimizing the customer experience is a core driver of digital transformation.
Digitization, Digitalization, and Digital Transformation
Whilst digitization and digitalization are often mistakenly used interchangeably, they’re very different processes at different stages on the digital journey of a business.
Digitization is the process of making analog data digital. This optimizes internal processes by improving workflows and efficiency. Digitalization takes this a step further by leveraging digital technologies and data to further improve existing processes and reduce operational costs.
Digital transformation refers to the use of this digitalization to create a fundamental shift in the culture and business model of a company. This not only improves current processes but generates new ones.
Digital transformation takes on a different form in every organization to include initiatives such as:
- Retraining and upskilling employees
- Integrating technologies like artificial intelligence to automate certain processes
- IT upgrades such as cloud computing
- Technology that improves the customer experience online or in physical stores
- Shifting to a remote work environment
The Importance of Digital Transformation in Business
Time and again new competitors have succeeded in outperforming incumbent firms by embracing digital transformations that gave them the competitive edge. Embracing their own digital transformation is the best way for existing companies to maintain their position in their respective markets.
In fact, 51% of executives view differentiating themselves from competitors as their core reason for pursuing their digital strategy.
Examples of 3 Companies That Just Got it Right
Starbucks
Starbucks has successfully used data-driven strategies to become the 3rd largest restaurant chain in the world. The most notable of these strategies is the implementation of their Deep Brew AI-based tool that predicts the best new store locations, and potential revenue growth from those locations.
They also drive personalization and menu innovation through their loyalty programs, as well as data-driven in-store improvements like upgrading their machines to speed up service time. All of these initiatives are part of their customer-focused digital transformation strategy that has driven huge business growth over recent years.
Disney
Disney’s digital transformation has occurred across many verticals of the business. Seeing an opportunity in the online streaming market, Disney launched Disney+ in November 2019. The platform has since amassed 118 million subscribers in 2 years.
They have also introduced new technologies in their theme parks to improve the physical experience of their visitors. Streamlined cashless payments in parks and personalized itineraries are both parts of their ongoing digital strategy. Whilst a partnership with Snapchat has also led to the launch of exclusive augmented reality ‘lenses’ for park visitors.
Burberry
In the case of Burberry, their transformation allowed them to reach new markets and reimagine their brand image.
At the core was a focused marketing strategy on millennials through social media and digital advertising. They also enhanced the in-store customer experience by retraining staff to use new technologies. Whilst also connecting their employees with a new internal chat platform.
Why Businesses Need to Embrace Digital Transformation Today
The rate at which new technologies are appearing on the market has increased dramatically in recent years. Progress in fields such as AI, robotics, and big data offers huge opportunities for digital innovation.
99% of organizations report actively investing in big data and AI in some way.
Embracing digital transformation is crucial for organizations to remain agile, innovative, and competitive.
How the COVID-19 Pandemic Has Accelerated Digital Transformation
The COVID-19 pandemic was the catalyst for digital transformation across every industry.
Many organizations were already on a digitalization path pre-pandemic. But now, the necessary rapid adoption of new technologies has accelerated digital transformation by several years.
67% of companies in 2020 reported speeding up their digital transformation strategy in response to the pandemic.
Businesses had to adopt a digital approach to connecting with their workforce and customers. Platforms such as Teams and Zoom allowed colleagues to connect in virtual meetings. Customer service moved online for the most part.
Even as employees return to work, many companies are adopting a hybrid of office and home working. So, the digital infrastructure that facilitates this is now crucial to maintaining this new model.
With many changes to ways of working here to stay, this acceleration in digital investment is set to remain in the coming years.
What Digital Transformation Means for Businesses – 5 Key Benefits
- Improved Customer Experience
- Access to Live Analytics Data
- Collaboration Between Departments
- Increased Efficiency and Productivity
- Improved Innovation and Resilience to Rapid Change
Improved Customer Experience
Nowadays, consumers often base their opinion of a company on their customer service and the quality of digital interactions.
Revenues for businesses that prioritize customer service are reported to rise 4-8% above their market average.
So it’s no surprise that a customer-centric digital strategy can bring about huge returns. With data-driven decisions creating smarter sales interactions and more personalized service.
The result is a more loyal customer base with a greater lifetime value.
Access to Live Analytics Data
Effectively making ongoing process and product improvements can only arise from access to relevant data.
Live analytics drive informed strategic decision-making in multiple business functions from marketing and sales to manufacturing and quality control. For example, targeted marketing campaigns rely on digital technologies to process and segment customer data.
Collaboration Between Departments
Powerful digital transformation strategies focus on creating a digital ecosystem that standardizes data sharing across the organization. This breaks down data silos and fosters a culture of cross-functional collaboration.
The resulting knowledge sharing between teams leads to improved capabilities and satisfaction for employees in the workplace.
Increased Efficiency and Productivity
Process automation, either digital or robotic, significantly improves efficiency. Not only are tasks executed faster by limiting manual intervention but errors are minimized, workflows become more streamlined, and operational costs decrease.
In fact, 78% of business leaders agree that automation improves productivity for everyone involved.
This productivity boost means employees are free to focus on more fulfilling and value-adding tasks and create opportunities for new functionalities as well.
Improved Innovation and Resilience to Rapid Change
Digital innovation is the foundation of maintaining competitiveness, being responsive to rapid change, and creating new revenue streams in the process.
The impact of the COVID-19 pandemic is a prime example of this. Although many executives already recognized the importance of this resilience pre-pandemic, its value has become even more evident.
Digital Transformation Trends to Look Out for in 2023 and Beyond
Digital transformation is inevitable across all industries. Whether that be through existing market leaders acknowledging that digital-focused business models are their most sustainable method of growth, or by newcomers disrupting the market.
Here are 5 key trends that are gaining traction and we expect will be at the forefront of transformation objectives over the coming years:
- A Shift to Online Business Models
- Building Resilient Supply Chains
- Adoption of Cloud Services
- Artificial Intelligence and Automation
- Society 5.0
A Shift to Online Business Models
Since 2020 in particular, sustainable online business models have become more crucial than ever.
We saw department stores all over the world closing throughout 2021 – for example, Sears and Kmart in the US both closed their doors. An inability for such business models to combat the reduction of in-person shopping during the pandemic led to massive losses and inevitable store closures.
For those businesses that have adapted, a cross-industry shift to digitized products and services has accelerated by several years across the world.
This shift to digital-focused revenue streams is only set to continue into 2023 and beyond.
Building Resilient Supply Chains
Following the significant supply chain disruption caused by the pandemic, companies are doubling down on investments in digital infrastructure to help future proof their supply chains.
Efficiency and cost-effectiveness were at the center of supply chain strategies. However, companies are now recognizing that resilience to supply chain disruption and reducing operational risk are key factors that were being missed.
Many companies are digitally transforming their supply chains to streamline processes, better understand customer demand and support every aspect of the process.
Adoption of Cloud Services
Although not a new concept by any means, the market has seen massive growth in recent years – valued at $380 billion in 2021 with an expected $1,614 billion evaluation by 2030.
Increasing expectations for employers to provide flexible remote working capabilities has put an emphasis on cloud technology that supports this. Solutions that offer these remote working capabilities and the cyber security required to enable it securely are becoming essential for businesses across industries.
Artificial Intelligence and Automation
Artificial intelligence is becoming integral to digital transformations and new use cases for AI will continue to expand as companies realize the power it can hold for automation and problem-solving at scale.
Society 5.0
Society 5.0 is focused on integrating the physical and digital space through digital innovation that balances economic advancement and resolving societal problems. This Japanese initiative aims to fully embed advanced technologies into every corner of society, bringing about a digital transformation across their whole economy.
Although still in relatively early stages, this concept is a trend to watch over the coming years.
Key Elements of a Successful Digital Transformation Strategy
70% of transformations fail, not due to a lack of technology but due to strategies that don’t account for all of the factors.
So what are the other key elements to a successful digital transformation?
A Well Defined Digital Strategy and End Goals
Digital initiatives without clear direction and end goals are a guaranteed way to waste time and resources. A well-defined digital strategy will minimize risks and drive the direction of the initiatives.
Yet, only 30% of businesses have a well-articulated data strategy for their company.
To fully realize digital transformations, a whole company strategic approach needs to be taken into account for the requirements of, and impacts on, every aspect of the business.
But the strategy doesn’t end upon execution.
For continuous improvement and optimization, the strategy must include ongoing measures of success beyond the implementation phase.
Digital Infrastructure
Implementing the right tools and technologies is of course crucial to a successful digital transformation.
Often the main focus in any digital transformation, building integrated systems that remove data silos and increase flexibility is the foundation of executing the strategy successfully.
Upfront investment in the right infrastructure results in long-run cost benefits and greater ROI on digital initiatives.
Customer Service and Engagement
At the center of any company initiative or investment should ultimately be the goal to better meet customer needs. Customer data should not be ignored, but used in context to sculpt digital initiatives. This approach better drives the purpose and direction of strategies.
Company Culture
Transformation success ultimately depends on employee adoption and cooperation.
Culture is identified by 92% of leading companies as the biggest hurdle to becoming data-driven organizations.
The necessary cultural shift should be woven into every element of the implementation strategy. From educating employees on the benefits of the new approach, to providing thorough training for those whose duties are impacted, employee adoption is a core factor in any transformation.
Undoubtedly, an approach that takes into account the whole company ecosystem, as well as an awareness of upcoming trends, is ultimately the most effective way of ensuring success and resilience in this constantly changing business environment.
Digital Transformation – Choosing The Right Partner
Further disruptive changes are inevitable across all industries as a digital-first economy becomes the new normal. As the ideation and adoption of new technologies accelerates, established companies and newcomers alike must be on board in order to maintain sustainable, long-term growth.
That’s why at RediMinds, we combine our knowledge of digital engineering and artificial intelligence to design data-driven innovative solutions for our clients.
Visit our digital engineering solutions page to find out more or talk to one of our experts to start your transformation journey.
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