4 Prime Considerations for Digital Transformation Strategy
A fundamental shift is happening in the behaviour of the people. There is a change in how people view and use digital content and applications. As mobile internet charges become less day by day this trend of using mobile applications will only increase. There is a tectonic shift of people into the digital world. All companies will have to respond to this shift. There is a behavioral change observed in the people. Companies will need to have a strategy in place for smooth digital transformation
Digital transformation is aimed at changing the functioning of the whole company. It has the potential to increase sales, increase productivity, change interaction with customers, faster turn around time, etc. As digital transformation has the potential to affect all aspects of the company it must be aligned with overall strategy of the company. Digital transformation strategy should be aligned with corporate, operational, functional and IT strategy. Further digital transformation will also have an effect beyond the company borders. It’s channel partners and vendors will also have to adopt and adapt to this change.
When adopting digital transformation a company has to decide upon the technology. Once the technology is decided, the company has to decide when in the technology life-cycle the company will adopt it, in the early market or wait for the technology to reach mainstream. The company has to decide whether to be visionaries or conservatives. When a technology is adopted very early the company will have first mover advantage. However the company will also face some risks. If the technology fails for some reason or is not scalable across the industry the investment will become a sunk cost. Further the company will also have invest continuously in the technology to maintain competitive advantage as other companies will also begin to adopt the same or similar technologies.
Adopting digital transformation will lead to changes in value created by the company. The value will change across the entire ecosystem. The employees, vendors, channel partners, rival companies, customers, etc will be affected. They will have to adapt to and learn the new technology. The technology competency of the people in the company will have to increase to rise up to the challenge. Often new opportunities arise and companies will have to move quickly to take it.
Digital transformation will also lead to structural and organizational changes. The company will have to consider the impact of digital transformation on itself. If the impact is small new avenues created due to digital transformation can be incorporated within itself. If the impact is significant the company should consider spinning off a new subsidiary. At an organizational level some positions may become redundant or obsolete. The company will have to consider this into account to up-skill or re-position the existing employees.
For digital transformation to happen one of the most important aspects is the company finance. How quickly the transformation can be effected will depend on the financial ability of the company. The size of the company will also determine the cost of such a transformation. Generally small companies will be able to transform more quickly than small companies.For smooth transition the company must select a partner to guide them through all these considerations. In summary a digital transformation company will have to consider technology selection, change in value creation, structural and organizational changes and financial aspects before any digital transformation process.