What is the digital transformation?
To begin with, a brief introduction to the abstract concept of digital transformation. What do you think it means? For the majority, this concept simply involves the change from analog processing to digital, such as fax or mail to e-mail. In reality, however, digital transformation is more than can be grasped at a glance.
SAP divides digitization and digital transformation into different levels. The basic meaning of digitization is the change of information and documents from analog to digital form. Here, then, the example of the change from fax or mail to e-mail is fitting. In the broader meaning of digitization, the integration of digital technologies into existing business processes is listed. The final form of digitization is digital transformation. At SAP, this is described as a fundamental rethinking. This rethinking can include customer experiences, business models, and operational processes. Digital transformation involves finding new ways to increase business efficiency and revenue using new technologies, such as IoT (Internet of Things) or blockchain.
Which business areas are affected by the transformation?
Digital process innovation
Digital process innovation refers to the digitization of existing processes and workflows. Analog processes are transferred to the digital environment and represented by digital workflows. This relates, for example, to the transfer of analog forms that were exchanged via fax some time ago to the digital environment, such as e-mail or online portals where the digital forms can be submitted. This transformation involves new interfaces and a structural change for (internal) processes. This changes employees’ areas of responsibility and may necessitate an expansion of their skillset.
Not only internal business processes are affected by digitization, but customer relationships are also changing as a result of increasing digitization. Among other things, this affects the information and usage behavior of customers. The increased use by customers of online stores for shopping or portals for information has led above all to inbound marketing and search engine optimization for strengthening customer relationships coming into the spotlight. Mapping the customer journey and collecting digital data enable new, targeted approaches and provide efficient touchpoints for sales psychology elements within your digital corporate presence. Here, too, digitalization is crystallizing clear advantages and creating business areas for which employees need to develop new skills.
Also affected by digitization is a company’s product range. By offering digital services, companies can position themselves advantageously for the future and expand their product range. The advantage in digital products is availability. E-learning, e-recipes or e-books in general are available immediately and consume fewer resources than the status quo. The ordering and delivery process to the customer requires less time and fewer service providers. This significantly reduces the cycle time of the process. In addition, the separation of location means that a larger circle of potential customers can be reached.
Other opportunities to further develop the company’s offering through digitization occur when integrating digital business models. Whether Spotify, Netflix or Canva – they all have one thing in common. A digital service with different features, from the freemium model or time-limited trial use to payment models with different features – depending on the needs of the customers. This specific segmentation helps to make your product available for different types of use and, as with digital services, it creates the benefits of location independence and a larger customer base.
3 advantages to kick off digital transformation in your business
There are many ways in which digital transformation can play a role in a company, from the efficiency of internal operating processes, to expanding the product range or offering digital services, to improving the quality of customer relationships. You can already extract some benefits in the business areas, but why should you now take the step to implement this structural change of digital transformation in your company?
The digital reformation of analog business processes enables you to significantly reduce costs by accelerating processes. However, the cost reduction is not only reflected in the processing time of digital business processes, but also in various other aspects. These can be, for example, an increase in work productivity, as employees spend less time on organization and coordination and can use their skills for important business tasks that require urgent action on their part. Information can be shared more quickly and without errors, without having to be documented afterwards. Digital processes already inherently imply sustainable documentation of data and favor traceability.
Customer Journey – Improve experience for customers
The documentability and traceability of digital data naturally also relate to the customer journey. As mentioned earlier, the emergence of digital solutions has changed customer behavior and the skills that employees need to have in this area. Today’s digital data makes it possible to track the customer journey from gathering information to making a purchase. For you, that means a big advantage. This allows you to target customers with much less wastage than, for example, public billboard advertising brings with it. Artificial intelligence also enables you to suggest suitable offers to customers, making it easier for them to make a purchase decision. Your customer service can be made more agile and thus qualitatively enhanced for customers. Basically, this means an increase in sales and profits, with resource-saving measures. You can use new technologies to provide your customers with reliable, responsive service.
The third major advantage for you is growth through digital transformation, in the sense of opening up new sources of revenue through new digital services. The expansion of the product range and the securing of competitive advantages through flexible action and rapid adaptation to new events and situations becomes possible with the help of new technologies – just as stores place umbrellas near the cash register in bad weather, you can reactively adapt your offering to the needs of your customers. Development processes can be shortened and the outcome for you is at the maximum principle: Minimum effort with maximum outcome for profit and benefit maximization.
Conclusion on the digital transformation
Digital transformation brings your company an efficiency boost that is absolutely necessary to remain competitive in the future and to be resilient even in crises. However, in practice, such a transformation is a major structural project and a lot of time has to be invested first: Processes are analyzed to identify optimization potential and to align these processes; employees are trained in the use of new technologies and equipped with new skills. In many companies in Germany, it can currently be observed how digitization leads to data silos and interfaces even mean increased organizational effort. This usually results from the quick solution of urgent problems. However, a holistic implementation of digital solutions, the adaptation and standardization of processes and the training of employees is essential for successful digital transformation in order to achieve an increase in efficiency and all of the named benefits to the full extent for your company.
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