“Digital transformation” isn’t just a buzzword anymore.
Some companies treat it as a buzzword and nothing more. They talk about digital transformation without having any real digital transformation initiatives. These are likely the same companies that talk about their “disruptive technologies” that aren’t disrupting anything.
But an increasing number of businesses are recognizing the value proposition of digital transformation. They’re putting meaningful resources into actual digital transformation projects.
We’ve discussed digital transformation at length in this space. If you’re just joining us, we define “digital transformation” as...
the process of organizational change brought about by the use of
digital technologies and business models to improve performance.
It’s not just about taking paper documents and putting them online—it’s about reimagining business processes in a digital world.
Digital transformation isn’t easy. It’s hard enough to improve a business process without developing a digital solution to implement it. But for companies that adopt it early and get it right, digital transformation can provide a competitive advantage by enabling them to deliver products and services faster, with higher quality and lower costs.
The more components of a business process that can be digitally transformed, the better. More companies are adopting a goal of end-to-end digital transformation: Applying digital transformation to all phases of a given business process.
By way of a hypothetical example, consider a well-known business process for manufacturers: the forecast-to-stock (F2S) process.
In this process, the business takes information from demand forecasts and uses it to plan manufacturing activities, such as resource planning, raw material procurement, and production order execution. The “to-stock” part of F2S means the products are not manufactured in response to actual demand; they are manufactured according to anticipated demand and are shipped as the sales orders come in.
The F2S process is quite mature at many manufacturers’ around the world. You might think all the possible efficiency optimizations have already been baked into the process. What’s left to improve?
It turns out there’s quite a bit that digital transformation can do for the F2S process. Here are just a few examples:
F2S is just one example. Many other business processes can be digitally transformed, and some already have been.
Consider on-demand transportation:
For decades, taxis were dispatched by humans. They took phone calls and radioed the requests to taxi drivers, hoping one would be available in the area. Uber and Lyft eliminated both the phone call and the uncertainty of service delivery with a system that directly matched ride requests with available drivers, relying heavily on the geolocation data provided by both riders’ and drivers’ mobile devices. The increased quality of service and reduced costs afforded by this digital transformation have shaken the traditional taxi industry.
Food delivery has also been digitally transformed. By enabling online ordering, order accuracy has increased, and third-party delivery services such as Doordash® and Postmate™ have eliminated the need for restaurants to employ on-staff drivers. (The related costs for vehicles, insurance, and maintenance are also lowered or eliminated.). This digital transformation has been a huge win for all stakeholders.
Digital transformation can drive efficiency and productivity, enabling companies to do more with the same resources. Process and quality monitoring can provide real-time data about a production process and enable staff to nip problems in the bud. Automation can reduce errors while freeing human workers for more creative and innovative activities.
In short, digital transformation is the next step in the evolution of business. Those who embrace digital transformation and do it right will succeed; those who do not may find themselves struggling to compete.
Is your company ready for digital transformation?