What does an effective digital transformation strategy look like?

June 26, 2023

8 Min Read

Most digital transformation projects (between 70% and 95%) fail, according to research by McKinsey.

By far the biggest reason for failure is the lack of an effective digital transformation strategy, with many businesses getting caught up in the hype of going ‘digital first’ with no real plan or idea for what that will look like.

The reality of a digital transformation is that it’s more than simply replacing one type of technology with a better version.

It’s a business-wide structural and mindset shift that’s as much about people as it is about processes and technology.

This is something many businesses struggle with.

Only 4 in 10 businesses that attempt a digital transformation have a business-wide strategy in place, according to a report by Harvey Nash and KPMG.

So, what do you need to do to make a success of digital transformation?

1. Identify the challenge or change you need to make

The journey into digital transformation begins with identifying where changes can be made within your business to make improvements.

If you’ve noticed certain business processes are slower, not as efficient or not as profitable as they could be, this is where to start.

Here are a few examples of things you could consider changing.

Automating manual processes

Tasks like data entry, document management and invoice approvals have historically been manual jobs.

This not only took a long time, but was incredibly monotonous for the employee, and also increased the chances of human error.

Today technology like machine learning, AI and image recognition have automated many of these processes, freeing employees to take on tasks that are more complex and provide more value for the company.

Automated workflows now sign invoices for approval, documents can be managed and stored instantly and data can be transferred from one system to another – accurately – with no delays or input errors.

Technology is also making this data more usuable. Data can now be analysed at scale within seconds and patterns instantly recognised and presented to decision makers.

Moving to the Cloud

Before the cloud, information existed in silos.

Important documents were stored on individual desktops, or within filing cabinets in one department.

Collaboration was difficult, with projects relying on one person to carry out a task and save updates before the next person could jump in.

Failure to manage this properly resulted in poor version control and wasted hours going back to find the latest updates or seeing who worked on a project last.

Business wasn’t particularly cost-effective either, with huge amounts of hardware and individual pieces of software (which often overlapped on some features) required to complete work.

Moving to the cloud changed it all.

With cloud technology teams can collaborate on projects from anywhere, and work on the same things at the same time.

Information was ‘set free’ and became accessible to those who needed it without complicated version control processes or sign offs.

Automatic audit trails provided key information on updates and who had accessed or worked on a document last, saving hours in lost productivity.

And safety became built-in as standard, with data and documents stored in a secure environment.

As said in Technology Advice:

“Cloud computing is cost-effective because costs usually directed at purchasing hardware and software are immediately eliminated. Operational, maintenance and upgrade costs are all expenses that disappear.”

Moving to VOIP

In 2025, the UK’s telecoms infrastructure will go through its biggest transformation in more than 50 years.

This is when the existing PSTN/ISDN lines are switched off, to be replaced by an internet based phone system.

Voice Over Internet Protocol (VoIP) will truly transform business communication by switching everything online and putting the entire suite of comms channels (voice, text, video and data) into one platform.

Hosted in the ccloud and reliant on a broadband connection, it will make it possible for business numbers to be accessed on any connected phone, allowing employees to work from anywhere while still having access to their essential business systems.

Communicate the plan effectively with employees

“When there is a lack of effective, consistent communication, digital transformation efforts often fail or do not garner the adoption IT hopes,” is how John Roman, CIO at The Bonadio Group describes the problem with communication and digital transformation projects.

And he’s right.

One of the main reasons digital transformations fail is a lack of communication between the C-Suite, IT and the end user.

There will always be some level of resistance when it comes to change in the workplace, especially when it comes to technology.

Employees don’t view digital change with the same optimism as managers. To them it’s just another system they have to learn. It may even be something they’re suspicious of if they worry it could one day replace them.

Communicating the value of the digital transformation is key here. Employees need to understand why the changes are being made and what the benefits will be to them as it relates to how they work and the type of things they’ll be working on.

This is an issue more business leaders are recognising.

Nearly three quarters of business leaders say a supportive workforce is essential in supporting a digital transformation strategy, according to an Industry Week study.

Training

Bringing in technology is only one step of the digital transformation journey. Getting employees to buy-in to the change and learn how to use the new technology to its full potential is vital.

Raju Seetharaman, SVP of IT and Transformation at Legal & General America, summed it up well when he said stakeholders are used to how they work and will be resistant to change.

A simple solution is to provide employees with an early version of a new technology or system, provide training, and ask for feedback.

Making employees feel like a part of the transformation, and going through the process of upskilling them during the rollout increases the chances of a successful digital transformation, compared to simply dumping new technology on them and expecting them to work it out.

This doesn’t just create resentment within the workplace, it means any digital transformation is destined to fail because you’ll never experience the true benefits.

Grow engagement within the business through “brand ambassadors”

Whether it’s intentional or a skill issue, not every employee will take to digital transformation technologies like a duck to water. It could take time and patience to fully bring them on board.

That’s why beginning with a small group of employees, rather than the entire enterprise, could be a smart strategy.

Treat these employees as your “brand ambassadors” – the ones who will learn everything there is to know about the new technology (how it works, its effectiveness) so they can help pass that information along to others as the technology becomes more widespread in your business.

An example of this could be members of your sales team. If they begin using a new system which helps them earn more leads and sales, the results will speak for themselves.

This will encourage others to dive into new systems and ways of working, in the hopes they’ll see the same success. This works especially well if there are incentives, like commission, involved.

Organisations with highly engaged employees are 21% more profitable than those without, according to a Gallup study.

Keeping your employees engaged by giving them something to strive for, like the scenario described above, could see your profits rise considerably.

Adopt your new tools and create “owners”

Like any new initiative, it makes sense to have a select few leaders oversee the rollout or even a single person makes sense.

You should do this with your digital transformation. Call these people your “owners” – they will be the ones responsible for handling any bottlenecks and making sure the new systems roll out as you want.

Choose someone reliable and hard-working, someone who is a respected member of the team with good relationships among staff.

You need to be clear about who the owners are at the beginning. Otherwise, there will be no markers as to who is responsible as things move forward.

77% of businesses report that leadership is lacking, according to statistics featured on Zippia.

Without proper leadership, no new business initiative can hope to reach the heights it should. Don’t fall into this trap in your digital transformation.

Make sure you follow through on your digital transformation

56% of CEOs say digital improvements have led to increased revenue, according to Gartner.

Following a clear and concise digital transformation strategy like the one outlined above will give you the best shot at being one of the few businesses that can rise above those who falter in their digital transformation efforts.