If I had a nickel every time I read or heard the words “digital transformation”; well I would be writing this blog from a beach chair far from where I sit now. The term has a certain mystical air and tends to turn people off and create uncertain fear in others. Simple terms like “paperless” do not fully describe it. So just what does digital transformation mean in simple terms? Here is one definition that tries to sum it up in one sentence.
“Digital Transformation is the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers.” (source: https://enterprisersproject.com/what-is-digital-transformation#q1)
But if we were told that replacing our horse and buggy with an automobile would fundamentally change how our businesses operates and delivers goods to their customers this would not answer but create questions about what? and how? Even if we understand the definition of “digital” and “transformation”, we need to know what must change, and how do we do it to “digitally transform”?
Digital – The word “digital” comes from Latin—digitus, finger—and refers to one of the oldest tools for counting. When information is stored, transmitted or forwarded in digital format, it is converted into numbers—at the most basic machine-level as “zeroes and ones.” (Source: https://www.igi-global.com/dictionary/digital-technology/7723)
Transformation – “a complete or major change in someone’s or something’s appearance, form, etc.” (source: https://www.merriam-webster.com/dictionary/transformation)
Transforming from non-digital to digital in simple terms is about…
- Adding machines (computers, or “hardware”) which have enough smarts (software) to get work done that today is done manually
- Inserting these “smart” machines into your business processes so that you efficiently and effectively operate and serve your customers
At a high level the steps generally follow this sequence:
- Document how your business currently operates and serves your customers
- Identify opportunities to
- Speed up operations
- Reduce costs
- Generate new customers
- Increase overall sales, and
- Improve on other strategic KPIs
- Define your desired future state – how you will more efficiently and effectively operate your business and serve your customers
Seems pretty simple right? Well that part is and does not cost a lot of time or money.
So what are the digital parts of this transformation? They are wherever you decide to replace manual effort (done by people), and the associated tools (pen and paper) with technology (hardware and software). The critical part of all this is to ensure you measure success from one end (R&D, shop floor, etc.) to the other (your end customers). From a Six Sigma business process perspective you want to optimize your rolled throughput yield to maximize defect-free products and services to your customers. In plain terms it is transforming your business to make it easy for your customers to get what they want, or need, on their terms.
So digital transformation is not only like trading your horse (manual processes, pen, and paper) in for a modern vehicle but making sure that vehicle gets great mileage, does what your customers want and need, and runs well from start to finish. It does truly transform your business in terms of how it works, how it looks, and even who it serves. The key ingredients of the transformation are digital technology together with process automation. (If you’d like help working through the steps schedule a call with us.)
In this LI post, Phil First (Founder and CEO of HFS) reshares what HFS predicted for digital and automation back in 2016, and how the pandemic has brought digital transformation to the forefront for businesses around the globe.