Digital Transformation (DX) is a type of structural corporate transformation that regards the overall culture of the entity through the use of digital technology. Today, digital transformation is among the various factors that must be implemented so that a business can further continue to grow. Within this current era of rapid digital evolution, more and more people are applying technology within their everyday lives so as to make the more convenient. With the help of technology, people are able to shop from the comfort of their homes, work remotely, hold virtual meetings, and so much more.
Today’s technology has been growing increasingly sophisticated, able to offer various conveniences regarding everyday life. This is why business owners are required to implement digital transformation at one level of another, so as to help adapt their businesses to the generally highly digital environment in which modern societies and economies are based upon, resulting in a much more effective and efficient experience. If your business is looking to take on this key form of corporate transformation, then it is also key that everybody has a solid grasp of what to expect.
What is Digital Transformation?
In general, digital transformation (DX) is the practice of changing business processes, customer experiences, and corporate culture with the use of digital technology. So, when doing digital transformation, you will integrate technology into all areas of the business so that it can bring fundamental changes to the way businesses operate and how businesses provide value to customers.
For additional information, digital transformation comes from English, namely Digital Transformation. In English, the word “trans” is often replaced with the letter X so that it is written as a Digital X-formation. That is why Digital Transformation is often referred to as DX.
What is Digitization?
Digitization is the process of converting an information from analog form to digital form. For example, when a company converts all info, data, or notes stored in paper form into a Microsoft Word soft file on a computer.
Digitalization is the process of utilizing digitization to improve business processes. Digitalization can also be defined as the process of using digital technology and digitized data to simplify the way you work. For example, when you upload a Microsoft Word soft file into Google Docs and give access to many people.
Digital transformation is the transformation of business activities and processes, products, or corporate culture that fully utilizes digital technology. The aim of this digital transformation is to increase efficiency as well as find new monetization opportunities. An example of digital transformation is the use of AI-tech chatbots for customer service that can help answer questions from customers. Another example is a retail company that develops an e-commerce website so that it can improve the transaction experience that is easy and pleasant for both the seller and the buyer.
Why Do Businesses Need to Transform in the Digital Age?
Digital transformation can be said as business transformation. Companies will usually make this change because of the urge to make the process to get things done effectively and efficiently for all parties, be it employees or customers.
Digital transformation that is carried out carefully in various aspects within the company can provide various benefits. For example, it can help streamline production processes, expand distribution areas, build a much better workplace for employees, and be able to improve a more satisfying customer experience. All these advantages will certainly bring your business or company to success.
In addition, you need to understand that the digital era has changed consumer behavior. Currently, consumers tend to search for and purchase a product through digital channels such as websites, mobile applications, social media, and many more. On the other hand, every business will continue to compete with each other to win the interest of customers. Therefore, if your current business competitors have started to carry out digital transformation, and you are still managing your business in a conventional way, then your business can be far behind.
Examples of Companies That Have Undergone Digital Transformation
Initially Netflix was a DVD rental company but after going through a long digital transformation process, Netflix has finally become one of the successful companies that offers streaming services for various TV shows, movies, anime and others. One of the reasons why this company is able to continue to grow and succeed is because Netflix can continue to transform and bring innovation and convenience to all of its customers.
The Swedish furniture company IKEA is also one of the companies that can show how DX can transform a conventional company into a more advanced one. By applying technology in various aspects, IKEA is able to make the shopping experience easier and more enjoyable. IKEA has also decided to implement smart home projects such as by providing smart kitchen appliances and lighting. In addition, IKEA also uses Augmented Reality technology in its application which can visualize how the furniture will look when placed in the consumer’s home space.
LEGO bricks are colorful plastic building blocks that can be easily combined to make towers, houses, and more. This toy was developed by the LEGO Group. The company embarked on a massive digital transformation program with the aim of diversifying their revenue streams. Some of the things they do are developing mobile apps, making games, and movies. After going through a long transformation process, LEGO finally managed to get a significant increase in revenue.
4 Key Areas in Digital Transformation
1. Business Process
Digital transformation is carried out in long business processes. Usually, companies will use technologies such as data usage, machine learning, APIs, and others to re-manage business processes so that they run better. By using technology in business processes, you can reduce operating costs, speed up work completion, and improve work quality.
One example of digital transformation in the business process area can be seen when a business applies technology that is able to automate the work of back office tasks to be more streamlined.
2. Business Model
Digital transformation in the business model means that the company makes changes to the business model that is being run. This transformation will open up new ways to develop products, find clients and generate profits. One example of a company that is successful in transforming its business model is Netflix. The company was previously a DVD rental company but has now digitally transformed into a company with streaming services.
Domain transformation occurs when one business successfully expands its services to another area. An example is the digital transformation carried out by the Amazon company. As we know Amazon is one of the largest online retail companies today. Currently, Amazon has a streaming platform called Amazon Prime. In addition, Amazon is also developing Amazon Web Services (AWS) for cloud computing services or infrastructure services. What makes Amazon enter the domain of cloud computing services may be because the company already has the experience and strong ability to support its large retail business.
4. Cultural/ Organizational
The next digital transformation area is the cultural/ organizational or corporate culture area. Broadly speaking, this transformation area describes the process of changing the company’s mindset, processes, and capabilities for the digital world. If your company wants to do a full digital transformation for the long term, then this is an area you should pay attention to.
How to Digitally Transform Your Business?
If you are serious about transforming your business digitally, then you must understand that digital transformation is a complete business transformation in various aspects. So, digital transformation is not just updating the system or using mobile applications.
As explained earlier, this transformation will change the company culture and you have to think about digital concepts for all processes that occur within your company.
All types of businesses, both large and small, can carry out digital transformation. You can start by building a digital culture into your company. Furthermore, you can develop digital concepts in various other aspects of the company.
Broadly speaking, there are several steps you can take to transform your business digitally, namely:
1. Change the company culture
First of all, you must be able to change the company culture to create and grow a digital mindset in every employee. You must continue to actively promote this digital way of working. So, you may have to inform it again and again so that this mindset can be embedded in all employees. One way of working that is widely used by various companies in this digital era is Scrum. With this framework the company can develop a product agilely and more profitably.
2. Focus on customers
You run a business and carry out various marketing strategies to gain customer interest. Therefore, in running a business, you must pay attention to the interests and habits of customers.
Along with the development of technology, today’s customers are increasingly aware of technology. They are also used to experiencing extraordinary user experiences from big businesses such as Google, Facebook, Tokopedia, Shopee, Grab, Gojek, and others. Therefore, your company must understand how customers use products and services both offline and online. Thus, the developed business can be adapted to these habits so as to create a good customer experience. One example of an approach that you can apply in product development is the Design Thinking method. This method is used to solve problems with the main focus on users or customers.
3. Manage your company’s data
In today’s digital era, data is a very valuable asset for companies. Therefore, companies must continuously collect, store, analyze and utilize customer data to create optimal marketing. There are several types of data that you can collect such as purchase history, consumer behavior when shopping, customer activity on social media, and so on.
Currently there are various tools that you can use to collect data. One of them is through the CRM system. By using this system, you can obtain customer data such as profiles, contact info, and various other interesting information
From this data, companies can understand who your customers are and design the right marketing strategy. Thus, you can improve business processes more effectively and efficiently.
4. Find experienced partners
Doing digital transformation is a long process. In addition there are various aspects that you need to pay attention to. Therefore, working with professional partners can help companies to carry out digital transformation successfully.
Professional IT vendors or consultants generally already have in-depth knowledge of digital transformation. Most likely, they also have a lot of experience helping businesses in similar situations.
Thus, the vendor or consultant can assist you in finding the best solution that can be applied in your company. One example of a professional IT consultant who has helped many types of businesses is LOGIQUE Digital Indonesia.