Digital transformation (DX) is showing no signs of slowing down. According to IDC, spending on DX will hit nearly $2 trillion in 2022. Indeed, DX spending is expected to steadily expand throughout 2017-2022 forecast period, achieving a five-year compound annual growth rate of 16.7 per cent. However, it’s becoming increasingly apparent that a large proportion of the money spent on digital transformation is wasted on initiatives that often do not succeed.
In fact, IDC previously predicted that 70 per cent of digital transformation initiatives will fail by 2018. As such, companies must identify the warning signs of a pending DX defeat – the alternative is not just wasted resources, but the difference between success and failure. There are a number of considerations that businesses must consider in their digital transformation journey.
Digital transformation is continuous as change is never-ending
Technology’s forward progress is never-ending. Electronic typewriters led to word processors, which led to office productivity suites, web-and cloud-based office tools, and the live integration of customer relationship management (CRM) data into dynamic documents. In a few years, new advancements will pop up and companies will clamour to take advantage of those newer, faster, easier productivity-enhancing benefits.
On the one hand, many companies today are doubling down on their DX investment, which is why the aforementioned growth rate is so high. This is not least because they recognise the need to constantly improve processes, advance workstyles and increase productivity. On the other hand, a recent Forrester study found that 21 per cent of firms say their DX is done, while another 22 per cent say they are just investigating starting or not transforming at all. What this actually means is that there is no real threat from the 43 per cent of competitors that said they are truly ‘done’. This is because true digital transformation is never done.
The key takeaway here is that digital transformation is a continuous process, not only because new technologies and approaches will constantly appear, but also because businesses, markets and competitors will continuously change as well. It is critical that enterprises constantly re-evaluate, adjust and take advantage of new opportunities.
For businesses that installed a digital solution a decade ago, the chances are it is light years behind what’s considered common today. It’s likely been replaced by cloud computing, Artificial Intelligence (AI), Internet of Things (IoT), augmented reality, quantum computing, 3D printing and more. While businesses don’t need to be on the bleeding-edge of technology to stay relevant and competitive, they should constantly be evaluating new DX technologies and looking for potential opportunities.
Business strategies and techniques are constantly advancing as well. Consider how email transformed marketing, then online advertising, then social media, then influencer marketing and then predictive lead scoring. In the early 2000s, solution selling was all the rage, and it probably sucked up billions of pounds in resources as companies changed their sales techniques. In other words, the only constant in business is change and part of this change is realising that DX isn’t a single project with a start and an end date.
Smart companies are not treating DX as a side project for IT – it’s a dedicated function. According to IDC, 40 per cent of companies have a fully staffed digital leadership team. Leaders know that DX benefits have a multiplying effect, where the real value comes from sharing data across solutions, enabling automation across functions and making sure a customer has a great experience as they’re handed-off from marketing to sales to services to support. That value can only be seen from a strategic, cross-functional perspective.
Put simply, businesses are undoubtedly different than they were a decade ago. While a business might be targeting the same sectors and have the same products and differentiation, how it collects data and the tools it uses to operate the business have changed. As such, DX strategies have to change as well – and much of that comes from leveraging the value of sharing data across a company’s various systems and solutions.
Companies focus on process and efficiency whereas a true DX project should go a level deeper
Once the process has been transformed and businesses are looking through their internal resources, they must consider the final stage to the process. What are you going to do with the assets at the other end? Businesses cannot leave documents to remain static, they must leverage solutions that can get more from their contracts, invoices and more.
A common problem for most companies is that their data is often locked in documents, such as employee, customer and supplier contracts, limiting the insight it can provide and therefore hindering the benefits of digital transformation. Indeed, business documents may be digital, but most of the data within those documents is not and therefore is uncontrolled, created from scratch and essentially disconnected from the huge amount of valuable data stored within CRM systems. This disconnects companies to everyone in their ecosystem, resulting in poor management information which can inhibit growth. Businesses therefore need to be prioritising digital document transformation (DDX), which will drive insight, make better decisions and energise growth. By having the ability to connect data in documents, businesses will make it possible to embark on the next phase of transformation, which is where they will get results.
It is important to know your data and use it to your advantage in your solutions. Fifty per cent of customers surveyed by Fortune said Artificial intelligence (AI) is a key competitive edge for innovative businesses. Businessman Brian Krzanich says AI can assemble and reason through large amounts of data and draw conclusions from it that humans could never achieve. He says in the near future, companies that use AI to make sense of their vast stores of data have a clear competitive edge over those that don't.
Competitors are hot on the heels
When it comes to competition, one misstep can make or break any deal, or quarter. When companies transform digitally, they are able to better understand their own business and which levers to pull to make improvements or avoid disasters. Those who view DX as a competitive advantage know the value in collecting, analysing and sharing the data involved in all aspects of business. Indeed, tracking something as simple as the time to review a sales contract can unearth process hurdles, or outright roadblocks, that could result in customers finding you difficult to work with or even lost deals. DX provides the tools to find and address problems, such as this, and to accelerate all aspects of business, while also eliminating errors and streamlining processes.
According to Harvard Business School, ‘digital leaders’ have higher gross margins, higher earnings and higher net incomes than the laggards. In addition, they spend more on IT than their counterparts – but only slightly. That means they are spending smarter and more strategically on DX, by focusing on more bang for the buck, and doing so in areas that will make a bigger impact. Researchers found that leaders are two-and-a-half times more likely to harness real-time data and analytics to deliver tailored customer experiences and are also two-and-a-half times more likely to use analytics to prescribe business actions that limit customer turnover.
What’s more, DX leaders are emphasising data, CRM, the customer experience and time-to-market, among other things. This focus on “front of house” and customers is accelerating sales and revenue attainment, which translates into more deals won, more customers retained and more customers stolen from the competition. Nothing hits all of these areas more than the sales process, which underscores the need to make sales easier for your reps and your customers. Think digital signatures, faster contract negotiations, an easier sales process and more personalised and targeted sales efforts.
Continue your momentum
Ultimately, DX is a process that has to be built around people, processes and solutions. However, most of all, it must be built around your customers. Many companies are looking towards the future with DX, but in the process, they’re assuming that the DX initiatives they deployed yesterday allow them to check a box. In reality, no DX box is ever checked. Businesses shouldn’t ignore the proven advances that have taken place in the past decade and how their current systems, processes and solutions could benefit from them. And, if a company is well on its way on its DX journey and looking for the next step, consider the most valuable resource of today’s world: data. How does your business treat its data? Do you have true access to it? Is it locked away in documents and contracts? Do you gain true insight into your business by leveraging your data?
Matt Tuson, SVP and MD EMEA, Conga