Digital Transformation
Digital technologies are shaping our everyday lives and their development is progressing at high speed. For companies, this presents both opportunities and risks. To be able to seize the opportunities, they need to digitally transform themselves.
What digital transformation really means in companies and how the process can succeed. An overview.
Definition: What Is Digital Transformation?
In a broader sense, digital transformation describes the transformation of society through digital technologies. In a narrower sense, it refers to the process in companies of changing workflows, customer relationships and business models with the help of digital systems, with the goal of increasing the company's success.
For many companies, the challenge of digital transformation is a top topic; they are in the middle of change. According to the Capgemini study Digital Mastery 2020, two-thirds of companies worldwide already have the skills to successfully manage digital transformation. To avoid competitive disadvantages, companies of all sizes need to focus on how they can integrate digital technologies into their processes and business models.
Benefits of Digital Transformations for Companies
Digital transformation in companies is a process that lasts for months and years and requires a high level of human and financial resources. However, the benefits are significant and can be measured quickly if a strategic approach is taken.
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Efficiency is a significant advantage that companies benefit from when they digitally transform their processes. Employees can complete processing operations significantly faster with the right applications. Questions and clarifications are a thing of the past. Automations additionally increase productivity.
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Digital systems with analytics functions reveal correlations and trends that employees would otherwise have missed. Which orders in the field cost the most time? Which products in the online store have a lot of views but no sales? Which customers are most likely to be late with payments?
Skilled data integration is a prerequisite for making analytics from different departments more meaningful and enabling teams to include deeper insights in their strategy.
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Thanks to intelligent digital processes - especially with the use of machine learning, artificial intelligence or automation - employees can generate higher output. Processing time is reduced without the error rate climbing, as the systems guide users step-by-step through processes and perform input checks, for example.
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Digital transformation not only leads to greater value creation in internal processes. Since companies can collect precise data on customers and their usage preferences, they are able to perfectly tailor their services and products to demand. Marketing measures can be segmented and personalized. Customers receive what they consider to be a higher-quality service and more accurate information - they experience a positive customer experience.
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Digital workflows are standardized. If it turns out that a procedure is not efficient, it can be easily adapted with the help of the right software. If companies regularly collect data on market and customer developments, they can also see changes in demand in advance and adjust the next steps of their digital transformation accordingly.
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If processes are smartly transformed digitally, employees have to spend less time on unpleasant administrative and routine activities and can concentrate on creative and value-adding activities. But that's not the only thing that boosts motivation. When companies involve employees in the digital transformation of their business model, new roles emerge and new career options for engaged employees. The attractiveness of the company as an employer also increases.
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The economic interrelationships in global markets are becoming more and more complex. Digital applications with AI capabilities enable executives to make data-based decisions. The applications simulate various future scenarios and ensure that companies make advantageous decisions in less time.
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The gain in efficiency on the one hand and the ability to produce new products in response to identified customer needs on the other strengthen the competitive position of companies. They become more resilient and recover more quickly from crises.
Examples of Digital Transformation in Companies
Digital transformation has many faces: More efficient processes, new products and changed or completely new business models can be the result.
Digital Unit Drives Change
OBO Bettermann, a company for electrical and building installation technology, established its own digital unit several years ago to accelerate the digital transformation within the Group. First, the website was rolled out to all 40 subsidiaries, then a newsletter tool was introduced company-wide, and finally innovative business models were implemented.
From Online Store to Online Marketplace
Customer focus has always played a major role at the Engelhorn fashion house. The company is continuously developing its digital product range. From a simple online store most recently to an online platform where many hundreds of suppliers present their items. Master data management and product data management no longer had to capture data only from Engelhorn itself, but from all partners.
Focus On Customer Needs
At the fischer group, you can find examples of digital transformation in all areas from marketing and product development to customer service. For example, the fastening technology division uses new digital tools in consulting, the construction division visualizes customer building designs via Building Information Modeling (BIM), and internal processes are accelerated via automation.
Challenges of the Digital Transformation
As a rule, the process of digital transformation does not proceed in any company without obstacles, setbacks and resistance. There are many different reasons why the successes of digital transformation are so long in coming.
One essential factor: the human. Few people react with joy when it is revealed to them that the previous usual procedure will not be continued in this way. Employees' working conditions and responsibilities change, and some have to settle into entirely new roles. Managers must help manage these social and psychological aspects of the digital transformation.
In some cases, there is a willingness to innovate in the teams and departments, but management is hesitant to release sufficient budget for supposedly risky projects. This is another way in which companies can block their digital transformation and future success themselves.
Some companies realize that they have let the digital transformation process slide for too long and then rush into it. Pilot projects are launched and innovation departments established without an overarching strategic plan. Often, the IT infrastructure must first be successively modernized so that data and systems are at all capable of supporting new technologies and changed processes show the desired effect.
Why Is Good Data Quality Important for Digital Transformation?
Digital systems are not an end in themselves. Their essential added value is in the data they collect and evaluate.
What are the processing times for picking? Which product categories generate the most sales? Which marketing campaigns generated the most valuable leads? If companies can't trust the data, the answers they get from their applications are worth nothing. Then conclusions and derived actions come to nothing. Data quality is a crucial success factor for digital transformation.
Consulting for Digital Transformation - How Can Parsionate Help?
We see ourselves as a management consultancy for digital transformation. Our focus is on introducing strategic data management in companies or optimizing such management and ensuring first-class quality of the processed data. In this way, we create the prerequisite for our customers to be able to generate valid insights from their data and for further digital transformation measures to be crowned with success.
Whether you want to implement a company-wide data strategy or only want to optimize individual aspects such as master data management, in our strategy consulting we obtain a comprehensive picture of your starting position and accompany you individually so that your company can make even better use of the opportunities of the digital age.
Frequently Asked Questions About Digital Transformation
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The terms digital transformation and digitalization are often used synonymously, but they mean different things. Digitalization refers to the process of converting analog processes 1:1 into digital applications. Digital transformation, on the other hand, examines existing (analog or digital) processes and optimizes them to achieve a desired result with the aid of digital technologies. As a rule, existing processes are not digitized unchanged.
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When a company decides to transform, a comprehensive change process begins. Professional change management is essential for digital transformation and should take all aspects of the change into account: Technology, work processes and organizational culture. It is not enough to introduce new processes and products. If employees do not support the changes, the desired productivity and competitive advantages will not be realized. Therefore, organizational culture should be a pillar of change management from the very beginning.
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Many factors must come together for the digital transformation of companies to succeed. In our view, three factors are essential for success:
- Strategic approach: Only those who approach change processes with a plan will not be discouraged by initial setbacks and will see a worthwhile return on investment from their actions.
- Professional support: Many companies tend to map as much as possible internally. Management wants to save costs. But in digital transformation processes in particular, expertise is not already available in-house for every issue. In most cases, it is worth investing in external experts instead of slowly building up expertise yourself.
- Agility: Not every project and every approach will lead to the desired result. Companies should establish a positive culture of error and remain flexible. Failure is inevitable. In competition, those who learn quickly from mistakes and realign their project or company are ahead.
Accelerate Transformation