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If you haven’t heard, the world you live in is swiftly becoming digital. Digital transformation is taking over industries across the globe and gearing them towards success. The keyword here being “digital transformation.”
Now, not all companies were born after the dawn of the digital age. In fact, many were started even before the internet was invented. And these companies are still going strong, thanks to their foresight to anticipate changes and adapt accordingly. They practically rewrote their business strategies to include digital transformation. And it has paid off handsomely. Digital transformation jobs are also in high demand as more and more companies are going digital.
However, the case isn’t the same for many others. A lot of companies are still hesitant to adopt digital transformation for a good number of reasons. Now, why is that? Read on.
Digital transformation has positive effects on not just companies but industries as a whole. While the pace at which these different industries are changing varies, they are still changing.
Prior to digital transformation, industries such as Pharma, Telecom, and Finance used traditional means to connect with their customers and offer their services. This resulted in a steady, yet slow growth that was not sustainable with changing customer needs. However, once they shifted gears to digital, their growth was a lot more pronounced and made a significant difference to consumers.
The best example of digital transformation making a difference can be seen in the Pharma industry. Traditionally, patients were completely dependent upon the doctor for every small ailment and possessed bulky records of their diagnoses. With digital transformation, hospitals began using mobile applications and software to maintain customer records, which could be retrieved by both the hospital and patient at the touch of a button. This enables patients to access their information whenever they want, from wherever they choose. Rather than carrying around a suitcase of their medical history, they can access all their prior illnesses with a simple app on their mobiles or a web application.
A more millennial example of digital transformation would be Netflix. Before transitioning to streaming services, people used to shop at video rental stores to grab their favourite flick. The introduction of Netflix, Hulu, Amazon Prime, and other streaming services took the concept of renting movies to a whole different level. Now, the latest movies were available to stream on customers’ devices for a small monthly or yearly fee. There was no need to step out of the house at all. Blockbuster, a video rental store based in the United States, retired due to diminishing revenues brought on by the competition from Netflix. Blockbuster did not transition to digital and hence has now almost retired.
These digital transformation examples are just the tip of the iceberg but offer a clear understanding of how digital transformation can revolutionize industries as a whole.
The introduction of technology in these industries has ensured customers experience a truly superior quality of service. It also provides easy access to data that they are looking for. This only goes to prove that digital transformation is a necessary model that can have positive and far-reaching consequences in any industry.
After all this talk, let’s get to actually defining Digital Transformation. What exactly is it?
Digital transformation is the process of integrating digital technology into existing business models in order to create new business strategies and deliver superior customer experiences. Digital transformation compels companies to think beyond traditional methods of doing business, disrupt existing structures, and offer something different to customers.
Digital transformation aims to radically improve business performance by leveraging the power of the digital space.
Digital transformation, as the name suggests, transforms business models by identifying customers, developing market products, forecasting, and basically reinventing the traditional way of conducting business. According to the Altimeter Group, companies that have embraced digital transformation have noticeably higher customer engagement, an increase in market revenue, and an overall improvement in employee morale.
As the world shifts gear into digital, it is obvious that companies that follow through with digital transformation will be at an advantage over companies that do not.
The apprehension of companies to transform their business into digital is not new. But what’s the reason for this? Why are companies reluctant to move on to a sustainable and potentially lucrative platform? There are several reasons. Here’s eight.
Most companies have a defined culture that has been in place since their inception. Employees and management are used to this set way of working, even if it seems mechanical. There is a good reason for these companies to not change. Because the traditional way works for them. And why fix something that isn’t broken, right? What these businesses don’t understand is that the reason companies don’t adapt is that their business model wasn’t built for it.
While any kind of change is daunting for an organization, it is even more so for employees. Digital transformation for a company may mean having to do away with certain resources. And sometimes, these resources mean employees. When a change threatens their position, employees will obviously resist. No one likes to be laid off. Even if there aren’t any layoffs, it could mean drastic changes in compensation, teams, managers, etc. Employees will, therefore, be unwilling to participate in such changes.
With fierce competition from all sides, companies have to innovate to stay relevant in the market. But it often happens that in order to stay relevant, they blindly follow what others are doing at the moment. They have no clear vision for the company and nor are they looking for a major transformation. All they want to do is jump on the bandwagon like their competitors. Short-term goals are the products of a lack of digital strategy. And it’s easier for companies to plan for the next 6 months than the next 6 years.
There has to be someone at the forefront, leading the change and taking charge of the transformation. If not for a single individual, there should be a team of executives who carry forward the vision of digital transformation. This individual or team should be responsible for connecting vendors, employees, investors, and customers with each other across various channels. Many leaders are not receptive of change and are incapable of undertaking digital transformation.
Let’s be honest. Digital transformation is not easy to implement and nor is it cheap. Any change in the organization requires a significant amount of investment. The cost of digital innovation can be quite overwhelming. For small companies, it is even more difficult as their budgets cannot include a major allocation for large-scale transformation. Even if they do invest in digital technologies, the transformation can be inadequate. Then they are better off not having invested in a change at all.
Big data plays a major role in digital transformation. The adage “data is the new oil” is now truer than ever. Data plays a significant role in mapping a customer’s journey with a brand. Using such data effectively can mean the creation of a wealth of strategies that can improve the company’s growth. However, many companies choose to ignore the opportunities big data provide or use it ineffectively. When there is no means to understand the customer’s journey and needs, there is no way to improve their experiences either. This lack of understanding of what customer data can do inhibits companies from going digital.
Digital transformation requires resources such as big data, analytics, cloud technology, IoT, and people well-versed in them. However, 88% of companies surveyed in the Economist Intelligence Unit Digital Evolution Report say that they do not have the resources to drive digital transformation. With digital, the scope of projects keeps changing with the times. Companies need resources that can keep up with these constant changes and adapt quickly. Managing these changes requires a complete makeover from traditional business models, which, as mentioned earlier, companies are reluctant to do.
According to a report from SoftServe, about 55% of companies cited a lack of adequate security was the reason they were unwilling to implement digital technologies. Considering the risks involved in moving from legacy to digital systems, security plays a starring role. Cybersecurity is complex and tricky. Understanding its need and implementing security is one of the top challenges that prevent companies from going digital. The consequences of getting cybersecurity wrong are dire. It can lead to data loss, compromised systems, and a potential loss in customer loyalty and trust. Companies would rather sacrifice digital transformation than their customers.
As you can observe from the list above, it is rarely the lack of technology that stops a business from going digital. The challenges are mostly internal and psychological rather than physical. And thus, one of the greatest challenges to digital transformation is overcoming these hindrances. However, organizations need to really understand the wealth of change digital transformation can bring and implement them to stay afloat in a competitive marketplace.
In this rapidly evolving digital world, the only way businesses can stay relevant is by adapting to a newer order. And this order is nothing but a digital transformation.
HETIC understands the relevance of digital transformation and the potential it has in the Indian arena. By bringing its Digital Transformation course to India, HETIC aims to develop young minds capable of implementing this transformation on a massive scale.
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