Despite approximately 89% of businesses investing in digital transformation, in practice, they achieve only 31% of expected revenue gains. So, those favoring a "low risk/high reward" strategy are now questioning the worth of enterprise digital transformation. However, digital transformation is still essential for company growth.
When there's a mismatch between expectations and results, the real issue lies in delayed action and a lack of understanding of symptoms. In this article, I will focus on the definition of enterprise digital transformation and highlight 5 signs indicating the need for an upgrade.
What is enterprise digital transformation?
Enterprise digital transformation, while seemingly straightforward, involves more than just integrating digital technology into business processes.
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It’s not a singular solution. Enterprise digital transformation is not a standalone product but an integral part of a strategic, long-term approach that fosters innovation and adapts to changing conditions.
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It’s an ongoing process. Unlike a one-time investment, digital transformation is a continuous, evolving process that involves the consistent adoption of new practices, technologies, and perspectives.
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It normalizes change. Rather than being an anti-change measure, digital transformation encourages enterprises to embrace and standardize change, growing without compromising productivity.
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It goes beyond technology. Digital transformation shifts the mindset of department management, communication, and employee interactions with workplace tools.
**In essence, enterprise digital transformation is a continual and strategic initiative dedicated to integrating digital technology into workflows, enhancing business processes, and providing lasting value to employees.
5 indicators of an enterprise digital transformation
When leaders have to make a decision about their growth path, they seek applications tailored to their requirements. In such situations, the importance of digital transformation is recognized through the assessment of processes within the organization.
1) Increasing expenses associated with legacy systems
If a legacy system continues to meet essential business requirements, it usually remains unchanged, undergoing only minor modifications over time. While this is a good approach for niche and government organizations, businesses in other sectors will face rising maintenance costs and diminishing efficiency.
**Moreover, as a legacy system becomes more cumbersome, it impacts cybersecurity and data safety. The rigidity of the infrastructure and lack of scalability make it challenging to integrate new services or implement the latest data protection measures. In cases like this, it makes sense to invest in legacy application modernization.
2) Rising resistance to change
Around 70% of digital transformation initiatives face challenges due to the limited cooperation or adaptability of enterprise employees. However, it's important to understand that when companies neglect to initiate change, it signals that they overlooked addressing this underlying issue until it reached a critical point.
Many organizations find themselves trapped in a phase of bureaucratic constraints and inflexibility, with departments becoming deeply rooted in established processes and resisting exploration of potential avenues for growth. Failing to identify this pattern results in a mismatch between the leadership's vision and the perceptions of various departments, leading to employee resistance or difficulties in adapting to new tools and services.
3) Weak cross-functional collaboration
A successful enterprise operates cohesively, with all departments working together and exchanging important customer data, financial information, and meaningful insights in a timely manner. While achieving such synergy may encounter occasional challenges, persistent issues arising from poor interdepartmental communication could indicate that the enterprise might benefit from digital assistance.
4) Changing cybersecurity standards
As cyber threats evolve, maintaining robust data security is a constant challenge for large companies. New safety guidelines and security measures emerge in response to these threats, necessitating organizations to adapt and upgrade their technology to align with current cybersecurity standards whenever their existing solutions fall behind.
5) Inefficient change management
Some companies hesitate to begin this process, citing a lack of proper change management as a challenge—how can they integrate new digital solutions when they lack a starting point? What they might not realize is that, in acknowledging the absence of change management, they indicate their business as an excellent candidate for digital transformation.
Main priorities of an enterprise transformation strategy
Now that the core aspects of enterprise digital transformation are clear, let’s see what should be prioritized at the beginning.
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Assessing readiness for transformation. Conduct research to evaluate employees' expectations and experiences with new technologies and measure readiness through communication, feedback, and organizational preparedness.
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Leader vision. Thought leadership significantly influences success. How do leaders envision the roadmap? Can they effectively communicate the journey's value? What knowledge is required?
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Middle management support. Middle managers play a crucial role in collecting feedback and disseminating information. Are they aligned with the transformation goals? Are they engaged? Do they have any questions or suggestions?
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Enterprise's relationship with change. Understanding past transformation provides insights. Did previous changes deliver the expected benefits? Were there any drawbacks? How did the changes impact overall performance?
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Desired impact. Linking the present to the future allows a better understanding of expected results. How will the transformation impact the organization and its employees? What is the envisioned future state? What is the worst-case scenario?