Growth

Why you need a digital transformation strategy

Sholto Macpherson
Smarter Writer

Sholto Macpherson builds business models and tech stacks for cloud accounting practices on DigitalFirst.com

Sholto Macpherson
Smarter Writer

Sholto Macpherson builds business models and tech stacks for cloud accounting practices on DigitalFirst.com

Smarter finds out how a digital transformation strategy can help businesses thrive.

Success requires a strategy that doesn’t just implement a new program, but transforms how the business operates.

Internet of Things, CRM (customer relationship management), marketing automation, analytics dashboards – the list of digital initiatives seems to swell every month. If you’re not feeling the pressure to roll out a new digital project in your business now, you may soon be.

Hands typing on virtual keyboard

The temptation to rush out and buy technology that checks the box may result in the project failing. If your staff or executive team don’t understand the need for the project or how it will benefit them and the company, your digital project may not succeed. Success requires a strategy that doesn’t just implement a new program, but transforms how the business operates. 

“We talk about suddenly adding digital and it all becomes easier, but there is adoption and all these other things that need to take place for digital to work,” says Gavin Heaton, founder of Disruptor’s Handbook, a strategy and innovation firm based in Sydney. “I talk about the spark of innovation and then the grind of transformation. It’s hard and dirty work.”

A digital transformation strategy may help you in three key areas: to show the business case for the project, understand nuances in your business functions, and help staff embrace change. 

First though, it’s about convincing the board that the project is worthwhile. Boards, as a general rule, tend to have little experience in digital transformation themselves.

We talk about suddenly adding digital and it all becomes easier, but there is adoption and all these other things that need to take place for digital to work

- Gavin Heaton

A report from consultancy firm, Digital Chameleon, identifies three classic objections boards raise to digital projects. They assume digital transformation is only relevant to the IT department and a distraction from “real” goals; that it can be so overwhelmingly ambitious or disruptive it could endanger the future of the company; and that incremental change is less risky and therefore preferred. 

A digital transformation strategy lays out the business case for the project and shows a board how the technology may improve key metrics. A strategy will also help you understand which areas of the business should be tackled first ‑ and how. “Often there’s a gap between the owner or CEO and the capacity of the middle managers to deliver” [on a technology project], Heaton says. 

For example, a CEO may think that if installing a CRM with the sales team increases revenue, a marketing automation tool will have the same impact. However, better marketing will generate more leads and opportunities, not necessarily more revenue.

A strategy will help you understand the nuances in the functions in your business, Heaton says. A targeted strategy may also help generate the highest ROI. Iconic fashion brand Burberry turned to digital transformation to catch up to the competition. It focused on the important issues ‑ improving customer experience and rationalising systems. It wasn’t one project, but a number of self-contained projects that each targeted a specific area for improvement. The strategy carried out by former CEO, Angela Ahrendts, helped turn the brand around – doubling sales and increasing the share price by 250 per cent.

Finally, a digital transformation strategy will ensure staff affected by the change will be willing and able to embrace their new roles. CRMs are a complex technology, businesses often install with too little support for staff. They fail to understand that technology itself doesn’t manage customer relationships, it manages the data in customer relationships. If your staff don’t know how to input the right data, then they won’t get the right information out, Heaton says.

A strategy needs to start with a skills audit. This will show the sorts of skills required to deliver the customer experience or the business benefits from the project. Does your organisation have those skills? If not, should it hire or retrain, and if the latter then who?

The old adage of People, Processes, Tools still applies, Heaton says. “You need the first two to deliver on the third.” 

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