The importance of digital transformation for a business that wants to stay relevant and competitive in its niche can't be brushed aside.
Nearly 80% of organizations surveyed by Accenture are concerned about disruption and competitive threats, specifically the ones posed by digitally enabled market entrants. However, many organizations are still hesitant to transform: 22% of organizations are either just investigating this opportunity or not planning to transform at all, according to Forrester.
Enterprise digital transformation is a challenge not all organizations can handle (or afford, for that matter). It could take months just to come up with the right digital transformation strategy, including the planning of its implementation. As a result, by the time you are ready to get started, your needs and objectives might be completely different due to the fast-paced market environment.
Luckily, there's a way to keep your business up to date with the market requirements without putting its very existence at stake. So, if you are also currently at the crossroads of your digital transformation, then read on.
The dark side of digital transformation
There are dozens of reasons why digital transformation should be a strategic priority: It helps you stay competitive in your niche, improves customer experience and, as a result, increases your revenue while cutting operational costs. The list goes on and on.
Yet, when it comes to enterprise digital transformation, it's not all that simple. There are certain limitations and digital transformation risks that established companies should take into account.
As mentioned above, digital transformation initiatives can take months if not years to implement. Accordingly, it won't help you stay competitive in a fast-paced market. Your agile, tech-savvy competitors, mostly startups, will come up with a solution to meet the audience's needs before you can even draft your digital transformation plan.
Moreover, the process itself is also very unlikely to be completed, even if you have enough time and resources on your hands. This is one of the most common mistakes businesses make: thinking of their digital transformation initiative as a one-off project.
Plus, you can't just keep your business operations on hold for months until you implement the new digital tools to run it. You'll still need to support your old tools and infrastructure along with building the new one. This means more expenses for you and more work for your IT team.
The listed challenges are some of the main reasons why digital transformation fails.
Take the case of Co-operative Bank, for example. This U.K. banking provider set out to transform its operations in 2005, aiming to rebuild the existing systems from the ground up instead of improving, optimizing and adapting them to the current market requirements.
Unsurprisingly, the transformation turned out to be too complex: The organization simply didn't have the capacity to handle such a major initiative. As a result, the project was abandoned in 2013, costing the organization more than £300 million.
So, what are the options for businesses that are not ready to do a 180-degree turn but still want to keep up with the market? The answer is simple: Instead of digital revolution, choose evolution.
What is digital evolution? The benefits and use cases
Instead of revolutionizing your business processes through digital transformation, you use technology to help your organization evolve according to the market requirements/environment and business needs. In other words, you pinpoint a problem and focus on finding the best practical solution to it while running your business as usual.
This means you don't have to throw away all of your current assets and processes to rebuild everything from scratch. Instead, you make incremental changes to improve the efficiency of the existing workflows and adapt them to the changing market requirements without any disruption to the main business processes.
The incremental approach to digital transformation, often referred to as "digital evolution," is a perfect solution for large enterprise organizations. While startups are agile enough to handle the disruptive revolutionary approach (i.e., the "win or die" approach), for most established businesses, the risks of such a strategy will inevitably outweigh the potential benefits.
This digital transformation strategy has a number of long-term benefits:
Speed. If you take the digital evolution approach, first prioritize the areas that need improvement and focus on initiatives that are strategically more important. As a result, you reduce your time to market and deploy the changes faster, as compared with an end-to-end transformation.
Cost. With the enterprise digital evolution, you can choose to address the most urgent needs and focus on the improvements that will compensate quickly. As a result, you can see immediate ROI. This approach also allows you to keep your digital transformation budget in check and better manage your expenses.
Low risk. As mentioned above, digital evolution doesn't impact or disrupt your ongoing business operations. It goes in parallel with them and is relatively risk-free compared to the disruptive revolutionary approach. That is why this approach is preferable for established companies rather than startups.
Flexibility. With the evolution approach, you can set clear short-term objectives and iterate your way to the transformation later on. This helps you stay in full control over your budget and timelines during the implementation phase and adjust your strategy if your objectives or immediate business needs change.
The keys to digital transformation success
Digital transformation might seem like a Herculean task, but it doesn't have to be that difficult or risky. It all depends on how you decide to approach the task.
So, if you want to cut the risks of your digital transformation, there are two things you should consider:
Choose the right approach to your digital transformation. Once you break down the larger process into smaller, realistic milestones and move one step at a time – i.e., choose evolution instead of revolution – it will be easier to manage the process and achieve your long-term goals.
Make sure you have the right skills in place for your transformation. You can either source the required talent in-house or partner with a technology provider that has relevant expertise.
There's one more reason to choose a digital transformation consulting route: An experienced tech partner can help you prioritize the goals and create a solid roadmap for your transformation (as well as take charge of its implementation). As a result, professional consulting can be a fast, affordable, low-risk way to get started with your digital transformation and to help you lay a solid foundation for its future success.