The MIT Centre for Digital Business describes digital transformation as “the use of technology to radically improve performance or reach of enterprises.”
The emphasis here is on technology, but it is important to remember that technology is the enabler for change and that the driver for this change is the real focus of digital transformation. That driver is customer experience.
Consumers now expect a superlative service, faster and cheaper. Digital has changed their expectations in a 24/7 world. The term “death by digital disruption” has been used to illustrate how companies like Kodak who failed to evolve their business models have found it increasingly difficult to grow in a space they once dominated as they’re being overtaken by competitors who embraced digital transformation much more readily.
So it is fundamental that businesses seek to transform their business models to stay relevant in this new consumer age. Especially with the rise of digital-first organisations like Netflix, Airbnb and Uber who are turning their respective industries on their heads.
To think “digital first” is easy for a start-up. Their very foundations can be built on a whole new business model. But what about the organisations that have been around for years? With their well-known brands and cultures, tried and tested processes, and legacy systems, their quest to transform how they work through technology and compete with newer organisations with digital at their heart of marketing, selling, and delivering their products and services is a much harder mountain to climb.
Microsoft have recently released the results of a UK-wide study that assesses the impact digital transformation is having at a time of great uncertainty in the British economy. Packed with views from more than 1,000 business and IT leaders from large UK organisations across a variety of sectors, Digital Transformation: The Age of Innocence, Inertia or Innovation? illustrates how digital transformation is not simply an IT department initiative or reinventing services for a mobile world, but the responsibility of an entire organisation.
Yet despite digital transformation being regarded as one of the most important steps in business evolution, many respondents in the survey are yet to grasp the true value that enhanced digital strategies can deliver.
Some key findings in the report show:
- Disruption is real – nearly half of all business leaders (44%) think their existing business models will cease to exist within the next five years.
- It’s happening quickly – half of all organisations think that their industry will be disrupted within the next two years.
- Taking action is the only option – yet almost half (46%) of business decision makers think their senior leadership are unwilling to disrupt their existing businesses in order to grow and compete more in the future.