In a world where everything is connected, where everything is equally wonderful, and where performance is approaching perfection, good enough is no longer an option. Right now we are a central point of the raging of change fueled by digitization, mobilization, augmentation, and disintermediation. The way we work will never be the same. Our needs will be dramatically different. The internet of things, quantum computing and artificial intelligence are transforming the world. Are we driving change or are we being driven by it? What is our response? How will we discover new opportunities in one of the most transformational times in human history?
Key Points
We are living in the 4th Industrial Revolution where the lines between physical, digital, and biological spheres are blurring.
Digital Transformation is the No.1 Priority for companies' IT initiatives.
Global Spending on Digital Transformation by 2024 forecasted to be 2.4trillion USD
To keep up with the changes and hop on Industry 4.0’s new trend of Digital Transformation, you need to be part ecosystem in some forms and need the right partners for digital transformation.
This blog will cover topics on
Flash Back to Digital Transformation History
What is Digital Transformation and How It can Help with Your Business’ Growth?
Why Digital Transformation is Important?
Why Digital Transformation Fails?
How to Overcome Digital Transformation Challenges?
Implementation Duration & Cost Estimation of Digital Transformation
How You can Achieve Digital Transformation Challenges with Ecosystem Partnerships?
Conclusion
1. Flash Back to Digital Transformation History
The First Industrial Revolution mechanized production using water and steam. The Second introduced mass production mass with help of electrical power. The third industrial revolution was the digital revolution with the use of electronics and IT to automate production. In the forth industrial revolution cyber-physical systems will communicate with one another using Internet of things.
Today, we are living in the 4th Industrial Revolution, “Industry 4.0”, where it is all about AI, Blockchain, Cloud Computing and IoT (Internet of Things). With Industry 4.0, operations are shifting from manual to automated processes and the lines between physical, digital, and biological spheres are blurring gradually. Technology is driving change across all areas of society and a growing number of people increasingly use it and rely on it in their personal lives. Workspaces are digitally evolving with more and more processes and now being undertaken using technology. This is where Industry 4.0 comes in which shifts from manual operations to automated processes. The production can be more efficient and personalized with the customer needs.
To survive in industry revolution 4 or upcoming revolution, we all need to adapt with exponential changes as individual and corporation especially in digital transformation process.
2. What is Digital Transformation and How can it Help with Your Business’ Growth?
Transforming digitally means bringing in a complete change in the way business and operations function by empowering them with digital capabilities. It can be any technology that allows you and your business to be more productive, efficient & effective. It is the adoption of digital technology to transform services or businesses, through replacing non-digital or manual processes with digital processes or replacing older digital technology with newer digital technology. e.g AI, Blockchain, IoT, Accounting software, etc.
Digital Transformation = Business Transformation
Improve working efficiency
Better customer experience
More effective organization
Making jobs easier for employees
3. Why Digital Transformation is Important?
With the shifts to automated processes, Digital Transformation has been getting popular lately. It is said that Digital Transformation is the No.1 Priority for companies' IT initiatives by Statista. 56% of CEOs say digital improvements have led to increased revenue by Gartner and the top benefits of digital transformation are improved operational efficiency (40%), faster time to market (36%), and the ability to meet customer expectations (35%) by PTC Report. With the Global Spending on Digital Transformation by 2024 forecasted to be 2.4tn USD by Statista, Digital Transformation is already and will be the next big thing in the business world.
4. Why Digital Transformation Fails?
Some of the common challenges that can be faced and experienced by Executives and Project Teams during the implementation time are
Employee Pushback
Lack of Overall Digitization Strategy
Lack of Expertise to Lead Digitization Initiatives
A Lack of Organizational Change Management
Unrealistic Cost , Time Estimation and Human Allocation
DX fails due to ignorance of the business transformation (Business process, org, ppl) side of things.70% of digital transformations fail, most often due to resistance from employees. Digital Transformation is more likely to succeed only if you invest heavily in the people and process side of things to correspond with investment in technology.
5. How to Overcome Digital Transformation Challenges?
These challenges can be avoided easily if you know how to successfully run Digital Transformation. 10 steps on how to overcome the challenges are
1. Set Vision
Long-term goals and short-term targets should preferably be included in your Digital Transformation strategy. Identify gaps and create a realistic implementation strategy. Rather than focusing on new ideas, the goal is to build on existing resources.
2.Market Analysis
Understanding market dynamics and shifting trends is critical. This enables you to develop a strategy that is current and relevant in comparison to the competitors in your sector. All you need is a sharp eye for market fluctuations.
3.Develop a Company-Wide Digital Transformation Strategy
The digital transformation journey doesn’t belong to one individual or department. In fact, success is unlikely when it is designed that way. Departments may be tasked with executing part of the strategy, but the whole company should be working toward the common goal.
4.Finding the Expertise to Lead Digitization Initiatives
It takes a combination of talent and technology to go through your digital transformation. Train your workforce to be digitally literate and help them build the skills needed for innovation. Digital transformation will bring along its own technical challenges and you need the right people on board.
5. Handling Employee Pushback During Digital Transformation
The digital transformation is the epitome of discomfort for employees. Being consistent and transparent is key to keeping your employees engaged through the whole process. By helping your employees understand what's at stake, you can light a fire in them. It's important to note that sometimes change is a requirement to keep up with the times.
6.Feel the end-user experience
The digital experiences of both customers and workers account for more than 90% of Digital Transformation success. The success of your DX strategy is determined on how compelling and simple your product is to your clients. The end-user experience that you want to provide is what digital experience is all about.
7. Estimate and Manage Realistic Budget, Schedule and Human Resources
Don't put your company at risk over budgetary issues. Digital transformation may require new, and sometimes substantial, investments in your company. Develop a plan that involves realistic budget, schedule and allocation of employees for several phases over several years, if that's what is required. I will explain to you in the next section how you can estimate a realistic one.
8.Risk Mitigation - Risk mitigation will become increasingly essential in the future, so be sure you include it in your digital transformation plans.
9.Fast Decision-making - Many organizations were compelled to make quick judgments during the 2020 crisis. Whether it's supply chain difficulties or consumer issues, businesses must be prepared to make rapid and correct decisions in the future.
10.Self-assessment
Understand your present infrastructure, software, applications, and more, and ensure sure they're compatible with future DX modifications. As part of your DX strategy, don't forget to identify important supporting, developing areas and build the required integrations.
6.Implementation Duration & Cost Estimation of Digital Transformation
Implementing Digital Transformation is easier done than said. The implementation cost can be different based on the company sizes. Those numbers are for average as reference for you.
For Mid-size companies ($50M to $1B in annual revenue), it takes 14 to 16 months for successful implementation and the cost can be 3% to 5% of their annual revenue.
For Large-size Enterprise companies with annual revenue greater than $1B, it can take 31 to 34 months and cost 2% to 3% of annual revenue.
For making it easier, you can also simply apply the following rules for the overall case. You generally should allocate 5% of your total revenue for digital transformation at least. For specific software integration, you should expect at least 5 times the real cost of software itself. For successful implementation for specific software implementations, at least 5 person FTEs should involve it. For eg. If 20 people need to be involved in this project as core members, you should expect a quarter of their time is going to be allocated in this implementation.
7. How You can Achieve with the Ecosystem Partnership?
Now, almost all highest valued companies have business ecosystems of their own or create the business ecosystem structure with the aim of delivering the best values to the customers. The most well-known ecosystems are Apple, Amazon, Airbnb, Facebook, Google, and Uber which are virtual corporate networks.
In addition, it can be said that business ecosystems are bringing advantages to all sizes of businesses including startups, small and medium businesses. Resources and experience of the larger counterparts are offered to the SMEs by the business ecosystems. SMEs are now able to try out the digital economy, consult with suitable partners from all around the world, develop the appropriate business models and evaluate them in the market, all of which lead to the transformation in their value chain.
In the case of startups, the larger companies are cooperating with startups from the accelerators in which both sides benefit. The startups get access to the resources, customers, and capital goods of the larger companies while the larger ones get the new innovations and development methods.
A McKinsey research shows that by 2025, 30% of the corporate revenues will come from ecosystems and up to $60 trillion global revenue pool potentially concentrated in an integrated network economy.
These days, some questions on whether the business can be successful without an ecosystem on its own are made. It could have been successful on its own in the past but nowadays, it is unlikely to stand out from all those big innovations made from the ecosystems by itself. Business ecosystems are also believed to grow more and more in the coming years. Thus, to be a part of an ecosystem is the next step you should take for your business.
You can check out more about ecosystem more in this article, Everything you need to know about Ecosystem. Please check out also Openfor.co Ecosystem if you are looking for the right partners through ecosystem and Join for Fee.
Conclusions
In the 21st Century, things are changing every nanosecond. To keep up with the changes and hop on Industry 4.0’s new trend of Digital Transformation, you need to be part ecosystem in some forms and need the right partners for digital transformation.
We will introduce 2021’s Digital Transformation Technology Trends and Forecast, Top Countries and Top ERP/CRP System in upcoming article.
To read more blogs like this follow our Openfor.co social media Facebook and LinkedIn. To know more about our company, visit our website https://www.openfor.co/.