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The benefits of digital transformation derive from the combination of its two key building blocks, technology and people, though there’s debate about which plays a more important role.
Clearly, it’s technological advances that make digital transformation possible – big leaps in cloud computing, data analytics, edge computing, and artificial intelligence. On the other hand, you’ll often hear that “digital transformation is about people, not technology.”
However, at its most advanced, digital transformation is not precisely about people or technology, but about the relationship between people and technology. When these two powerful entities are merged with a digital transformation strategy, a business reaps major productivity benefits that neither element can deliver by itself.
Indeed, the benefits of digital transformation are myriad – there are easily a dozen or more major advantages. But let’s explore the four central benefits. It’s these four benefits of the symbiotic relationship between people and technology known as digital transformation that are transforming businesses.
Major Benefits of Digital Transformation
One note as you explore these leading benefits: digital transformation is a highly dynamic process. Currently, the foundational technologies are data, AI, and cloud, but in the future they could be the metaverse, 5G and quantum computing. The technology shifts, but the core principle remains improved productivity created by human-tech synergy.
Also see: Top 10 Digital Transformation Companies
Data Becomes a Major Competitive Advantage
While digital transformation is about the relationship between people and technology, at the very core of this relationship is data mining and data analytics. It is the constant and effective analysis of data that tracks and transforms the all-important people-technology relationship.
Companies have embraced data analytics over the last several years, yet most companies – even today’s cloud-native companies – suffer from multiple challenges in this early era of the mass adoption of analytics. As an example, experts estimate that only a limited percentage (well under 40 percent) of data is ever analyzed, meaning major insights are missed.
In contrast, a digital transformation strategy focuses intently on optimal data use, enabling the following benefits:
Data is No Longer Siloed
When data silos are dismantled, key metrics flow easily between departments, allowing dynamic interdepartmental collaboration. For instance, when the sales team understands all the relevant metrics from the business development team, it produces competitive synergy. An organization become a single collaborative entity focused on success.
Data Analytics is Set Up to Scale
For many companies, data platforms are geared to service only today’s needs, with no built-in capacity to scale as needed. A well-planned digital transformation practice ensures that its data analytics infrastructure is flexible and ever-scalable; if the business grows by 5 percent or by 20 percent a year, the analytics platform scales with ease.
Decisions Based on Metrics, Not Instinct
It’s a great strength of the entrepreneurial system that businesses have been built by one or a few individuals with a natural gift for understanding markets. Yet as markets have grown more competitive, running a business by “feel” is limited. Embracing digital transformation enables a framework of regularly scheduled metrics to navigate business decisions based on actual market direction, rather than quirk or mood.
A digital transformation strategy embeds a sophisticated data analytics practice throughout the organization, in the C-suite, across the various departments, and at all levels of the org chart. The intelligent metrics derived from this practice informs smart, fast, highly flexible decision making. Companies have a Chief Data Officer (CDO); even SMBs have an expert handling this role, perhaps without the executive title.
When data use is optimized in a digital transformation strategy, the highest value data is effectively targeted to produce gain.
Artificial Intelligence Emerges as a Key Team Member
Though still in its infancy, artificial intelligence is rapidly becoming more practical to deploy, which provides companies that invest in digital transformation the benefit of AI’s most next-gen capability: the ability for systems to learn and develop without human assistance. The concept of a “smart machine” is a central pillar of digital transformation.
This self-learning technology means that the output of AI toolsets/platforms will – increasingly over the next several years – resemble the output of human staffers. AIOps deployments will no longer be merely support systems, but independent teams that will:
- Create and accomplish new and important business tasks.
- Constantly scan the business and its infrastructure for areas of improvement.
- Dramatically increase customer engagement.
All of this AI-based activity will, paradoxically, increase the value of human staff. They will be freed up for upper-level work that requires the judgement and creativity that maximizes their value.
Customer Relationship is Strengthened
A leading pillar of digital transformation is optimal use of social media. The challenge here is that social media has no clear line between promotion and communication. Some companies use social media purely as a promotional outlet, constantly posting about sales offers. While this might offer gain, a smart digital transformation strategy turns social media into a communication system, a platform for dialoguing with customers.
Why is this important? Because the most profitable benefit of digital transformation is a better relationship with your customer. This truth is often lost amid a focus on the remarkable advanced technology that powers this emerging trend.
Social media is a compelling conduit for nurturing this customer relationship, for driving engagement and long-term brand loyalty. The greatest benefits are reaped from this practice by:
- Focusing on building communities rather than merely mass posting.
- Offering material that serves the audience in addition to sales offers.
- Responding in real time to customer posts – constantly.
Social media used in the context of digital transformation turns customers from a source of analytics information – their clicks charted on graphs – to the leading stakeholder at the table. No decision is made without using analytics to look beyond the raw metrics, to delve into the intensity and true underlying intent of their voices.
Technology is Democratized
Of all the benefits offered by digital transformation, the one that will increase productivity across the widest swath of staffers is the democratization of technology. This bulky phrase refers to enabling the use of advanced technology by people at all levels of tech expertise, not just IT pros.
The concepts that define the democratization of technology are so similar to those of digital transformation that the two ideas are almost synonyms. Inherent in both ideas is improved systems throughout every level of business, across all staff and all departments.
Specifically, here are examples of how digital transformation’s focus on the democratization of technology boosts staff productivity:
Simplified User Interface
Even among sophisticated enterprise applications, the trend over the last few years has been to make the user interface as intuitive as possible. In no sector is this effort more pronounced – and more competitive among vendors – than data analytics platforms. Traditionally, analytics platforms required data science expertise, and many still do. But as technology is democratized, data analytics platforms are offering dashboards simplified to that level that any office staffer can query the database and get quick answers.
No Code / Low Code
No code / low code software development platforms allow non-tech staff to create and update software applications. By opening the door to software development to non-developers, this trend supports a quantum leap in the quantity and creativity of apps and upgrades developed. It also frees up trained developers for more advanced work, which creates yet another productivity benefit. This trend is growing quickly: Gartner projects the low code / no code market will enjoy 23 percent revenue growth between 2020 and 2021.
RPA
Robotic process automation (RPA) platforms allow non-tech staff to create automation to handle office workflow and other business tasks. This is a major break from the past, when coding automation required teams of data scientists and programmers. Better yet, with RPA automations handling the low-level busywork, human staff can focus their judgment and expertise on higher value business tasks.
NLP
Natural language processing (NLP) allows staff and customers at any level of tech training to simply speak with computer systems, instead of needing to know sophisticated coding. This is a revolutionary step in the relationship between human and computer. A few words in conversational language from, say, a business analyst can query a database, request a change in software program, or launch a new algorithm.
The net effect of all this democratization is that the power of technology is decentralized. It’s the real excitement of digital transformation: By allowing access to high tech to all employees, a company’s potential for innovation opens up exponentially. More of the staff can experiment and innovate and contribute. Bottom line benefit: as the democratization of tech drives digital transformation, your entire company is empowered to lead positive change.