Digital technologies and the ways we use them have irrevocably changed how we work. Businesses across all industries have to face innovation or go extinct at some point. But digital transformation done right takes a company to a whole new level. That is why digital transformation is essential – for both business owners and clients. In this article, I will describe five examples of digital transformation. You will see how organizations that master digital transformation use it for their benefit.
Table of contents
What is digital transformation?
Digital transformation is a profound change in business that strongly influences the opportunities of digital technologies. It affects business activities, processes, competencies, and models to create value for the customers, acquire new capabilities in response to rapidly changing market requirements, manage risk, or improve efficiency.
Digital transformation is not only about adopting new technologies. It impacts the whole organization, including the toolset, but also structure, workflows, customer service, management, way of thinking, and all other aspects of running a business. The two keys to success with your transformation are a thought-through digital transformation strategy and cross-functional collaboration.
Examples of digital transformation are:
- Transitioning into a remote-first workspace
- Using design thinking to analyze and optimize the customer journey
- Implementing automated customer service
- Using AI-driven insights to improve sales efficiency
- Automating employee performance management
Those are elements that combined may lead to digital transformation. Again, performing single actions without rethinking the way of doing business is not enough to make a big difference and call them transformation. We will go through real-world examples of digital transformation done by five enterprises in a moment.
Digitization, digitalization and digital transformation
Digital transformation does not equal digitization nor digitalization. It is a broader term that refers to all aspects of the business. Digitization and digitalization are smaller parts of digital transformation.
Digitization refers to converting analog data sources into digital files. Some examples include creating spreadsheets based on the data from ink-on-paper records, scanning paper documents or photographs and saving them in PDF format on a company’s drive.
Computing systems can then use those digital files to create business value. And that what we call digitalization – the use of digital data and technologies to improve business processes. Some examples of digitalization are: sharing the documents (that were turned into PDF files during digitization) on the company’s cloud drive with all sales departments or saving the spreadsheets (that were created as a part of digitization) on OneDrive so that other team members can access and edit them simultaneously.
Benefits of digital transformation
To understand why digital transformation is essential, one needs to realize its benefits together with the cost of not doing it. In many cases, the driver for digital transformation is purely cost-related. We should also be aware that customers are already in the digital era. They use technologies to some extent (depending on who our clients are) daily. Embracing digital transformation is also about meeting their needs and expectations as a service or product provider. On top of that, an enterprise may generate a competitive advantage using digital solutions.
So, what are the benefits of digital transformation?
- Customer-centricity: clients want valuable solutions to their problems, and they want it fast. Customer experience (CX) is a primary value of digital products. Therefore, one of the main goals of digital transformation is to improve CX and use that as a competitive edge. There are many things that may enhance it, such as using chatbots that provide instant customer service 24/7, gathering data about client behavior to better understand their needs and pain points, creating and optimizing user’s journey to deliver value in a fast and convenient way.
- Improved analytics: going digital makes it possible to track and analyze metrics related to all digitalized processes, be it sales, marketing, logistics, customer care, finance, etc. Understanding the data behind all business efforts and how they influence costs, ROI, and revenue significantly improves and streamlines decision-making.
- Cost savings and revenue growth: maintaining old systems and products generates costs that can be reduced through digitalization, moving to more modern IT solutions, and rethinking the processes around that.
- Reduced operational cost: improvements in IT infrastructure, more effective supply chain management, streamlined communication and decision-making. Each business relies on processes that can be optimized, and their cost reduced. Relevant IT solutions and digital methodologies provide the tools and knowledge needed to continuously minimize operational costs and improve profitability.
- Increased agility and innovation: implementing agile processes, digital solutions, working with open-minded talent, all that, gives businesses the capacity to adapt in response to changing environment and improve to be ahead of the industry. Having that flexibility is super important in today’s fast-changing world.
- Digital skills and know-how: investing in employees’ skills development equips organizations with updated in-house knowledge and skillsets. Intelligent talent management may be an essential competitive advantage and drive the growth of an enterprise.
- Better employee experience and work culture: performance reviews, feedback, training, onboarding, tracking employee satisfaction, all that can be at least partially automated and powered up with analytics. It leaves more time and energy to focus on taking care of all the employees and their needs.
- To benefit from a digital transformation, make sure you have the support of experienced professionals and software that is suited to your needs. Leaving the old way of doing things behind may be stressful, but it is essential for true growth experience—both as a person and as a business.
5 examples of digital transformation
If you ever watched The Office, you already saw (a long and definitely not perfect) digital transformation in 10 seasons. While this pop-culture example was meant to be funny, not to educate about the topic, it is an excellent example of a traditional business and its team tackling the shift to digital. We should definitely not spend too much time thinking about how Mike was not a good advocate of the change and move on to some real-world examples of digital transformation.
Adobe
Adobe is an American software company founded in 1982. You probably used some of their flagship products: Photoshop (to edit images), Adobe Acrobat Reader (to read or edit PDF files), or Illustrator (to create vector-based illustrations).
Back in the day, Adobe was called Adobe Systems and sold boxed software. When the 2008 crisis kicked in, the company made a risky decision to move from a license-based model to a subscription-based model. They redefined their service offering and divided it into three cloud-based solutions Creative Cloud, Document Cloud and Experience Cloud. This is how Adobe became a cloud company operating in a now so popular SaaS (software-as-a-service) model.
In the meantime, as a part of their digital transformation, they acquired a web analytics company (Omniture) and an ecommerce platform (Magento). The company also realized that they could achieve their goals only if having the best talent. Therefore Adobe focused on making sure people are happy at the company, invested in building an employee-focused work culture, benefits, and employer branding. They also employed a data-driven operation model that helped monitor the business’ health.
Their digital transformation happened on many levels: new business model (SaaS), new technology (cloud), redefined service packages and positioning (focusing on enterprise clients), new HR management strategy, embracing a data-driven operation model, etc. Adobe’s example proves two important facts:
- Digital transformation can create a substantial competitive advantage for a business.
- It has to happen across the whole organization and redefine the way of doing things for everyone.
sonnen
sonnen is a renewable energy B2C service provider. The company enables households connected to its network to produce, store, and share their electricity.
sonnen’s case is particularly interesting, as it decided to embrace digital transformation because their business was growing so fast that they needed to:
- Rapidly grow the teams
- Improve the service ecosystem,
- Work on internal processes
- Deal with high volumes of traffic and data
- Face technical debt from their older products
- Comply with regulations on different markets
And all that while providing high-level services in a competitive market.
Between 2017 and early 2021, sonnen went through the digital transformation that was concentrated around two complementary pillars. The first one was the transition to Agile. It facilitated changes in the company structure, adjusting it to the needs of its customers, employees and the ever-changing market. The second pillar was related to the software that sonnen uses to manage its operations. The changes included improvements in the sales parts of the application and the sales process as such, as well as customer service and collaboration with partners (on both the software and process level).
Thanks to digital transformation sonnen:
- Recorded an increase in the number of leads and clients.
- Streamlined communication process between partners and the sales team.
- Moved all communication to its internal software (rather than connecting multiple external applications from different brokers).
- Gained control and transparency over their business processes which is a solid ground for future growth.
Read more about how Boldare helped sonnen to implement the change: sonnen - the case study of digital transformation.
UPS
Logistics is definitely one of the industries that have undergone the most significant changes linked to the evolution of digital technologies. UPS is an international shipping and supply chain management company. It was founded in 1907, which makes me think that digital transformation was just another transformation on its long timeline. However, established companies tend to have more difficulties embracing digital transformation, and UPS proves it is not always true.
Back in 2012, UPS was already relying heavily on digital technology, but this is when they started a digital transformation in logistics and operations. They had two main goals:
- To speed up the delivery process.
- To introduce real-time package tracking.
In 2012 they built a fleet management tool that used machine learning to set optimal routes for delivery drivers. The system significantly increased drivers’ productivity, decreased fuel cost, and reduced carbon footprint. It is estimated that thanks to software development, UPS is saving $300M-400M yearly.
Another example of UPS’ digital transformation activities is the introduction of multiple systems that leverage data to enhance the company’s internal operations (such as sorting packages, loading trucks, etc.).
UPS doesn’t stop and regularly takes up new challenges related to its digital transformation. Thanks to actively embracing the change, the company has saved hundreds of millions of dollars and continues to be one of the world’s largest shipping providers.
Nike
Nike is an American sportswear company. Sometime around 2017, they realized that while they were one of the most recognizable brands worldwide, their brand image has weakened – they were perceived as just another sportswear company.
Having that in mind, Nike decided on a digital transformation focused on enhancing brand image and customer experience. They set 3 goals:
- Double the innovation.
- Double the speed to market.
- Double direct connection points to customers.
Nike started with a more effective use of analytics, focusing on digital consumer data. They also updated their ecommerce strategy with things such as improved UX (user experience) and better-adjusted membership options. Their offline activities corresponded with online marketing strategy. Nike focused on delivering a unique experience to shoppers who visited their offline stores, especially the flagship stores.
Nike’s digital transformation activities have been multifaceted but kept the two priorities (branding and customer experience) in the centre. It helped the company to thrive during multiple lockdowns in 2020 and 2021. Nike’s stock price grew from $52 to almost $88 in two years since the transformation began.
Ikea
Ikea is a multinational giant that designs and sells ready-to-assemble furniture and home accessories. After running an analogue business for almost 80 years and becoming one of the world’s most recognized trademarks, Ikea decided to undertake a digital transformation in 2018.
The company decided to hire a digital expert to lead the organization through the process. In early 2018, Barbara Martin Coppola, ex-Google and Samsung advisor, joined Ikea’s team as a Chief Digital Officer.
The scale of changes was massive and touched all facets of Ikea’s business. In this article, we take a closer look at three examples:
- Being a retail company, Ikea focused on developing its e-commerce. Running an online shop and a traditional store are two very different things. Running both at the same time is a whole new story. It is impossible to say where one part of digital transformation ends, and another begins.
- To adapt to the new business model, Ikea decided to transform their stores and use them also as fulfilment centres. To operate two businesses from the same space (from thousands of spaces – Ikea stores and distribution centres), they used algorithms to manage the supply chain. On top of that, they focused on developing analytics and involved them in decision-making.
- The same customers were shopping at Ikea online and offline. To enhance customer experience and keep consistent branding across all channels, the company decided to connect in-store and online interactions with their clients. For example, one can start designing their new kitchen on Ikea’s website and come to the store later. They can connect with a remote customer meeting point in the store and be found by a store employee.
As Barbara Martin Coppola puts it: digital needs to be embedded in every aspect of IKEA. While the company’s values stay the same, the way of doing things adapts to the changing business and lifestyle landscape.
Conclusion
Digital transformation is about employing digital technologies to reinvent your business, for your and your customers’ benefit. It takes a fundamental shift in thinking to run it effectively, but it seems like there is not much choice left. The clients are already in the digital era, and going digital is not only about a competitive edge. It is also a survival must-have. Find out more in our article about digital transformation in practice.
Businesses are undergoing enormous amounts of pressure due to the rapidly changing environment (VUCA) and progressive adoption of technology. Therefore, a thought-through and properly implemented digital transformation strategy may not only change one’s position in that race but also leave them with an open mind and the ground for future growth.
FAQ
Q: How do businesses initially assess their readiness for digital transformation?
A: To assess their readiness for digital transformation, businesses must first conduct a thorough review of their current operations, technology stack, and strategic goals. This involves identifying any technological gaps that hinder operational efficiency or customer satisfaction and evaluating the organization’s ability to adapt to new digital tools and methods. Understanding the staff’s skill levels and willingness to embrace change is also crucial. Businesses might consider consulting with digital transformation experts or using maturity models designed to gauge readiness across various dimensions such as technology, culture, and processes.
Q: What specific risks are associated with digital transformation, and how can they be mitigated?
A: The risks associated with digital transformation can be significant and include disruption of existing business processes, high costs of implementation, and potential security vulnerabilities introduced by new technologies. To mitigate these risks, companies should adopt a phased approach to implementation, starting with pilot projects that allow for the evaluation of technology on a smaller scale. It’s also essential to invest in staff training and change management strategies to ensure that all employees are on board and capable of working with new systems. Furthermore, partnering with reputable technology providers can help manage technical risks, while regular security assessments should be conducted to protect against cyber threats.
Q: Can digital transformation be scaled down for small businesses or startups, and if so, how?
A: For small businesses or startups, digital transformation can certainly be scaled down to fit more limited resources and scopes. Instead of overhauling entire systems, smaller entities can focus on automating specific processes that offer the highest return on investment. They can adopt cloud-based services, which provide scalable resources without the need for large upfront investments in hardware. Small businesses should prioritize customer-facing solutions that enhance the customer experience and streamline operations, such as customer relationship management (CRM) systems or e-commerce platforms. By focusing on incremental changes that align closely with their immediate needs and long-term goals, small businesses can effectively navigate their digital transformation journey.
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