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Digital Transformation

Digital Transformation

This is an introduction to Digital Transformation. Material includes a synopsis from multiple sources for easy reference for educational purposes.

What is Digital Transformation?

Digital Transformation implies the use of digital technologies to enhance customer and employee experiences, operational processes and business models, by achieving an ongoing state of agility and responsiveness that leads to lasting business growth. 

Digital Transformation is similar to Business Transformation, as technology enables business and is key to most transformations. Digital technology dramatically improves the economics and capabilities of every business.

It’s not about implementing a specific technology, or project, or a group of projects, though it may include integration of several technologies and strategies. Achieving IT agility and responsiveness provides the leverage and is a precondition for digital transformations.

It’s a Journey,  Not  a Destination 

Digital Transformation started 10 years ago. Most companies may already have an ERP backbone that provides a connected view of the enterprise. However, they may be at different stages of digital transformation that drives value for their customers and operations. Companies have different levels of digital maturity. New technologies and competitive landscape are forcing traditional businesses to transform themselves, otherwise they may be disrupted painfully. There is some hype and disillusionment around the buzzword, especially at slow moving companies.

Key Technologies 

It’s enabled by several technologies, including social, mobile, analytics and embedded devices. Others include cloud, artificial intelligence, big data, automation, Internet of Things (IoT), custom manufacturing & 3D printing, robots & drones, augmented reality, and personalization. 

Key Transformations 

Digital Transformation can be grouped into three buckets, including customer experience, operations and business model.

Customer transformation makes customer interactions more immersive and contextual, using customer data and microservices from the company and partners’ ecosystem. 

Operational transformation includes backend process and productivity improvements, lower costs, better quality and safety, connected and empowered employees, better decision-making by employees using data analytics, and more agility and responsiveness. Most impactful transformations combine customer and operational transformations. 

Business model changes are not essential, and may include re-inventing industries, substituting products and services, creating new digital businesses, reconfiguring delivery models, and rethinking value propositions. 

 

Agile Architecture: 

Digital Transformation requires an ongoing state of agility and responsiveness, so that digital assets including technology, functionality and data, can be securely leveraged, reused, combined and shared, with little friction across the company and ecosystem, so that the company is always ready to evolve for whatever the customers may want next.

 It involves decoupling of traditional infrastructure, services and teams, and the creation of a loosely coupled architecture around cloud, containers, APIs and microservices. Instead of monolithic applications, companies build numerous small single function microservices, which are assembled together to create applications and digital experiences. Microservices use APIs (Application Performance Interfaces), which decouple back-end complexity from front-end development. Microservices are associated with Containers, which decouple applications from both hardware and operating systems. Management tools are used to manage the resulting complexity and security, reducing human intervention. There is a shift to smaller and faster independent teams doing parallel development, that can more quickly deliver new features and experiences, learn from them, and rapidly iterate, increasing the pace of innovation.

 The digital assets are more modular, increasing interoperability and portability. IT Agility fuels business outcomes by allowing companies to recombine their own APIs to make new digital experiences, and also combine with APIs of partners in the ecosystem. This can lead to immersive customer experience by many company services coming together through APIs to offer right content and options at the right time. Companies can insert themselves into digital contexts where consumer interactions are already happening, without having to build everything themselves.

Governance:

Digital Transformation always starts at the top due to its massive impact. Leadership capabilities are the key to implementing successful transformations. Leaders define a transformative vision, with clear intent and outcome. Visionsets the direction and may evolve over time. Employees are engaged at scale to make the vision into a reality. Employee engagementincludes connecting (through wikis, microblogs, social networks, video conferencing), adopting (using executive involvement, digital champions, mentoring, use cases) and scaling (new ways of working together)

Digital transformations are enabled by IT, so IT and business need to collaborate closely for success. Some companies establish a Digital Unit to build the skills required and develop the digital platform required, which could later be deployed to other business units. Some companies establish the Digital Transformation Office (DTO), led by a Chief Digital Officer (DTO). DTO coordinates across business units and geographies.

Digital Transformation Roadmap is established to drive the delivery timelines for various transformation initiatives.  Delivery Cadence of weekly transformation meetings and monthly steering committee meetingsare an indispensable part of an effective performance infrastructure. Tools and Systems to monitor performance include metric dashboards that track initiatives by departments, owners, projects and delivery status, to easily spot delays, observe trends and monitor impacts.

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