The key to digital transformation is strategy, not tech

The key to digital transformation is strategy, not tech

2022-07-13T07:10:15-04:00April 25th, 2022|Economy, Pittsburgh, Professional Services|

Writer: Joshua Andino 

2 min read March 2022The prevailing perception is that technology is the key to a successful digital transformation, but is it? The true key to success is an informed business strategy. 

“A key theme that sometimes is overlooked is that digital transformation should be tied to the strategic goals of the business. When evaluating processes for transformation, you should be able to clearly identify how the transformed process helps the business in achieving its goals” Patrick Armknecht, shareholder and technology adviser for Pittsburgh-based Schneider Downs, told Invest:.

The onset of the pandemic was marked by digital transformation. Some businesses had spent years planning for disasters and operational difficulties and were prepared for a smooth transition to remote work. Others saw change foisted upon them with little recourse but to adjust course. What was billed as a two-week shutdown quickly grew into a global reorganization of industries. The impact of technology was evident in the transformation of many businesses as thousands of companies across the world adopted online platforms and cloud services to continue operations through the virtual space. Optimizing processes that enable technology to be deployed to support business operations is digital transformation

For those businesses that had put off the strategic integration of technology into their businesses, particularly smaller businesses, the shift underscored how effective tech could be in keeping a business afloat and how much of a necessity it had become. The need became clear: to be successful, a proactive strategy must address how technology is adopted. 

Technology changes fast. Thirty-three years ago, the internet barely existed; today e-commerce alone accounts for $26.7 trillion of the global economy. The rapid pace of change can make digital transformation seem daunting and can lead to haphazard or incomplete implementation. The infrastructure and technical know-how can fall outside of the scope of expertise for a business and for many, once a successful business model is developed through years of trial and error, it becomes easy to simply say, “If it’s not broken, don’t fix it.” The reality is that the unwillingness or inability to proactively strategize costs business further opportunities and cedes greater market share to competitors that do. 

“A frequent mistake made in digital transformation is neglecting to look at the process holistically. I’ve spoken with many companies that have started their digital transformation journey and come to find that their efforts have been limited to a segment of the business or a specific department,” Armknecht said.  “Beginning with a broad view and open mind sets the table for the most productive benefits.”

A proper business strategy regarding digital transformation identifies key objectives and processes for streamlining and makes it more efficient, allowing businesses and their employees to focus their efforts on more important and hands-on tasks. The challenge is in identifying those processes and in what manner technology can complement those objectives. 

Often, and as the pandemic in many cases demonstrated, the inverse is what occurs, where businesses find themselves falling behind and turn to technological innovations without a thorough understanding of what needs to be done to turn its adoption to their advantage as opposed to a wasted effort. 

“The most important thing to consider when assessing what technology to implement (and when) is that planning is key. As the old adage goes: the best time to plant a tree is 20 years ago, the second-best time is today. At the same time, do not rush into anything. Unfortunately, there are plenty of cautionary tales of companies that have rushed a decision or tried throwing technology at a broken process. This almost always results in ill-used and under-utilized tools that don’t help their business and require additional spend to correct,” Matt Kraemer, Senior Manager of Schneider Downs’ Automation & Data Analytics Process Team, told Invest:.

Businesses must consider the tools at their disposal when considering digital transformations, as well as how and what strategic goals they fulfill. Over the last decade, business media has had scores of headlines announcing the changing business landscape, how new technologies such as artificial intelligence (AI), machine learning (ML), data analytics and a host of other developments would revolutionize the conduct of business. According to a 2018 studyopens PDF file by PwC, AI alone will increase the GDP of North America by 14.7%, a value of $3.4 trillion. Kraemer explained to Invest: what the impact of these developments actually means for business: “These technologies are allowing companies to better understand their customers, their employees, their business processes and external market factors on a daily basis. Additionally, they provide an opportunity for businesses to quickly adapt their strategies to be more successful. Among the many benefits of data analytics, AI, and ML are the efficiencies gained by instant analysis that would take some businesses weeks to compile without the infusion of technology.” 

Kraemer highlighted another benefit: the ability of data analytics, AI and ML to improve the efficiency and competitiveness of companies. “Businesses are able to achieve more accurate analysis and reporting since computers don’t make typos, transpose numbers or make ‘fat finger’ mistakes.” In short, faster, more effective, efficient and informed decisions, letting businesses focus on execution as opposed to compilation. The long-term result? Reduced costs, higher revenues and, ultimately, greater profits. 

An easy example of the technology at work is the suggested products at an online checkout. “If one company is improving their customer experience by using ML (e.g., recommend complementary items at checkout or predict when a customer is about to stock out of an inventory item), and another company is relying on their ‘gut feel,’ which one is more likely to win the business?” Kraemer asked. 

“Far too often, small businesses are deterred by the cost of digital transformation without consideration of the value that it brings. This value can be in the form of increased revenue, risk mitigation or improved stakeholder experiences,” Armknecht added. Companies that fail to utilize these tools, he said, fall behind those that do, adding, “As the competition for talent in the workplace heightens, it is imperative that small businesses look to digital transformation to remain competitive.” 

Digital transformation will continue to proliferate. Physicians will use tech to monitor patient health and more accurately predict potential future ailments based on aspects such as family history and biometrics. Nonprofits are employing data analytics to understand their donors more and learn what campaigns, events and strategies are best at generating donations. For those in transportation and logistics, from autonomous vehicles to route optimization demonstrated by map applications on phones that find the quickest route to a destination, the technology is here. Businesses need to respond accordingly and understand their strategy to remain competitive, relevant and technologically engaged in an increasingly technological world. 

“At its core, digital transformation involves evaluating the purpose, efficiency and effectiveness of processes, reimagining how processes should work and identifying and leveraging technology to execute upon the reimagined process,” Armknecht said. “It is imperative that small businesses look to digital transformation to remain competitive.”

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