What is Digital Transformation?

MakerClub Opinion   •   May 15, 2019

The beginnings of Digital Transformation

Digital Transformation is the process of embracing technology as a company.

This article discusses why digital transformation is important, especially large incumbent corporates, the different stages of digital transformation, and some of the technologies that will make a big difference in the coming years.

Why Digital Transformation is Important

Over the last 10 years, three things have happened to accelerate the pace of innovation across the world. We’ll break these down to explain why digital transformation is no longer an optional extra, but an essential process for any business that wants to stay relevant 10 years from now. Xero is a good example of an application that should have been built by an innovative accountancy firm but is now disrupting them and there are similar examples in every industry you care to mention.

Technology became cheaper

It used to be the case that certain industries were untouchable to startups and entrepreneurs because the upfront costs of investment were prohibitively expensive. In product development, the introduction of 3D printing and cheap micro-computers have meant that small companies can compete with the likes of Apple and Canon. We built our MakerClub learning platform to teach the next generation the future skills they need to build with these technologies and we share an office with a company taking on the camera industry.

In the big data and AI world, servers that used to cost hundreds of thousands of pounds are now cheaply available on Amazon Web Services. All this has levelled the playing field for small companies and allowed them to compete at the global stage.

Technology became much more advanced

As the internet is maturing, improvements in technology are becoming less obvious on a daily basis. However, large step changes in how machines understand language have dramatically changed how we interact with the internet and will have profound effects on workforces in the next 10 years. AI chatbots are promising to half the time required by support teams, for example, and machines can already write intelligent articles and reports. Understanding what these technologies are good at and where humans still excel should play an important part in any digital strategy.

Digital natives grew up

Digital natives don’t call themselves digital natives, they just call everyone else slow. This army of 20-30 year olds has grown to expect things to just work and they have the technical skills to create their own solutions. With the availability of cheap, powerful technology, it is important that big businesses learn how to provide engaging work for this entrepreneurial group or risk being disrupted by them.

The stages of digital transformation

3 Stages of Digital Transformation

Companies can be split broadly into three main categories along the digital transformation process, depending on the amount they have embraced technology into their working practices.

Early Stage

According to a study by Delloite, 26% of companies fall into the early stage category. While 92% of respondents said that digital technologies will be important 3 years from now they agreed that early-stage companies are lacking a clear digital strategy. Without this strategy, employees find it difficult to conceptualise how technology could be applied to their business. Companies at this stage of transformation should focus the bulk of their digital strategy on starting the conversation with their employees. At MakerClub Futures, we have designed an introduction to digital transformation workshop to start exactly this conversation.

Developing

Developing companies are further along the transformation process, where employees feel that time and effort are being put in to train the futures skills and future-proof the company. A digital strategy is beginning to emerge, but it is not yet clear and concise. These companies have often already seen the benefits of introducing collaborative software or automating tasks and are open to taking these ideas further. We’ve had a lot of success with hack days for our clients, but any focused team meet-up where digital strategy is on the agenda will help to forward these conversations.

Maturing

Only 15% of companies fit into the maturing category, where there is a clear digital strategy and a dedicated individual or team leading the charge. Due to their large size, mature companies still have plenty of work to do to upskill and retrain an ageing workforce, but they can also start to think about the more exciting sides of digital transformation. Once a strategy is in place, mature companies can start to invest more time and energy into looking to the future and innovating new solutions of their own.

Why Big Businesses are small

Why businesses are slow to transition

It can be surprising when you visit some of the biggest, most impressive companies on the planet and they are all using technologies that went out of fashion a decade ago, emailing different versions of documents to one another with dozens of people cc’d into every email. The reason often given for this is security, and large companies are rightly cautious of security breaches and privacy so this should be taken seriously. That said, it is worthwhile noting that Google employees use Google Docs internally very securely. With the right will and approach, many of the objections to digital transformation can be overcome.

Conclusion

Digital transformation is the company-wide process of embracing technology. The speed at which technology is advancing means that it is now essential that every company has a clear and well thought through digital strategy. Depending on where the company is in its digital maturity that strategy will change, starting with simply bringing teams together and engaging in the conversation, all the way through to creating new and innovative product lines. Understanding what digital transformation is and why it is important is the first step to building a digital transformation strategy.

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