Digital Transformation Management; 2024 Guide

Business has been a driving force behind technological advancements since before the Industrial Revolution. However, while early 19th-century businesses were able to reach far beyond their previous limits thanks to developments in factory-floor automation and the widespread use of electricity, a different kind of revolution has been sparked by the relatively recent advent of digital transformation management. Digital technologies are becoming indispensable in all markets and industries.

Unfortunately, there is now a significant gap in the sharing of information due to the widespread use of digital tools and systems. Ad-hoc, siloed technologies are prevalent on laptops, mobile devices, and private networks; they are unable to instantly exchange critical data or “Talk” to one another. Because of this, companies are realizing that in order to stay flexible, scalable, and knowledgeable, emerging technologies must be used for more than just creating or improving products; rather, they must be employed to assist in enabling true organizational-wide digital transformation by removing the silos and other obstacles that stand in the way of productive digital collaboration.

Digital transformation management is essentially a total rethinking of how companies function in the digital era. It necessitates the complete integration of dependable digital technology into every facet of the firm, radically altering or replacing current procedures and establishing a new, connected corporate culture—as well as a new strategy for how businesses provide value to their clients.

What is Digital Transformation Management?

For businesses, big or small, to be competitive in an increasingly digital environment, they must innovate and keep up with the times. The integration of digital technology across all business domains, which leads to significant changes in how a firm functions and provides value to its clients, is the broad definition of this digital transformation management.

Companies must continually challenge the status quo, be willing to try new things and embrace failure in order to manage this digital transition. Ultimately, the aim is to improve the firm from the day it was founded. Broadly speaking, digital transformation management encompasses the planning, strategy, and coordination of all digital transformation activities that are directed toward this end.

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What does a Digital Transformation Expert do?

The connection between the domains of business and digitalization is provided by digital transformation management. Experts in this field have programming skills and a strong grasp of data. What sets digital transformation managers apart from developers and data scientists is their ability to connect and enhance these abilities to other business domains including finance, accounting, operations, and information management, as well as business strategies and models.

Among the tasks they perform for a living are:

• Gather, evaluate, and present data to create insights that support the board of directors of a corporation in formulating effective strategies.
• Directing a group of data scientists and engineers and overseeing the business intelligence platforms of the organization.
• Identifying and implementing digital business processes that improve the customer experience, reduce friction, increase productivity, or enhance a company’s profitability.

Why is Digital Transformation Management Important

Digital transformation management is a comprehensive reassessment of an organization’s operations, encompassing not just its systems of use but also its marketing, sales, support, and other strategies. Although the technology themselves could be complicated, modern firms are generally not motivated to embrace and apply it; rather, they are adopting digital transformation to help ensure their survival.

The current COVID-19 outbreak has caused significant and broad disruption in the commercial world. Supply chains that were disrupted, the necessity for remote work solutions, the need to shorten time to market, and the fast-changing needs and expectations of customers pushed businesses to either quickly adapt or fail. Although the idea of digital transformation management is not new, it gained particular importance in 2020 and 2021 in order to guarantee business continuity in an unpredictable environment. Organizations all throughout the world are now more dedicated than ever to assisting in the development of a global digital economy.

Since the benefits of digital transformation management are so extensive, they are also almost infinite. Digital transformation can enhance almost all facets of business operations. Nevertheless, a few main advantages frequently stick out over the others:

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1. Improved Resource Management

Consolidating IT tools into a single suite or platform is a crucial component of digital transformation management. Businesses may successfully put an end to the confusion and inefficiencies of IT sprawl and save operating costs by centralizing these digital resources. By integrating databases, software, and applications, digital transformation improves their ability to work together.

2. Effective Data Collection

Gathering accurate and pertinent data is necessary for modern organizations to be able to adjust their operations to the demands of their audiences and the status of the market. Data collection methods are redesigned by digital transformation management, which also builds robust systems for obtaining relevant data instantly and fully integrating it for advanced business intelligence. Decision-makers will always have access to the most recent information, providing them with the knowledge they need to act confidently.

3. More-accurate Insights

The mere act of gathering appropriate data is insufficient unless an organization can effectively transform it into meaningful, practical insights. In order to promote better business growth and consumer experiences, digital transformation management ensures that acquired information is correctly analyzed and acted upon rather than storing it in data silos.

4. Optimal Collaboration

Using digital tools to enhance internal collaboration and communications is a frequent goal of digital transformation management. Reduces the risk of lost resources with central access to crucial databases and tools that are all managed and kept in one single digital location. Similarly, companies have the ability to maintain an accurate log of all exchanges and business correspondence. A true digital culture is established through digitally enhanced collaboration.

5. Better Scalability

When used properly, digital tools help organizations accomplish more with less resources. Centralized information access, automated workflows, and machine learning technologies all help businesses expand without being constrained by availability-related constraints. Digital transformation management makes it simple to scale up or down to meet evolving business requirements.

6. Increased Flexibility

Businesses frequently fall behind when it comes to changing markets and client expectations. Organizations that undergo digital transformation management have the agility to react swiftly in addition to enhanced data analytic capabilities that help them recognize and foresee changes as they occur. By integrating strategies for continuous improvement, digital transformation management provides businesses with the ability to adjust to any changes.

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What Capabilities are Needed to Move the Needle on Digital Transformation Management?

A range of well-coordinated initiatives are necessary for a successful digital transition. According to Rewired, the following six skills are essential for successful digital transformation management:

• The capacity to formulate a concise plan with a business value in mind. Businesses should concentrate their transformation efforts on particular domains (customer journeys, processes, or operations) that yield substantial economic value. A road map outlining the resources and solutions required to bring change to domains that are prioritized should serve as the direction for the transformation.
• A robust pipeline of internal engineers. No business can achieve digital excellence by outsourcing. Having your own pool of digital talent on staff to collaborate with business peers is what it means to be digital. Beyond hiring, the greatest digital talent programs should include employee value propositions to draw and keep top talent, agile and digital HR procedures to locate, manage, and develop talent, and a positive work environment to support and nurture top people.
• A scalable operational model. Cross-functional teams that include individuals from within the organization are essential to digital changes. A new operational model is needed to accommodate hundreds or thousands of these teams, as most firms currently only have a small number of them. The digital factory, product and platform model, and enterprise-wide agility model are the three main operating models to take into account.
• Distributed technology that fosters autonomous innovation among teams. Teams should find it easier to continuously develop and distribute digital innovations to users in a business thanks to technology. Organizations should create a dispersed technology environment where all teams have access to the necessary data, apps, and software development tools in order to do this. This dispersed architecture can be facilitated by recent technological advancements, such as the intelligent disengagement of apps through APIs, the availability of developer tooling, the cloud migration of high-value workloads selectively, and the automation of infrastructure provisioning.
• Availability of data for teams to use as needed. For digital transitions to be effective, reliable, up-to-date data is essential. Teams throughout an organization should be able to quickly access the data produced by data architecture, which should also be regularly evaluated and updated. To make this capability possible, strong governance is necessary. The fundamental component is the data product, which organizes disparate data sets into a logical whole that is easily assimilated by a variety of groups and applications.
• Robust change management and adoption. The process of gathering requirements, creating solutions, testing them, and finally reaching the end user constituted the previous iteration of the technology adoption cycle. This procedure frequently led to low adoption rates, which in turn produced low business value. The process of planning, prototyping, gathering feedback, and refining the solution to realize the full value potential is significantly more iterative in the case of digital transformation management. Implementing process modifications, user training, and change-management programs should cost at least one dollar for every dollar you spend on creating a digital solution. At the outset of their transformation, companies ought to consider adoption and scalability in order to allocate the necessary resources for implementing the change.

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What Role can AI Play in Digital Transformation Management?

Artificial intelligence (AI), and especially generative AI, is completely changing how businesses function and create value. It offers enormous prospects in content creation, new discoveries (especially in industries like chemicals and medicines), and coding.

However, it’s simple to become sidetracked by flashy new toys. The lessons from earlier technological advancements still hold true: value originates from a clear knowledge of corporate objectives and the ways in which technology may support achieving them. Rapid experimentation and learning are vital, but it’s equally important to avoid giving in to the need to create use cases for novel, exciting technology that won’t ultimately provide value to the company.

The same solid skills required for successful digital transformation management—a well-defined strategy, an internal digital talent pool, and an adaptable and scalable operating model—are also necessary for creating value using generative AI. Furthermore, integrating generative AI into a company’s value offering requires ongoing examination of prioritized solutions and digital transformation management road plans by organizations hoping to find new ways to leverage generative AI models to achieve their objectives.

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How do you Know if Digital Transformation Management is Working?

Monitoring the progress of a digital transition can be surprisingly challenging. Leaders will find it difficult to control performance and make sure the changes they are implementing are adding value if they are not tracking and measuring results appropriately.

Part of the struggle is knowing what to measure. Key performance indicators (KPIs) in digital transformation management typically fall into three categories:

• Creation of Value: One or a few operational KPIs are usually the focus of digital solutions, which can normally be converted into cash gains.
• Group Well-being: Many digital transformation management take longer to complete than anticipated because the teams are understaffed, they haven’t embraced current methods of working like agile, or they don’t have essential skills like product management and user experience design. We’ve found that high-achieving teams can produce five times as much as low-achieving teams.
• The Advancement of Change Management: These indicators track the development of new competencies as well as the overall health of the transformation. Are teams being assembled as scheduled? Are persons in a relationship? Are we developing talent and capabilities? Are people utilizing the tools, technologies, and goods that are being developed with ease? In our experience, when it comes to managing change, perfection is the enemy of good.

What Companies are doing this Well?

Every business must completely rewire its operations to go digital. Amazon used to be just another start-up, and in order to rise to the top of its sector, it had to make years-long investments in data, performance management, technology, and personnel practices. The good news is that not just the biggest names in technology can execute successful digital transformation management. All types of established businesses can succeed in their digital transformation endeavors. Here are three instances:

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Freeport-McMoRan

A massive copper mining company, developed and implemented an artificial intelligence model at an ore-concentrating mill in Bagdad, Arizona, to enable next-level performance. The goal of the leadership was to raise the site’s copper output without a significant cash infusion. In order to develop, test, and refine the AI model, the organization assembled cross-functional teams and changed the culture to emphasize quick iterations and ongoing development.

Freeport-McMoRan implemented a quarterly planning system (akin to quarterly business reviews) in which top executives from the company met to set objectives and key results and to focus resources on high-priority areas. They also assigned a finance director to oversee impact tracking and reporting and placed a senior product manager in charge of helping coordinate teams and improve allocations across working teams.

Vistra

One of the biggest electricity providers in the US, Vistra, developed a multilayered neural network model to increase overall productivity, boost dependability, and lower emissions. After analyzing two years’ worth of plant data, the model discovered the set of parameters that would maximize a plant’s efficiency at any given moment. This knowledge was then used to create an AI-powered engine that provides operators with recommendations every 30 minutes to increase the plant’s heat-rate efficiency while prolonging asset life.

Developing the capacity to scale the solutions—for instance, a machine-learning-operations infrastructure to standardize and maintain models—so they could be quickly implemented and customized for each station in Vistra’s network was essential to the approach’s success. Rapid development, high-quality models, and model adoption were achieved by a cross-functional team comprising power process specialists, data scientists, plant operators, and analytics translators.

Conclusion

The process of integrating digital technology into every aspect of a business and radically altering how you run and provide value to clients is known as “Digital transformation.” Organizations must constantly experiment, challenge the established quo, and learn to accept failure as part of this cultural shift. Whether a company is small or large, digital transformation is essential. Almost all keynotes, panel discussions, articles, and studies about how companies may stay relevant and successful in an increasingly digital world make this point very evident. Many corporate leaders are unsure about what digital transformation actually entails.

A framework is a strategic blueprint used in digital transformation management that leads firms on their journey of digital transformation. This framework for digital transformation management is an organized strategy that lists the essential elements, procedures, and phases needed to accomplish a successful transition. It gives businesses a road map for navigating the intricacies of the transformation process and guarantees that initiatives are in line with set business objectives.

Digital transformation management is a comprehensive reassessment of an organization’s operations, encompassing not just its systems of use but also its marketing, sales, support, and other strategies. Although the technology itself could be complicated, modern firms are generally not motivated to embrace and apply it; rather, they are adopting digital transformation management to help ensure their survival.

Resources:

ServiceNow | EnterprisersProject | Mckinsey | Srh-Haarlem-Campus | Invgate | Prosci | Emeritus

For all the pictures: Freepik