Digitization is not the same as digital transformation

(Estimated reading time: 3 - 6 minutes)
Andrea Fiedler

Andrea Fiedler

As a consultant in the field of IT strategy, advises and supports medium-sized companies in digital transformation and is certified as a Microsoft Catalyst Partner.

Why digital transformation requires more than technology

Too often, digital transformation is wrongly equated with pure technology. However, this is clearly not enough, because the technology only represents the “digitization” part. The “transformation” part initially has nothing to do with the technology, but is a strategic corporate issue. A simple example from the early days of digitization illustrates the difference: in the past, management dictated a letter to the assistant. The assistant took notes by hand and then typed the notes by hand on the typewriter. Nowadays, management can dictate a letter, record the dictation using an app on a smartphone or laptop and then send the recording to the assistant via email or messenger so that they can type it on the computer and send it back for proofreading. This would digitize the entire process, but not transform it. A transformative approach would be, for example, if management not only recorded the voice recording via an app, but also had it converted directly into text. This would save the assistant from typing and she could use the time gained to take care of more important tasks.

Entrepreneurs need to learn to think transformatively

Unlike implementing an ERP or CRM software solution for ERP or CRM, digital transformation involves a complete digitization of all business processes, the way you work and even the way you think. This requires an honest and critical examination of the existing structures of your company, in which the needs of employees and customers in particular must also be taken into account. For example, is there Routine tasks that can be automatedto relieve employees? How can I get employees excited about automation solutions and train them in how to use them? How can I improve communication and service with my customers? It is important to take stock and analyze all of the company's processes, to identify fields of action, to define clear goals for the digital transformation and only then to create the necessary digital infrastructure. A good and experienced consulting partner who knows your industry and at the same time has the necessary implementation knowledge can give you the food for thought you need to successfully set your company on the path to digital transformation.

Why is a rethink so important?

Companies are all too often stuck in their structures, which means that there are internal crunches in many nooks and crannies. Increasingly strict regulations, constant time pressure, economic and supply crises and, last but not least, the lack of skilled workers are just a few of the factors that are troubling them. Necessary restructuring is often left unattended alongside day-to-day business. As a result, the company sees itself left behind at some point, despite actually good economic data. Employees go, no new customers come — an often gradual process of deterioration that is often only recognized too late. However, the blame for this is rarely assigned to one's own encrusted structures, but mostly to the changing external conditions. Admittedly, conditions have changed enormously in a relatively short space of time in recent years. The markets are more dynamic, everything should be networked, the complexity of supply chains has increased exorbitantly. However, it is all the more necessary to act so that your own company becomes flexible enough to be able to keep up with the rapid changes, just as successful competitors do. A digital transformation gives your company the chance to redesign the organization, to modernize and optimize business processes and the way your employees work together, to improve your products and services, and to put your customers back at the center of everything you do as a business. Today's customers have enormous expectations for topics such as proactive action, transparency and agility. The same applies to skilled workers. Every mistake, every bad experience spreads widely in a few moments through social media and review websites. This is another reason why the modernization of business processes and the renewal of the internal mindset is nothing less than a decisive step towards ensuring a healthy future for your company.

This is why digital transformation projects fail most often

Cloud-Computing is a technology that cannot be avoided if it is to lead towards digital transformation. However, the unjustified distrust in the technology is still great. But this is also based on outdated thinking. Neither the weal nor the woe of a digital transformation lies solely in the technology. In fact, the number one fail factor in digital transformation projects is the complete migration of existing business processes, outdated reporting, insufficient data and outdated mindset from an on-premises solution to the Cloud. This procedure without any redesign is often referred to as "Lift & Shift". Reusing old processes and ways of thinking after the decision to go digital means nothing more than filling old wine into new bottles.

Digital transformation cannot be bought

The success of digital transformation projects starts on the executive floor and not in the IT department. Some of the key success factors for a transformation are a clear vision, genuine engagement and commitment from management, time and budget for organizational changes, and open communication. Digital transformation is not an article that you can simply order. On the contrary: the process of change that naturally accompanies such a transformation is predominantly determined by so-called human factors. For example, through the vision for the future, through trust and internal support, or through a clear understanding of goals and basic strategies. Through the commitment of everyone involved. And of course through the role model function of the managers. You should therefore clarify a few fundamental questions before you tackle a transformation project, for example:

  • Do we all know what digital transformation means for us and our company? And why is it so important?
  • Are we ready and motivated to implement the changes?
  • Do we know what exactly we want to change? Is there a clearly defined vision and a corresponding strategy?
  • Is management willing and able to lead by example?
  • What are we investing in the digital transformation and how much can we earn with it?
  • How do we deal with employees' fears (keyword job loss through automation)? What happens if the project fails or there is no change at all?

Taking the time to openly and honestly discuss this type of pre-project questioning will greatly increase the likelihood of a successful outcome.

By the way: If you are looking for a partner for the digital transformation in your company who not only advises you on the technology level but also on the process level and who supports you in this change process with a proven set of methods, we should talk to each other.

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