FAQs about Digital Transformation
What is the difference between digitization, digitalization, and digital transformation?
Digitization refers to the process of converting physical objects into digital format. Through digitalization, digital technologies and digitized data are utilized to enable or improve processes. While digitization focuses on converting and recording data, digitalization is about developing processes and changing workflows to improve manual systems.
Closely related to digitization and digitalization, digital transformation’s primary aim is to integrate technology into most, if not all, business operations. In digital transformation, digital technology is incorporated into all business areas to fundamentally improve workflow efficiency and create value for customers.
How do KAIZEN™ and digital transformation match?
The KAIZEN™ approach delivers breakthrough results in process transformations and gives teams the capabilities to operate smarter while deploying the newly improved processes. This improvement backbone sets the perfect scenario for digital transformation: an environment where critical processes are optimized and teams can adapt to new ways of working in an agile way.
A digital transformation journey should not happen as a stand-alone process with the purpose of digitalizing the company. It should be part of the improvement strategy for the business, along with process transformation, skill development, and cultural advancement.
That means that an integrated approach of KAIZEN™ and Digital transformation ensures a sustained trajectory for the business that matches the most efficient use of technology implementation to the long-term company vision regarding results, processes, people, and culture.
Is Digital Transformation a must?
Digital transformation is not a must for all organizations, but it can be a key factor in helping businesses to stay competitive in an increasingly digital world.
The impact of digital transformation differs from industry to industry. The scale of that impact depends on factors such as: how reliant an industry is on technology, what type of technology that industry uses – i.e., hardware or software – and the advancements of technology for that industry in particular.
Ultimately, the decision to undergo digital transformation should be based on the specific needs and goals of the organization. It is vital for businesses to carefully consider their resources, industry, and market when deciding whether to embark on a digital transformation.
Who is responsible for driving digital transformation forward?
The responsibility for driving digital transformation forward can vary depending on the organization and the specific goals and objectives of the transformation. However, it is typically the responsibility of senior executives, such as the CEO, CIO, or CTO, to provide the vision and strategic direction for this transformation. These executives may also be responsible for securing the resources needed to implement the transformation and ensuring that it aligns with the organization’s overall strategic goals and objectives.
In addition to senior executives, other key stakeholders may also be involved in driving the digital transformation forward. These may include employees at all levels of the organization, customers, shareholders, and other external partners or vendors. The involvement of these stakeholders in the process is key to ensuring that the transformation is successful and aligned with the needs and expectations of all parties involved.
What organizational changes are required to develop a “digital-ready” culture?
Becoming “digital-ready” demands several high-level preparations. The most obvious include support from leadership, a place for digital in the core business model, and, of course, a budget to afford digital tools.
The less tactical but equally important component is the “human” component. To cultivate buy-in from staff and quell resistance, it is important to plant the seeds for a digital culture. Catalyzing a cultural shift is essential to seeing the digital transformation through.
How to measure the return on investment (ROI) of a digital transformation?
First, companies should collect data on the benefits of each initiative under the digital transformation program. This should include any efficiency, productivity, sales, and profitability improvements that can be directly attributed to the actions performed. On the other side, the direct costs, including software and hardware expenses, and indirect costs, such as employee time and training, must also be considered.
It is important to note that measuring the ROI of a digital transformation can be challenging, as some of the benefits are intangible. Moreover, disrupting the business model is not always to generate short-term gains but to protect the business’s sustainability. In summary, there are some low (or immeasurable) ROI initiatives under the program, which are enablers of the transformation, that should not be underestimated.
How to ensure that digital transformation efforts are sustainable in the long term?
Ensuring that digital transformation efforts are sustainable in the long term requires a combination of ongoing investment in technology and infrastructure, as well as a culture of continuous improvement.
It is important for organizations to regularly analyze their business and operation system, review and update their digital systems and processes, and invest in training and development for employees to ensure that they have the necessary skills to support the organization’s current digital initiatives.
What indicators show it is the right time to start a Digital Transformation?
The right time to start depends on several factors, but in general, the sooner, the better. Factors such as your organizational readiness, industry, market, finances, long-term strategy, compliance, and government regulations may all come into play.
How long does Digital Transformation take?
Digital transformation is more of an evolutionary process rather than an individual project with a set start and end date. There are often multiple projects within a general digital transformation program that need to occur to achieve the overall objectives.
In addition, technology will constantly evolve, so organizations must evolve with it. This may require future digital transformation efforts to maintain the competitive edge achieved by initial efforts.
How to get started on the implementation of a digital transformation?
Building a digital transformation strategy starts with the company’s strategic goals. The medium and long-term goals for the business determine the areas of the organization that will need strategic improvement. Once we have defined the value streams for improvement, it is time for a deep analysis that will point out the opportunities that should be addressed in terms of process improvement, digitalization, and knowledge or resource gaps.
With the priority areas defined, the design of the future state vision for the company’s value streams will deliver the transformation roadmap for the teams to continue. This is where the impact of the initiatives to be implemented should be clearly measured, along with the benefit they will deliver. For that, it may be necessary to perform some proof-of-concept actions.
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