Digital transformation has become a strategic necessity. Any company that wants to stay ahead of the competition, improve performance, and drive growth has to take a long, hard look at its digital adoption rate.

However, McKinsey research suggests that only 16% of digital transformations achieve the desired outcome and equip businesses to sustain changes in the long run. Even industries heavily focused on technology, such as telecom, don’t have a much higher success percentage.

Why? Because you can only adopt new technologies by considering your business as a whole. Companies need a digital transformation strategy to coordinate this large-scale effort across the organization and the various aspects of their business.

While digital transformation might sound intimidating, a comprehensive strategy and a digital transformation roadmap can turn it into a smoother, more manageable process. Let’s explore how you may achieve this.

What is digital transformation?

Contrary to popular belief, digital transformation is not just a purely technical initiative, where you bring new technologies such as AI or automation into your business. It’s more about how you use digital transformation tools to improve processes, create value for your customers and employees, and thrive in competitive conditions.

For example, automating tasks may allow your Customer Success team to onboard new clients faster or keep track of issues easier.

Or maybe you recently implemented a solution that empowers employees to manage vacation times and documents on their own, without additional HR support.

There are hundreds of actions you can take that fall under a digital transformation approach. Planning ahead and creating a well-defined strategy ensures your efforts aren’t lost in an endless sea of options and decisions.

Why do you need a digital transformation strategy?

A digital transformation strategy acts as the North Star across the organization. It’s your guiding approach as you remodel the business to incorporate digital technologies, keeping everyone on the same page and ensuring teams are delivering on what matters most to your business and customers.

Companies that have a digital transformation strategy in place and act on it are more likely to enjoy some of these benefits.

Increased operational efficiency

A coordinated digital strategy leads to a better understanding of challenges and how to overcome them. Through digital transformation innovation, companies can streamline operations to respond better and faster to changing market and customer demands.

Organizational agility

Agile became popular in software development, but its benefits reach further. Digital transformation both requires and reinforces an Agile mindset throughout the entire organization, focusing on the continuous delivery of value versus one-time deliverables.

Data-driven decisions

As part of implementing and using digital technologies, companies collect, analyze, and interpret data to identify insights that can be used to make better decisions. This can range from a smarter product development approach to data-driven marketing and customer service.

Faster time to market

When companies adopt a digital transformation strategy, they can reduce the time it takes to get their products or services to market. Businesses can iterate faster, improve deployment times, and cut down on the costs required to bring their solution in front of customers.

Better customer experience

Implementing a digital transformation strategy gives teams the resources and tools to tackle customer issues, listen to end-user feedback, and create a positive customer experience.

When companies merge technology with a good understanding of customer expectations, that’s when the magic happens.

Who should be involved in the creation of a digital transformation strategy?

Digital transformation requires company-wide involvement. Bringing a handful of decision-makers into a conference room to put together your digital transformation strategy might not yield the best results.

Rather than relying exclusively on the input of executive leadership, an Agile approach to digital transformation encourages cross-team collaboration. This means involving participants from different areas of the organization in the process of creating and defining your digital transformation strategy:

• The IT department provides the practical know-how required for planning and implementing a technology transformation.

• Marketing and Sales teams offer valuable insights into market trends that shape digital strategies.

• Operations teams can identify opportunities for process optimization and automation.

• Customer Service teams give a voice to customer concerns, expectations, and requests.

Key steps for developing a digital transformation strategy

According to industry research, 89% of the companies have already adopted a digital-first business strategy or are planning to do so.

Let’s look at the four key steps you can take to get a head start on your digital transformation process.

1. Assess the current state of your business and infrastructure

Before you jump into any radical changes, you need to understand where you stand. Maybe you’ll discover that a radical change isn’t even required and all you have to do is tweak existing resources.

Use a business analysis framework

Techniques such as SWOT and PESTLE can give you an overview of how your business is performing.

SWOT is a great option to identify internal strengths, weaknesses, opportunities, and threats, while PESTLE looks at external factors impacting your business (political, economic, legal, etc.)

Benchmark against industry standards

Benchmark reports enable you to compare your current state with how other companies in the industry are operating. You can evaluate how you stack up against competitors in terms of digital maturity and how much you need to improve.

Examine customer and employee experience

Understanding how employees and customers see your business goes a long way toward planning your digital transformation. Questionnaires, surveys, focus groups, and even verbal feedback can reveal unexpected pain points.

Perform an end-to-end technical audit

At the end of the day, digital transformation relies heavily on technology and on an infrastructure capable of supporting it. Evaluate your current technology stack, including hardware, software, and networking infrastructure to identify outdated solutions or cybersecurity risks.

2. Identify transformation opportunities

Based on the research conducted so far, you can now identify those areas within your organization that would benefit most from digital transformation.

Let’s briefly explore two scenarios where companies capitalized on transformation opportunities to increase ROI, customer engagement, and efficiency.

Financial digital transformation

One of our partners is a prominent payment gateway that caters to businesses in Indonesia, the Philippines, and Southeast Asia. Part of their portfolio included a legacy core banking platform, that they identified as a digital transformation opportunity.

Their research revealed that a lot of operations were being done manually or outside the platform itself, slowing down their team and posing governance concerns.

As a technology partner, we rebuilt their core banking platform to adhere to banking regulations and empower customer support teams.

A look into retail digital transformation

Another client of ours had an online retail store with a large product inventory. Before our collaboration, employees were manually curating the inventory, which took roughly 80 hours a month and still didn’t show the most relevant items for each individual client.

It became very clear to our client that inventory management was a major pain point and one of the main opportunities for digital transformation.

We used Machine Learning to create personalized inventories, leading to increased customer satisfaction and an annual savings of $25k.

3. Define your vision and direction

As part of reevaluating your business strategy, you will need to define your vision, overall goals, and the destination you want to reach through digital transformation. This may also include revisiting your value proposition, namely how you make employees’ and customers’ lives better through AI, the cloud, or any other technology you use or are planning to use.

Think of it as defining the big picture, or the WHY behind your digital transformation efforts. If you don’t already have a mission or a vision statement, now it’s a good time to work on them. If you already have those, consider their relevancy in this new context and if they accurately reflect the ambitions you have for your business over the next few years.

4. Establish an action plan

A digital transformation strategy gives you direction and purpose, but it doesn’t address the actual steps you should take. That’s why you need to add to your digital transformation strategy an action plan or a roadmap that explains:

• the concrete tasks, timelines, milestones, and resources involved in your digital transformation efforts

• how you will track implementation and progress

• how you will tackle challenges and risks

Your digital transformation roadmap is an important, but separate, aspect of your overall strategy. Whereas the strategy is a general guideline pointing toward what you want to achieve and why, the roadmap helps you visualize the nitty-gritty details.

From strategy to digital transformation roadmap

Now that we’ve looked at the differences, let’s explore how to connect your digital strategy to an actionable roadmap.

Turn your goals into measurable KPIs

One of the main purposes of a digital transformation roadmap is to make your strategy achievable through concrete, measurable steps. Start by considering your digital transformation goals. Maybe data silos are a big problem in your company, preventing teams from accessing the information they need.

Or maybe your employees are doing too much manual work and they are falling behind in terms of productivity and digital skills.

Whatever your goals may be, break them down into quantifiable KPIs. If your aim is to increase operational efficiency, you might want to track, for example, things like:

• Cost savings percentages

• The time it takes an employee to perform a routine task

• Overtime hours

• Uptime and availability of digital systems

Pro tip: Make sure to establish a baseline for each KPI before you begin tracking them. Without a starting point, it will be difficult to assess if you’re heading in the right direction.

Start small and work Agile

Digital transformation doesn’t mean changing everything about your company, and certainly not everything at once. By starting small and working within an Agile framework, you can hit the ground running and also make adjustments easier when needed.

Focus on small, achievable projects first and build up from there. Before you implement your digital transformation roadmap company-wide, consider testing it within a department first.

Similarly, break down larger milestones into smaller tasks your team can get behind.

The easier a task is to understand and act on, the more excited your team will be to contribute to the digital transformation of the organization. It will feel like a natural part of their day-to-day work. Incremental changes combined with an Agile mindset equal digital transformation success.

Choose the right tools and allocate resources

There’s no shortage of technologies you can use in your digital transformation, from marketing automation to the latest AI-powered assistants and cloud platforms. To give you a quick overview, we’ve compiled a list of ready-to-use tools broken down into business categories.

Avoid buying software solutions just to follow a trend or meet a quota. Any tool or technology you choose should address current challenges and also be scalable enough to accommodate future demands.

Once you settle on a particular technical solution, you will also have to allocate the resources needed to:

• Purchase new tools and technologies

• Review security measures and network resources needed to support the technology

• Train your team on how to use them

• Put in place policies, procedures, and documentation

• Maintain and upgrade the tools and infrastructure

Nurture accountability and a change-ready culture

Any organization that wants to stay ahead of the game needs to be ready to adapt to changes.

To nurture a transformation-ready culture, make sure to:

• Encourage employees to learn from mistakes, discover on their own, and experiment. For example, Google’s “20% time” policy allows employees to spend 20% of their time on experimental projects.

• Make clear the value of adopting new processes and tools.

• Get teams involved in planning and implementing the digital transformation roadmap.

One of the best ways to motivate stakeholders and employees is to create a sense of accountability. Give them ownership over specific digital transformation initiatives. This will not only make responsibilities crystal clear, but it will also create your very own, in-house transformation advocates.

Plan for challenges and risks

A digital transformation roadmap is a plan outlining where you are and where you want to go. Inevitably, there will be obstacles and your roadmap should account for these as well. Digital transformation requires people to change how they work, collaborate, and even how they think, so a certain level of resistance is to be expected.

Instead of dismissing these concerns, talk about them. Support your team as they are going through this cultural shift through proper change management. Even the best digital transformation strategy will lose momentum if the people on the ground don’t share the same vision or if it leads to disruptions in business continuity.

Track implementation and ask for feedback

Another trap companies often fall into is not monitoring progress and how the digital transformation roadmap is implemented. Asking for feedback and making adjustments based on this is a crucial step for staying on course.

Companies that regularly update their roadmap achieve their objectives 63% of the time, compared to only 18% of companies that don’t.

Use an Agile approach to roll out your digital transformation roadmap in phases. Review KPIs, test implementation, iterate, and refine throughout each phase.

Depending on the size of your business, various phases may require feedback from different departments and clients, so put in place a way to collect and analyze feedback end-to-end.

Ready to start your digital transformation?

Digital transformation is a gradual process that involves a long-term strategy and a coordinated effort. One of the biggest challenges companies face is not having the internal expertise or the right partners to accompany them on this journey.

At ETEAM, we’ve been working in Agile for almost a decade, building software solutions that solve real business problems and transform organizations. From cutting down infrastructure costs and manual processes to re-imagining legacy applications and increasing user satisfaction, we’ve done it all. And we’re ready, let's do it for your project as well!