The Four Essential Pillars of Digital Transformation in Business Organisations
Digital technologies offer opportunities for companies to transform their business models and improve their business processes in ways that put their customers at the centre of their operations. However, many companies struggle to realise the full value from the adoption of digital technologies because they fail to fully consider essential elements of the change process. This article describes the four essential pillars of digital transformation which every business organisation must consider if it desires to achieve clarity and the success of its digital transformation initiatives.
Business organisations and governments, view digital technologies (big data, machine learning, internet of things etc) as key to ensuring competitiveness including productivity and efficiency gains, reaching net zero, and addressing labour shortages. These digital technologies, form the technological foundation upon which companies initiate ‘digital transformation’ projects.
Although the term digital transformation is widely used, it can mean different things across various industrial sectors and to different groups of stakeholders. For example, it may be used to refer to something as limited as the introduction of a new digital technology e.g., the transition of a company’s IT storage to cloud computing. At the other extreme it could involve the creation of completely new digital business models such as a move from sales to servitisation (where customers pay for a service - such as mobility - rather than buying the mobility equipment such as a car or a bike), or platformisation (the creation of a digital platform that brings together different stakeholders to interact in a virtual environment such as multi-sided marketplace - an ecommerce platform). Consequently, depending on the scope, digital transformation projects may result in localised changes in processes, or lead to organisation wide business model transformation and value chain reorientation.
Despite years of research focused on untangling the web of confusion around the subject, understanding what digital transformation means within an individual company remains a daunting challenge. The key to cutting through the confusion might be in a change of perception which requires stakeholders to abandon the mindset that digital transformation is a single thing and view it as a multi-faceted journey with differing goals, which takes into consideration context e.g., the industry peculiarities and the level of digital maturity of a specific company.
To improve clarity and the chance of success, before embarking on their digital transformation journey every organisation must address the essential pillars of "why", "what", "how", and the "metrics" of success:
The relevant stakeholders in a company must first answer the fundamental question of why it is necessary for the company to embark on a digital transformation project.
Then, it must identify what needs to be transformed, that is in terms of its business model, value chain, customer value proposition (which includes its customer experience and customer journey mapping), as well as how the company will identify and leverage new opportunities to capture value for itself (its revenue model and development of redundant capacities).
The next important issue that must be addressed is how to go about the transformation process, this is in terms of the appropriate frameworks and methodologies that would be adopted in project managing the digital transformation initiative.
Finally, it is important to understand if the transformation project is succeeding or not. Success metrics provide objective measures of performance and enable those responsible for the transformation project to identify issues which require urgent intervention and areas for improvements.
In conclusion, the business landscape is becoming increasingly shaped and driven by digital technologies. Digital technology adoption is an essential building block of digital transformation, however, the reach of what is considered a ‘transformation’ can differ. For clarity and to improve the chance of success organisations should define why they are undertaking the transformation; what is to be transformed; and how the change will be conducted. Fundamentally, consideration should be given to defining the metrics against which the success of the project can be measured
Author’s profile
Dr Fortune Nwaiwu is an expert in ICT for Development and Digital Transformation. He has a Ph.D. in Economics and Management from Tomas Bata University, an MBA from Nyenrode Business University, and an MSc. in Security and Risk Management from the University of Leicester. His research interests are on Digital Transformation in business organisations and development economics. He was previously a Business Transformation Manager (mKTP) at Liverpool John Moores University, and is now a Research Associate at the Centre for People-Led Digitalisation, University of Bath.
If you would like to know more about this research, please email p-ld@bath.ac.uk.
