This article describes the strategies that companies must adopt to achieve digital transformation and realize the promised growth potential.
A recent study by Morar Consulting found that high-growth companies spend twice as much time on strategic planning as low-growth ones. This approach is critical for businesses undergoing digital transformation. Many competing technologies, such as the Internet of Things (IoT), cloud computing, artificial intelligence (AI), big data, and analytics, are driving digital transformation;
Manufacturers need to know:
- Their positioning on the digital transformation journey
- How specific technologies add value to the business
With increasing competition and phenomenal pace of technological growth, companies must determine which areas can be minimally transformed to maximize return on investment. Therefore, a thorough understanding of the market and business is the starting point for the road to growth. Those committed to strategic planning are more likely to achieve a “thorough understanding”.
Define growth goals
To get started, vendors need to conduct a comprehensive and objective assessment of their current operations, such as:
Set what works
- Identify what needs immediate attention
- Determine where digital transformation can add real value
- Only by achieving this can the company clearly define its growth goals and prioritize investments for digital transformation.
McKinsey recommended that leadership should ask five key questions before establishing a path to digital transformation:
- How will digital technology destroy our industry and what new ecosystems will emerge in the next five to ten years?
- Where is the value of our company and how can we optimize to the maximum?
How close is reform to our doors? Where should we invest in infrastructure, cybersecurity and partnerships?
- What new competencies, skills and mindsets does the new institution need? How do we identify, recruit and retain the right new talent?
- What should I try now to get value?
For vendors, prioritizing can mean a trade-off between operational efficiency and improving the customer experience. The risk of holding excess inventory or missing order delivery deadlines is expensive for businesses. It is important to be honest about which areas are the biggest obstacles to growth and which offer the greatest opportunities for lasting success.
Unique balancing strategies and techniques
Companies that have made the most reliable progress in digital transformation will use strategic planning to guide the transformation, based on their specific business situation. For some vendors, digital transformation means investing in new technologies for connectivity, integration, and automated production, including:
- Artificial intelligence, sensors, actuators, and drivers help exchange information in real time
- Internet of Things technologies, such as smart sensors, that predict failures and send alerts that trigger automatic responses
- Automate and optimize supply chain logistics
According to Aberdeen Group, the digital technologies most likely to impact operations are the Internet of Things (for new operational intelligence), the cloud (for real-time visibility and scalability), and big data analytics (turning data into predictive, actionable insights).
For other vendors, digital transformation will be customer-driven: responding to increasing customer pressure to produce shorter, more personalized products at the same or lower cost, and a more personalized experience.Forrester”In these cases, firms must shift from the inside out to the delivery of products and services to the mindset of external customers to maximise new growth opportunities.”
Visibility and insight
Whatever the focus of digital transformation, the key to success is visibility and insight to understand where technology can add maximum value to your business. Vendors have more data than ever before, but few have the technology to get real value from it. IDC estimates that fewer than 10% of vendors can use data effectively.
To make the best use of this data, companies must invest in technologies that add value by providing business-critical insights. Vendors need an industry-specific enterprise resource planning (ERP) system that provides real-time, in-depth data to transform their operations and enable them to seize growth opportunities.
Better understand all areas of the business enables smarter and faster decisions, new operational efficiencies, and enhanced customer experiences. No matter what digital transformation your business is, applying the right tools means just the difference between competition and prosperity.