Digital Transformation – What is it and what role should my ERP system play?
Digital Transformation involves ‘different thinking, the encouragement of innovation and new business models, incorporating digitisation of assets and an increased use of technology to improve the experience of your organisation’s employees, customers, suppliers, partners and stakeholders.’
The Agile Elephant
In short, it’s about rethinking your business for the digital age.
The quote above will set alarm bells ringing as it calls on businesses to move out of their comfort zone and look at every element of their business with fresh digital eyes. It brings up a myriad of daunting questions. What are the specific steps we would need to employ to undergo a digital transformation? Would we need to design new jobs to help us create a framework for digital transformation? What parts of our business strategy or processes need to change? What specific technology do I need? Is it really worth it? How much time and effort is required? And the big question on the tip of everyone’s tongues….
Is this really of relevance to my business?
The answer to that one is a resounding YES!
We are living in a digital economy. There is a whole new playbook that every business can use to avail of the opportunities the digital world offers. Think of it as our modern day industrial revolution. If you look at it in this context its importance cannot be underestimated. The Accenture CEO was quoted as saying
‘Digital is the main reason just over half of the companies on the Fortune 500 have disappeared since 2000.’
Look at the impact companies like Airbnb, Uber, Netflix, Amazon & Spotify have had on their respective industries. This is more than just a passing trend with digital impacting every industry and in order to survive businesses must react accordingly.
New digital technologies like social media, mobile, and analytics are a current reality in the economic landscape. They are already used widely by your customers and employees alike. The challenge for you, as business owners/managers, is to understand how best to harness these technologies to achieve your business objectives.
Forrester estimates that currently only 27% of businesses have a coherent digital strategy. However, IDC recently reported that the number of businesses adopting advanced digital strategies will double to almost 50% in 2020.
There are clear benefits to be gained from implementing a digital transformation.
According to the MIT Center for Digital Business,
“Companies that have embraced digital transformation are 26% more profitable than their average industry competitors and enjoy a 12% higher market valuation.”
The word of warning here is: Do not be complacent.
Do not assume that this buzzword has no relevance for your business. Digital transformation is industry agnostic. The barriers to entry are dissolving across all industries enabling new, more digital entrants to enter and disrupt the status quo. At some point your industry will be impacted and if you are not leading the charge or equipped to deal with these changes your business will suffer.
How do we do it?
That goes beyond the scope of a blog post I’m afraid. However, we can give you some tips to get started.
1. Senior Team Commitment & Expertise
First and foremost, ensure a member of your executive team have some expertise in this area -if they don’t up-skill them or hire in the required talent. The importance of this project should not be underestimated. It must be led by a senior team member to ensure its impact will be felt across the organisation.
This project requires strong commitment from the get-go. When the word 'transformation' is in the title it’s definitely not magic wand territory! From the outset don’t think of this as a waste of time, energy or resources. Think of it as the necessary cost of change – approach it positively and enthusiastically. Also, many may assume that these types of projects will require heavy investment when often you won’t be seeking out additional capital…it will be more a case of spending current budgets differently.
2. This is not about Technology
Well that’s not technically true but the successful digital transformation projects do not focus simply on implementing new technologies. Instead, they illustrate how organizations can enhance the experience of their customers, streamline their operations or transform their business models using technology as the enabler.
To enable your business to thrive in the digital age you must adopt a holistic approach to this project. You need to work with your stakeholders, include your employees and map out your digital transformation strategy accordingly.
3. Start with the Customer
‘You’ve got to start with the customer experience and work backwards to the technology.’
Digital transformation is built around the customer experience. Customer-centric, customer-facing processes and the end-to-end customer experience are key in digital transformation strategies. Mapping out how your customers interact with your business will lay the foundation for your digital transformation strategy. Think about the problems you can solve for your customers and how you can make it easier for them to do business with you and then work back to how technology can help.
Once this is complete extend this process out to all stakeholders you engage with; suppliers, partners etc. to ensure you adopt a holistic approach.
4. Include your Employees
Digital transformation ideas are not siloed. They can be found across your organisation therefore; ensure you lead this change from the bottom up. Consider organising workshops across every department of your business (and the senior team) getting employees to detail all of the ways in which they could improve or change business processes, models, customer service & engagement etc. Everything from small, incremental changes to blue sky ideas… and ask people to make the assumption that a technology solution could be found to fix the problem. A thought provoking question to ask is 'how would you disrupt your marketplace?'
Ensure you provide enough time and the right collaborative space to make this workshop productive. It should ideally be led by the department head (some external expert assistance may prove useful to ensure these workshops are as productive as possible) to engender buy-in. When all ideas are collated you could then ask employees to rank their ideas according to criteria you set to enable you to map ideas into a coherent plan of action. When you are presented with a list of areas that your employees believe can be improved or need to be addressed the whole premise of digital transformation starts to become really tangible.
5. Build your Roadmap
Here you will start getting into the nitty-gritty of how technology can enable your business to thrive. Map out the technology solutions required to provide you with an overview of the scale of your digital transformation. Do this by putting the following comment behind each idea, problem or suggestion
- We already have the technology to address this
- We have a version of the tech needed but its capabilities are limited
- We need to find a new technology solution but we know this solution exists
- We need to invent the tech solution for this problem or get someone else to.
This may lead you to create a staged action plan for your digital transformation project identifying:
- Actions for Now
- Actions for Experimentation
- Actions for Future
The actions for now piece is important. Quick wins will help foster the culture required to ensure digital transformation becomes a normal part of your business.
What role should my ERP system play?
Your ERP system is an enabler of your digital transformation strategy, therefore it is vital that you have the appropriate solution in place. Outdated or obsolete business management systems can limit your ability to address challenges and emerging opportunities. If legacy technology is standing in your way, it’s important to address this early on. Computer Weekly recently reported that
“Nine out of 10 IT decision-makers claim legacy systems are preventing them from harnessing the digital technologies they need to grow and become more efficient.”
You need to have a modern ERP system in place that will provide the technology bed-rock for your digital transformation strategy. No, it won’t address all of your digital transformation objectives but a modern ERP system will enable you to integrate with the appropriate 3rd party technology solutions. This will allow you to use best in breed tech solutions for your specific problems that still feed into one fully integrated system that is used across the organisation. This is important as all of your technology solutions are now talking to each other and feeding back into one mainframe; your ERP system to provide you with One Version of the Truth.
Challenge your current ERP system
As we have noted a single ERP system may not be the best answer for all of your digital transformation challenges but it will certainly play a role in your digital transformation strategy.
1. Big Data Brings Big Opportunities
Information is at the centre of digital transformation. Data volumes, formats and sources keep growing exponentially. The question for leading companies has become: how do we turn all this data into actionable intelligence in a meaningful, prioritized and profitable way, leading to new opportunities.
‘Data is the new oil.’
Clive Humby, Data Science Innovator
Every day your ERP system discreetly records every key stroke, transaction and sales line. This is a massive untapped asset. If you know how to extract and interrogate this data, the benefits are significant. The process of setting up a Big Data analytics program is not as daunting as it sounds. Today’s modern ERP systems, more often than not, provide Big Data analytic capabilities within the system. This is often the preferred option for companies as the analytic tools complement and work seamlessly with all other areas of your business system. Once set-up, your system eliminates the mind numbing job of extraction and management of your data leaving you with a continuous flow of actionable, real-time insights.
To find out more about how you can use the data in your business to aid strategic decision making click here
2. Improve Business Processes & Optimize Operations
When you implemented your ERP system you challenged it to make your business processes, at the time, more efficient and streamlined. Now as your status quo shifts you need to re-engage your ERP systems provider at the start of your digital transformation journey to understand where they can and cannot assist.
You may be surprised to find that modern ERP capabilities related to workflows, user based customisation and advanced reporting could address many of the issues you identifiy especially when it comes to automating and streamlining processes.
For example, here at Intact our customers are using our powerful NeXus module to enable them to Manage by Exception. This basically means that their attention is focused only on those areas in need of action rather than wasting time sifting through data, reports or emails to find the critical information they need to know.
To find out more about Intact iQ Nexus click here
This is a classic example of how your ERP system can help you to radically innovate your operational processes. Your ERP system can also reinforce consistent business processes by implementing workflows that guide employees to follow specified procedures. Automated functions can be set up to improve customer communication. E.g. send emails at critical points in customer order processing—such as order confirmation, production updates and shipping notices.
3. Bridge the Mobile Gap
If you are not using the power of mobile to increase efficiency across your workforce, drive sales and stay in control than make this one of your digital transformation actions now priorities. Today most modern ERP systems offer access to a fully integrated enterprise mobility app that provides your employees with tailored anytime, anywhere access to your ERP system. Enabling your employees to interact with you and your customers effectively via mobile will enhance productivity and improve customer service levels overnight.
To find out more about the range of Enterprise Mobility options available click here
4. Online – Put your Customer First
When we think of online we automatically think selling online, but is this always the appropriate answer? Again, we would ask you to start with the customer. Do they want to buy your products online? Back this up with customer answers, not just hearsay. If you are investing in selling online because everyone else is this is the wrong approach. Think about the online functionality your customers require. For B2B customers they may just want access to a customer account portal where they can view orders, invoice history, bespoke price lists etc. Others may just want to access product information and yes some will want a fully functioning ecommerce site. That’s fine but just make sure your online solution is focused on the customer not the latest trend of the moment.
Whatever online approach you choose most modern ERP providers can provide you with a web solution that is fully integrated with your business system. This ensures online transactions are automatically created in your business system in real time making this the smart way to sell online.
To help you answer the question, ‘Selling Online – Is it the right option for my business?' Click here
We hope you found this blog useful and while it’s not the definitive guide to digital transformation we hope it provided you with some actionable food for thought.
A final note though….
Digital Transformation – The Journey That Never Ends
Digital transformation should be approached as an ongoing journey. It’s the development of a capacity to act, react and ideally pro-act as societal changes and technological evolution continues to take place, accelerate and evolve.
Remember - We are currently in digital pre-school…. It’s up to you to make sure your business graduates out of the college years!
Want to know more about ERP software? Our 'What is ERP software and do I really need it' is a comprehensive overview that covers all aspects of ERP software; from the benefits to how to successfully implement it.