Technologies Digital Transformation

Technologies Shaping Document Management Systems.

by with No Comment BusinessDigital Transformation

It is important to know that the global document management system market was valued at USD 5.51 billion in 2020. The document management system market is expected to reach USD 11.47 billion by 2026 and grow at a CAGR of 13.05 percent over the forecast period 2021-2026. The document management systems market is ever-changing, and is driven by the need for increased efficiency, demand of data security and compliance in the workplace. The improving technologies and efficient execution of document management systems are expected to gradually eliminate the concept of traditional paper files. [17] The organizations can embrace future of document management by leveraging mobile capabilities, integrating with other business systems, exploring blockchain technology, and implementing enhanced security and compliance features.

Document management systems have come a long way from basic file sharing and storage capabilities to comprehensive platforms that drive efficiency, insights, and strategic business value.

Digital technology transforming the document management system: The document management systems have come a long way from basic file sharing and storage capabilities to comprehensive platforms that drive efficiency, insights, and strategic business value. Today’s increasingly digital and mobile world relies heavily on effectively managing documents to thrive. The success of document management solutions is function of managing complex integrations with various independent platforms. It must offer a seamless user experience, secure access controls, data encryption, audit trails, data protection and ease of use. For example, a UK Insurance company receives thousands of documents everyday — forms, letters, cheques, photographs, even video — from corporate and individual customers. The insurer chose to implement a Xerox digital mailroom service and document management solution. Post implementation Xerox digital mailroom service, without disruption to the business, the insurer has gone from highly manual, paper-based processes to highly automated, digitized ones. [18]

Mobile document management solutions: The current age professionals are constantly in move, and they must have constant access to important files and documents. The advanced document management software needs to be accessible from mobile devices, which usually comes in the form of an intranet mobile app. With help of mobile document management system documents can be uploaded, annotated, and collaborated on-the-go without accessing a dedicated workstation. The experience of mobile based document management system must also be immersive and user-friendly. The overall process of mobile document management system help enhance productivity and enabling seamless remote collaboration. It also helps enforce security policies, such as device encryption, remote wipe capabilities, and app-level security, ensuring that sensitive documents are protected even on mobile devices. It enables users to access and collaborate on documents while on the move with the help of mobile apps, employees can view, edit, and share documents from their smartphones or tablets.

Cloud-based document management solutions: The cloud computing has revolutionized software and has had a profound impact on document management systems. It has transformed how document management systems are deployed and accessed. It is the future for document management as it is the easiest, most efficient way to access and organize documents. It facilitates seamless workflows and process automation.

Cloud based document management has emerged as a game-changing solution, revolutionizing how organizations handle their valuable records. Cloud computing provides a flexible and scalable platform that enables businesses to digitize, store, and secure documents efficiently. [19] The cloud-based document management solutions powered by global provider such as Microsoft, Amazon, Google, Oracle and others offers a centralized repository accessible from anywhere, facilitating seamless collaboration, real-time updates, and document sharing. It also, eliminates the need for on-premises infrastructure, reducing costs and simplifying maintenance. For example, an Italian consulting firm Gastaldi International specializes in claims management for insurance and reinsurance companies. The cloud-based document management solutions guarantee secure management of sensitive documents and processes.

The cloud-based document management solutions employ advanced encryption methods, robust access controls, and regular security audits to ensure the confidentiality, integrity, and availability of documents. It enables seamless integration of document management with other business systems that offers many benefits, such as increased flexibility, scalability, and cost savings. It offers unparalleled scalability and flexibility that offers organizations opportunity to adjust their storage requirements as their document volumes grow.

Artificial Intelligence in document management solutions: The AI-powered document management system plays a crucial role in document management. It automates tasks like document classification, data extraction, and even translation. Using artificial intelligence systems organizations are now streamlining processes such as invoice processing, contract management, and data validation, saving time and minimizing errors associated with manual data entry. For example, the accounts payable departments of an organization can process paperwork faster, gathering invoice information quickly with AI-driven smart capture technology, while utilizing reporting features to track and monitor the entire AP process.

The advances in artificial intelligence technology have expanded its capabilities and reduced its implementation costs. The adoption of artificial intelligence technologies such as machine learning, natural language processing and automated indexing, the system can be trained to handle that unstructured data. Moreover, artificial intelligence backed by Natural language processing capabilities empower document management systems to understand and interpret human language. It enables intelligent search and retrieval that allows users to find relevant documents quickly and effortlessly based on contextual understanding and semantic relationships.  In addition, the advancements in artificial intelligence algorithms and integration of document management with Internet of Things (IoT) will capture and generate vast amounts of data, which can be seamlessly integrated into document management workflows, enabling real-time insights, automation, and improved decision-making.

Blockchain Technology for document management solutions: The Blockchain technology by storing document hashes or timestamps on the blockchain ensures data integrity, offers authenticity, creates tamper-proof records, and strengthens trust and compliance. It is emerging as an innovative solution to verify the authenticity and integrity of documents. It provides a permanent and transparent ledger for document management and enable automated document workflows with predefined rules and conditions. It also offers enhanced auditability and transparency by creating a transparent audit trail, facilitating compliance audits, and ensuring transparency in document activities. The Blockchain technology by leveraging the distributed ledger approach of blockchain ensures that documents remain unchanged and track each change across the entire document life cycle. This ensures compliance with regulations around records preservation and eDiscovery.

Social integration is essential for document management solutions: social media has transformed how we use the internet, communicate, buy things, read news, and so much more. The popular social media platforms, like Facebook, Instagram, and Twitter, have made it easier than ever to connect with friends and colleagues — replacing email and phone as primary methods of communication. Social media has successfully integrated into document management and intranet file sharing systems.

A final Note

In today’s era of rapidly advancing technologies, companies have to deal with overwhelming amounts of data and that has made digital document management system the primary first step in the digital transformation journey. It is observed that world business leaders are quickly recognizing the benefits at stake specifically pertaining to document management system.

Additional Read:

What Lies Beyond Document Management System?
Digital Transformation

What Lies Beyond Document Management System?

by with No Comment BusinessDigital Transformation

Ryan Thompson in a blog – 8 Benefits of Document Management Systems for Your Business has delved into exploring benefits of document management systems. Some of the crucial benefits of the document management systems proposed by Ryan Thompson include – enhanced document accessibility, seamless collaboration, precise version control, robust document security, efficient workflow automation, sustainable reduction of paper usage, effective compliance management, efficient search and retrieval. Moreover, the effective integration of AI, machine learning, and blockchain with the document management systems has offered a significant automation to various aspects of document management systems, making document categorization, retrieval, and analysis more efficient, accurate and secure. It is also observed that the regulators have also mandated tighter data governance, fast query response times, robust security controls, and documentation of compliance reports.

The world business leaders have recognized the benefits of implementing document management systems. The documents management system is set to play a major role in financial, banking, and even manufacturing industries where the need for digitization is critical. It is also evident from the marketing trends, where in last few decades digital document management system has become the primary first step in the digital transformation journey.

Benefits of the document management systems

It is observed that the regulators have also mandated tighter data governance, fast query response times, robust security controls, and documentation of compliance reports. It is also observed that the customer demands, governance and compliance requirements continue to intensify making the document management core of the best practices. It offers numerous benefits including – index electronic and paper records to a secure central hub, enable access for all, with permission-based access levels, instant document search and retrieval, automated workflow checkpoints from input to finalization, automated data retention and purge, workflow visibility and staff collaboration, assured security and built-in compliance, and real-time management reports.

Ryan Thompson – enhanced document accessibility, seamless collaboration, precise version control, robust document security, efficient workflow automation, sustainable reduction of paper usage, effective compliance management, efficient search and retrieval. Moreover, the effective integration of AI, machine learning, and blockchain with the document management systems has offered a significant automation to various aspects of document management systems, making document categorization, retrieval, and analysis more efficient, accurate and secure.

Sustainable reduction of paper usage with document management solutions: One of the key benefits of document management systems is to bring a significant contribution to sustainability by digitizing documents and promoting electronic workflows. It helps organizations decrease their reliance on printed materials, yielding far-reaching environmental benefits. The reduced paper usage facilitated by document management systems adoption is a vital step toward a more eco-friendly and cost-effective document management approach. Moreover document management systems also free up the document storage space of the office and make room for other equipment or new employees.

For example, Fairfield Chair, a 99-year-old, family-run furniture maker based in Lenoir, North Carolina. It turned to Xerox to help them move from an analog to digital system. Xerox DocuShare helped Fairfield Chair digitize and automate their workplace processes. It allowed users to scan papers into a central content management system in the cloud where the documents can be measured, managed, and securely stored for users to access. Fairfield Chair post document management system implementation managed to integrate six different departments on one platform, got rid of one hundred and sixty-five file cabinets, has instant access to information online, can now respond to customers faster and better, and has reduced its print costs by 35 to 40 percent.

Productivity and Collaboration with document management solutions: An advanced document management system helps documents acquired from various sources to be accessible from a variety of locations. It facilitates effortless collaboration among team members, whether they work in the same office or are dispersed globally. It also enables multiple users to access, edit, and comment on documents concurrently.

For example, W.W. Grainger, A Fortune 500 industrial supply company implemented a document management system to improve collaboration among its sales and customer service teams. With the new system, sales reps can easily access customer account information and orders, which allows them to better serve their clients. Customer service teams can also quickly retrieve information about previous customer interactions, which improves their ability to resolve issues efficiently. As a result, W.W. Grainger was able to improve customer satisfaction and increase sales. [8]

The document management system helps organizations save time in the document management process, which translates directly into higher production. It increases the visibility of business processes and allows workflow monitoring and tracking. This feature also enhances workflow oversight, solidifying document management system as an indispensable tool for governance, accuracy and accountability.

For example, Capital One, the financial services company uses a collaborative document management system to improve collaboration and efficiency among its employees. With the new DMS system, employees can easily access and share information across teams and departments, reducing the need for time-consuming email exchanges and meetings. This has resulted in faster decision-making and improved productivity. Capital One has also been able to reduce errors and improve compliance with regulatory requirements. [9]

Storage and tracking with document management solutions: Some documents that are valuable and require use for a longer period of time require storage. The document management system eliminates the need for file cabinets, boxes, and storage bins is a great asset to any business, freeing up valuable office space. The file storage and tracking system is used to manage and store documents, images, videos, and other digital files. It is used by many organizations to keep track of their most important documents, ensuring that they are accessible and secure. Moreover, it also offers the scope for the documents that must be retained in hard copy can frequently be held in less expensive locations, such as an offsite warehouse or vault for the governance, academic and legal requirements.

For example, Bahrain Airport Service use document management system to control the increasing complexities of managing differing regulatory and operator document approvals. The document management system has enabled the Bahrain Airport Service team to not only gain complete control over complex documentation approvals, but also manage associated audit tasks including auditing to different international standards. The effective document management system has helped Bahrain Airport Service increase productivity by 30 percent.

The document management system allows for more control over critical data, and access to documents can be restricted at the folder level for different groups of people. Moreover, the document tracking capabilities lessen the possibility of records being misfiled or lost. The documents in a document management system are highly traceable and can be traced using various criteria.

For example, the BT Group plc, a global telecommunications services company with over 98,000 employees, is the largest telecommunications services company in the world. The BT Group had been using two separate databases to manage Audit Planning Programme and Audit Tracking. These databases were old, and both were not linked together in the way that BT management required. The BT Group recognized that they needed an easily accessible application that managed all parts of their auditing processes from beginning to end, in one central location. The document management system introduced a standardized approach across lines of the business. It also offered a simplified reporting to the senior management, providing visibility of business performance.

Access and Retrieval with document management solutions: There is a famous incident about Toy Story 2, that it was deleted in its entirety from the server due to some erroneous command by someone they could not trace only to be saved by a stroke of luck where an artist took a backup to work on from home. Pixar was lucky to get the data back and survived the mishap, but one is not lucky all the time. One need to out process in place to survive such mishap. The company was too young when this incident happened, and it could have destroyed the now globally acclaimed animation company.

For example, The City of Fort Worth, Texas implemented a collaborative document management system to improve communication and collaboration among its employees. With the new system, employees can easily access and share documents, reducing the need for physical paper files. This has led to faster decision-making and improved efficiency in the city’s operations. The new DMS system has also improved the security and confidentiality of sensitive documents. [10]

The document management system redefine how organizations access vital information. By digitizing and centralizing documents, document management system ensures swift and convenient retrieval, elevating efficiency and collaboration. Moreover, this document management system reduces response times, minimizes errors, and fosters seamless global cooperation, ultimately streamlining workflows and boosting productivity.

For example, Edgefield County Hospital (ECH) in Edgefield, South Carolina to manage hard copy of insurance remits and other related claim documentation annually. They also needed to reduce costs for maintaining and storing paper HealthCare records. ECH to automate the process used FileHold document management software along with EMC Captiva QuickScan Pro scanning software and Fujitsu scanners allowed ECH to get their patient insurance information quickly, easily, and securely into an electronic format. Post document management system implementation ECH takes less than one minute to have a batch of insurance remit forms scanned and stored into the document management solution.

The document management solutions are scalable, faster, and efficient that allow team to adapt the changing needs of any organization. It significantly enhances the speed and precision of document retrieval. The document management solutions, with help of features like advanced search functionalities and indexing. The document retrieval can raise employee morale and increase client satisfaction. Moreover, the document management solution offers a data backup and disaster recovery plan. The paper documents are preserved from the fire, flood, and other disasters with digital archiving as a backup.

Version and Access Control with the help of document management solutions: The advanced document management system offers detailed version control capabilities which is essential for maintaining document integrity and tracking changes accurately. It systematically records all document revisions, averting confusion and errors caused by multiple file versions. For example, a contract management team of a consulting firm managing contracts that can effortlessly trace the history of amendments, clarifications, and approvals, ensuring legal compliance and transparency. The team working on the contract management, with the help of version control, users can revert to prior document versions if necessary, guarding against accidental data loss or unintended modifications.

The advanced document management system offers access controls, user permissions, and end-to-end encryption protect sensitive document information. The document management systems also help businesses comply with data privacy regulations, safeguard confidential documents, and prevent unauthorized access or data breaches. They also protect documents from loss or damage with backup and disaster recovery capabilities.

Workflow Automation with help of document management solutions: The document management system can mechanize routine tasks such as document routing, approval processes, and notifications, minimizing manual intervention and expediting workflows. For example, DocuWare combines a document management system with a workflow management system to simplify invoice processing. Finance manager with help of the workflow management system can pay entire invoices or partial amounts using digital stamps. The workflow automation not only minimizes human error but also empowers team to focus on high-value tasks, thus boosting work quality and removing bottlenecks that at times also hurt bottom line.

According to the German study Process Mining & RPA 2019 by IDG, 90% of companies want to automate their processes with the focus is on time and cost efficiency. The workflow management system can standardize and automate any workflow that drives important business processes. For instance, an HR department leveraging document management systems can automate the onboarding process, establishing predefined document submission, review, and approval workflows, ensuring a consistent and efficient onboarding experience for new employees. Workflow automation saves time, reduces errors, enhances accountability, and enables organizations to allocate resources more strategically. With document management systems -driven workflow automation, organizations achieve higher productivity and operational efficiency across various departments and tasks.

Automation and Workflow Optimization with document management solutions: The automation can help streamline processes and reduce the risk of errors, resulting in increased efficiency and cost savings. This can be achieved through automated workflows, electronic approvals, and other advanced features in document management systems. The automation and workflow optimization by eliminating manual interventions and automating routine tasks minimize human errors, enhance accuracy, achieve faster turnaround times, increased efficiency, reduced manual errors leading to improved business outcomes. Moreover, the advanced Robotic Process Automation software robots can perform tasks such as data entry, data extraction, and document routing, freeing up employees’ time and reducing manual errors. It also offers workflow automation capabilities, allowing organizations to streamline and optimize their document-centric processes. The organizations by automating tasks, notifications, and approvals can improve efficiency, reduce bottlenecks, and enhance overall productivity. For example, companies can save valuable time managing these documents by incorporating splitting and merging tools into their applications. The document management systems rather than copying and pasting or rescanning documents, employees can simply disassemble or reassemble them programmatically. This allows them to quickly consolidate records, combining relevant documents into a single, comprehensive PDF that’s easier to track and manage.[11]

Integration with various business systems with document management solutions: In last few years, the digital document management system has become the primary first step in the digital transformation journey.  It helps business in many business functions including purchase orders, invoices management that enables easy access, facilitate faster decision-making and improve process efficiency. It helps sales representatives access customer-related documents directly from the CRM platform that provide a holistic view of customer information. The integration between document management systems and other business systems eliminates manual data entry, reduces errors, and improves workflow efficiency. The document management systems are designed to integrate with customer relationship management and enterprise resource planning systems, data analytics applications, and other applications that enables a unified view of information and streamlined workflows.

For example, Canon’s authorised partner Avantech, proposed a customized application that is able to scan and process cheques and finally, post them into the APS Bank’s ERP system. This application was then upgraded to scan ID cards and collect signatures. Together with this application, the Bank purchased Canon DR-C130 and DR-C230 scanners, which were distributed throughout the Bank’s branches. The Canon equipment allowed the staff to scan various customer documents directly from the branches’ frontline, significantly reducing back-office administration and increasing operational efficiency. [12]

Enhanced Security and Compliance features with document management solutions: It provides advanced access controls, including role-based permissions, two-factor authentication, and granular access rights. The access control in document management system ensures that only authorized personnel can access sensitive documents. It offers multi-factor authentication, such as requiring a password and a fingerprint or facial recognition, can provide an extra layer of security. The document management systems employ robust encryption techniques. Some of the basic compliance features, including audit trails, data retention policies, and secure storage, enable organizations to meet regulatory requirements and avoid penalties. The compliance measures ensure that only authorized personnel can access and modify documents, enhancing security and compliance. It caters to industry-specific regulations, such as GDPR (General Data Protection Regulation) or HIPAA (Health Insurance Portability and Accountability Act).

For example, a growing financial services company needed to transition to more collaborative and digital ways of working. They also needed to enable access to client documentation from multiple sites while maintaining security of financial and personal information to ensure EU General Data Protection (GDPR) compliance. Xerox ensured a secure digital transformation with help of its device and process analytics. It helped them clarify their digital ambitions and better understand information flows and user access requirements with a secure solution that could grow with them. It also helped the financial services company reduce information and security risk, increase end user productivity and realize cost, time and storage space savings of 25–35 percent. [13]

There are several critical reasons why document management implementations fail. The reasons of failure include: the process is not properly or fully described during preparation for implementation of the document management system, incomplete process of implementation by the implementation team, users do not want to use the new system with all its functionality, inappropriate selection of solutions or system technology, people performing the integration are not sufficiently trained to work with the new technology.

Compliance and Security with document management solutions: At times fulfilling legal and regulatory obligations can be complicated, especially for the organizations that are additionally subject to legal provisions. The advanced document management system ensures compliance with legal norms and regulations is managed best matching the local legal norms and regulations.

For example, in the highly regulated pharmaceutical sector, adherence to strict standard operating procedures (SOPs) is not just a best practice; it’s a legal requirement. SOPs are essential for maintaining the highest levels of quality, safety, and regulatory compliance in drug development, manufacturing, and distribution. To achieve these objectives, pharmaceutical companies must rely on robust document management systems that facilitate the creation, maintenance, and enforcement of SOPs. [14]

The document management system plays a pivotal role in ensuring regulatory compliance by aiding organizations in maintaining accurate records, tracking changes, and adhering to industry-specific standards. The document management system streamlines compliance-related tasks, including document retention and audit trails, simplifying the monitoring and reporting of compliance activities. For example, an IT product company with help of document management system ensures that records remain accurate, accessible, and correctly archived, streamlining compliance audits and mitigating non-compliance penalties.

For example, The APS Bank is a leading bank in Malta established in 1910. In 1970, the Bank was incorporated into a private limited-liability company, and in 1990 it was granted a commercial-banking licence. The Bank wanted to replace a legacy system with a specialized statement printing solution that is capable of integrating with the Bank’s digital channels in a more streamlined and efficient manner. In doing so, the Bank chose to consolidate the digitization efforts into one platform.[15]

The document management system offers formidable security measures to shield sensitive information from unauthorized access and breaches. It empowers organizations to enforce stringent access controls, guaranteeing that only authorized personnel can view or modify specific documents. It also keeps track of who had viewed a record, when it was accessed, and how it was edited. The managed documents are highly traceable and can be labelled to enable automated warnings. For example, a healthcare institution employing document management solutions can safeguard patient records by restricting access to medical staff with the requisite credentials. Furthermore, document management solutions often integrate encryption, audit trails, and automated backups to mitigate data loss or theft risks.

For example, a regional French government needed to find a better way to secure and distribute captured meeting notes to Commission members. Their existing manual process was wasteful, time consuming, unsecure, error-prone and cost $25,000 over five years — with a potential printer breach costing as high as $2.1 million. The Xerox process analytics helped map a step-by-step process to identify inefficiencies and flag security and compliance risks and developed a custom digital process to better secure and distribute captured meeting notes to Commission members. The regional French government is now able to vastly reduce exposure to security risks, turn a 23-minute task into a 1-minute one and reduce costs by 90 percent. [16] Moreover, sustainable reduction of paper usage with the help of the document management system makes significant contributions to sustainability by substantially curtailing paper consumption. The organizations by digitizing documents and promoting electronic workflows, can decrease their reliance on printed materials, yielding far-reaching environmental benefits. The reduced paper usage facilitated by document management system adoption is a vital step toward a more eco-friendly and cost-effective document management approach.

Additional Read:

Digital Transformation in Document Management
Digital Technology - Digital Transformation

Digital Technology Impacting Digital Transformation

by with No Comment Digital Transformation

Digital transformation is still at its evolution stage and every definition of digital transformation is different, depending on the industry and the project. But the main components will likely include rethinking business models, changing the underlying technology stack, innovating with customer experience and also potentially even remaking company culture. [1]  According to Henriette, the digital transformation is a disruptive or incremental change process.  The journey of digital transformation starts with the adoption and use of digital technologies, then evolving into an implicit holistic adaptation by an organization for value creation.

On exploration of various definitions for digital transformation, it is observed that the successful digital transformation is based on three distinct foundations: one, Technological – digital transformation is based on the use of new digital technologies such as Internet of things, social media, mobile, embedded devices, automation, artificial intelligence, analytics, machine learning, cloud computing, Robotics, digital twin, 3D-printing, additive manufacturing, big data, software as a service, robotic process automation, virtual reality, augmented reality, and many other emerging technologies; Two, Organizational process – digital transformation requires a change of organizational processes or the creation of new business models; Three, People – digital transformation is a phenomenon that is influencing all aspects of human life by, e.g., enhancing customers experience.

Starbucks is one of the many classic successes story of digital transformation. The brand used right technology to transform services into something more meaningful with the help of right set of people and process. It integrated the trio of people-process-technology in the journey of digital transformation. In 2017, as one of its many digital transformation initiatives, Starbucks introduced the Digital Flywheel. The initiative focused on transforming rewards, personalization, payments, and ordering based on customer feedback. A cloud-based platforms enhanced Starbucks’ ability to offer tips and order products while managing inventory and production. Starbucks had effectively integrated cloud technology, and artificial intelligence into its app, allowing them to personalize its product offerings and offer rewards based on consumer preferences. The incremental change process that starts with the adoption of digital technologies, evolve into customer value creation. Like Starbucks, there are many success stories of digital transformation where organizations have used most advanced digital technologies to create or modify business processes, culture, and customer experiences to meet changing business and market dynamics. Digital transformation worked for these organizations because their leaders went back to the fundamentals: they focused on changing the mindset of its members as well as the organizational culture and processes before they decide what digital tools to use and how to use them. What the members envision to be the future of the organization drove the technology, not the other way around. [2]

Technological Impact in Driving Digital Transformation

In today’s landscape digital transformation has become the most important part of the human life, affecting almost every part of a business. Digital transformation can be divided into two, being the ‘digital’ and the ‘transformational’ part. Whereas digital refers to information technology, transformation refers to the domain of innovation and creativity.[3] The digital technologies are used to process, analyze, store, and interpret data and include technologies such as Internet of things, social media, mobile, embedded devices, automation, artificial intelligence, analytics, machine learning, cloud computing, Robotics, digital twin, 3D-printing, additive manufacturing, big data, software as a service, robotic process automation, virtual reality, augmented reality, and many other.

The rapid advancement of new digital technologies are fundamentally changing the way how we live, communicate, collaborate, consume, and how firms create and deliver superior value for their customers, representing one of the most transformative impacts of information and communication technologies on business.

The digital technology has played a significant role in driving digital transformation in various industries. These technological advancements have enabled organizations to automate processes, improve communication and collaboration, and gain insights from data, leading to increased efficiency, productivity, and competitiveness. By leveraging emerging technologies, businesses can refine elements of the model to increase the amount of value generated, reduce costs incurred by operations and processes and even create new products and services more aligned with the changing needs of their customers. [4] The effective use of digital technologies has transformed many traditional business models and established industry leaders such as Walmart and Tesco and helped emerge digitally native niche players like Airbnb, Expedia and Netflix.

The companies that are transforming themselves with the help of digital technologies are not only differentiating themselves from competitors but are also addressing to the customers’ expectations, creating a new operating model that take advantage of new capabilities. it will be apt to say that in the last few decades digital technology has become central to how the business operates, and organizations effectively need to re-think and possibly re-invent their business models to remain competitive. Some of the keyways digital technology is impacting digital transformation include:

Improved efficiency: Technologies such as analytics, machine learning, cloud computing, robotic process automation (RPA) and artificial intelligence allow businesses to automate repetitive tasks and improve efficiency. This technology can result in cost savings and improved productivity.

Data-driven decision making: The internet of things (IoT) automation, artificial intelligence, analytics, big data analytics, and machine learning enable businesses to collect and analyze data from various sources. This enables predictive analytics, real-time monitoring and decision making, improving efficiency and reducing costs. Furthermore, it will enable companies to make data-driven decisions, which can lead to better outcomes.

Increased flexibility: The emergence of technologies such as cloud computing, big data, software as a service, and mobile technology allow employees to access data and applications from anywhere, enabling more flexible work arrangements and allowing companies to be more responsive to changing market conditions.

Enhanced security: As businesses become more digitized, cybersecurity has become increasingly important. The digital technologies such as automation, artificial intelligence, analytics, machine learning, blockchain and encryption can help protect sensitive data and prevent cyber-attacks.

Improved customer experience: customer engagement and service are the cornerstone of any new age business growth. The technologies such as big data, automation, artificial intelligence, analytics, machine learning, chatbots, AI-driven customer service, and personalization can enhance customer engagement and experience.

New business opportunities: Advancements in technologies such as 3D printing, virtual reality, augmented reality, robotics, digital twin, 3D-printing, additive manufacturing, and machine learning have open new opportunities for businesses to create new products and services.

Digital Transformation is not a product or out-of-box solution that can be purchased, refined and implemented. It is the process of adopting next generation technologies, bringing cultural changes to improve the current state of an organization. New technologies lead to process improvements which lead to better products and services. [5]

The power of digital technology does not lie in the technology individually; instead, it is the integration of new age technologies for transforming business and how they work, impact the business operations, augment existing processes, enhance customer experience. Over years the integration of technology in business have made every business is a technology business. Understanding the integration of technology in the business, it is only apt to say that almost all business are at different phase of the digital transformation journey.

The implementation of digital technologies and the consequent digital transformation activities have helped organizations develop a new way to create, deliver and capture value. In the article – Digital transformation: A multidisciplinary reflection and research agenda by Peter C. Verhoefa, et al have identified three major external factors driving the need for digital transformation – In the first phase of the digital transformation journey, external drivers of digital transformation need to be structured which includes understanding and reimaging digital technology, digital competition, digital customer behavior.  The second phases of digital transformation journey are divided in three parts – digitization, digitalization, and digital transformation. The third phase is function of change in consumer behavior as a response to the digital revolution. It is known as the strategic imperatives of digital transformation. The third phase of the digital transformation journey includes – digital resources, organizational structure, growth strategy, and metrics and goals.

Digital Technologies are Impacting Business.

Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure. [6] It helps the organization in business innovation, acceleration, and exponential growth in business value. The popularity of digital transformation is on rise and all progressive companies are embracing it for their survival and growth.

Digital Technology is an important element of digital transformation. It is observed that technological advancements have enabled organizations to automate processes, improve communication and collaboration, and gain insights from data, leading to increased efficiency, productivity, and competitiveness. But often, it is also observed that digital transformation is not only about adopting next generation technologies. It is also about removing outdated processes, embracing innovation, and eliminating legacy technology. However, the adoption of next generation technologies are characterized by speed, quality, productivity that are essential for the emerging digital worlds. Let’s explore in detail how some of the key digital technologies are impacting business.

Cloud computing: The cloud adoption provides the good benefits to the organization such as reduced costs of technology and response times, flexible and on-demand services, improved scalability, extensive storage, high availability, and security. The emergence of cloud computing has also forced tech giants like Microsoft, Adobe, Hewlett Packard Enterprise to change their business models to survive in the new technology landscape. These tech giants changed their business model from selling boxed software to providing a cloud subscription model. It will only be right to say that cloud computing is the future of business model for the technology companies. The cloud technology helps the organizations in accelerating the adoption of latest industry trends faster and efficient. It stores and manages data, and to provide scalable and flexible computing power to support the operations. It allows companies to store and manage large amounts of data, such as customer information, booking records, and travel itineraries, in a scalable and flexible way. It provides more secure ways to store and manage data, protects organization against data breaches and other security threats. For example, at Walmart built what it says is the world’s largest private data cloud which is capable of ingesting 2.5 petabytes of data every hour. The experts at Walmart uses this to inform all of its business strategies and decisions. In yet another case, Home Depot uses data collected from digital platforms and social media to understand customer needs and preferences, providing better products and customized recommendations. The company uses Adobe Experience Cloud and the Adobe Experience Platform to analyze customer behavior and categorize customers by demographic or economic profile to target its advertising and promotional efforts accordingly.

Mobile technology: The mobile technology is an important part of the digital transformation in almost all the industries. The digital native brands like Airbnb, Uber, and Lyft have use mobile technology and mobile applications to build a successful business model. The success story of mobile technology can be extended to the traditional business as it has played a critical part in the success of their digital transformation journey. The progressive traditional companies often provide mobile apps ecosystem to engage with customers. COO Kevin Johnson perhaps sums it up best: Where others are attempting to build a mobile app, Starbucks has built an end-to-end consumer platform anchored around loyalty. The mobile app coupled with their extensive loyalty program, gives Starbucks the perfect venue to up-sell and market to consumers. Additionally, the app channels back user data to the company, allowing them to better understand their customers’ habits and desires. In a similar other case, in 2008, when Domino’s share price hit an all-time low it invested substantially in digital transformation to recover its position. The brand among other initiatives, also launched its mobile app in 2011. The Domino’s mobile app allows customers to order pizza quickly and easily, and then track their order from the moment it’s placed until it is delivered or ready to be collected. Moreover, the rise of new age mobile technology like 5G is expected to provide faster and more reliable connectivity than previous generations of mobile networks. It provides the fast and reliable connectivity needed to support immersive virtual and augmented reality experiences. This will further transform the customer engagement model for the business.

Big data and Analytics: The big data and analytics are used in various industries to understand customer preferences and behavior. The farming-equipment manufacturer John Deere to stay ahead of the competition is creating a data-driven service business that collects soil samples and analyzes weather patterns to help farmers optimize crop yields. It is designed to help business to tailor their offerings, provides personalized recommendations, improve the customer experience, and increase customer engagement and loyalty. The big data and analytics are also used to analyze market conditions, help determine the most effective pricing and promotional strategies, and optimize various aspects of company’s operations, such as inventory management, booking processes, and customer service. For example, Netflix. The new age media giant – Netflix track what people watch, when they watch it, the device being used, if a show is paused, and how quickly a user finishes watching a series. Netflix by feeding all this information into their algorithms, can create custom user profiles. These allow them to tailor the experience by recommending movies and TV shows with impressive accuracy. [7]  In yet another success story where brand – Spotify uses machine learning, artificial intelligence, and data analytics to create a personalized listening experience for its users, recommending music, podcasts, and advertisements based on their unique listener taste profile.

Artificial intelligence: The artificial intelligence is being used in various ways in the industry, such as to personalize recommendations and offers, to automate processes, and to improve customer service. At Walmart big data and artificial intelligence are used for everything from tracking customer behavior and understanding the changing trends of shoppers to managing its supply chain and ensuring the right products are in the right place at the right time. The artificial intelligence also provides personalized recommendations and offer services based on their preferences and past behavior like Starbucks has integrated artificial intelligence into its mobile app allowing them to personalize its product offerings and offer rewards based on consumer preferences.  The artificial intelligence also automates many routine tasks and processes in the industry, such as responding to customer inquiries, processing bookings, and managing itineraries. The brand, AB InBev has created a tech innovation lab, Beer Garage, to explore ways that artificial intelligence and other technologies can be used to improve experiences for consumers.

Artificial intelligence Chatbot: In the last few years we have witness rise of AI Chatbot, which can be defined as a tool that allows humans to communicate interactively, through a pre-programmed artificial intelligence. For example, DHL, the global logistics company, has integrated 24/7 chatbots to provide real-time information on the whereabouts of parcels. Sephora, a French multinational chain of personal care and beauty stores, has an AI-driven chatbots that enable users to book appointments and. It also offers users to effortlessly find and buy makeup tested using virtual artist on the Sephora app and website. In yet another case, brand Marriott has been using AI-powered chat bots to do things like make reservation changes and check on account balances or redemption vouchers. In yet another case artificial intelligence enabled chatbots are helping companies to reach high levels of food safety, improve traceability, and reduce costs across the various stages of food processing.

Machine learning: Machine learning algorithms can be used to analyze customer data and provide personalized recommendations and offers based on their preferences and past behavior. UPS built a fleet management tool that uses machine learning to identify and set optimal routes for delivery drivers. This helped drastically increase driver productivity, lower fuel costs and reduce carbon footprint. Additionally, one of the everyday examples of the applications of Machine Learning, Google Translate enables us to translate documents, sentences, and websites instantly. Facebook’s Deep Learning project DeepFace is responsible for the recognition of faces and identifying which person is in the picture. It also provides Alt Tags to images already uploaded on Facebook. In yet another example, Amazon’s recommendation system also uses Natural Language Processing to analyze the feedback which is provided by the user. For example, Putnam Investments (like many other investment firms) has established a data science center employing machine learning technology to generate optimal business insights for and about clients.

Internet of Things: The Internet of Things (IoT) provides organizations with on-going insights into what is going on with their products, operations, and customers. IoT help organizations to achieve their most important goals like, create significant impact on customer experience and deliver unified product and service experience, huge cost savings, revenue enhancement, improving employee productivity, and Improving innovation. Ikea, the Swedish furniture retail company among many other digital transformations also used Internet of Things to offers a broad range of smart home products, which includes smart plugs, smart lightbulbs, smart speakers, and smart window blinds. Internet of Things is also used to increases operational and resource efficiency while reducing environmental impact. For example, Tesla gives drivers the option to connect to their vehicle through the Tesla app, which can access the vehicle’s charging history and climate controls and be used to schedule service and roadside assistance. [8] In yet another case Rolls-Royce use IoT sensing technology in jet engine modernization. The IoT sensing technology allows Rolls-Royce to receive engine data mid-flight, which enables them to carry out proactive maintenance and reduce repair and maintenance costs.

Virtual reality and augmented reality: Virtual Reality gives customers a realistic 3D product experience that lets them see all the features and decide which ones are best for them. This immersive experience enhances customer engagement and fosters brand loyalty. It creates a lasting impression, improving customer retention rates and boosting the brand’s reputation. The Swedish furniture retailer Ikea has also transformed customer experience with a clever solution to an age-old problem. For customers struggling to imagine how a piece of furniture might look, or fit, into their home, the company has developed Ikea Place. The app uses augmented reality to display products in customers’ homes with 98-percent size accuracy, helping to make purchasing decisions easy. Since its release in 2017, the app has been downloaded over 2 million times. [9] In another case, Tommy Hilfiger created a multi-metaverse hub that premiered during Metaverse Fashion Week hosted by Decentraland, a user-owned virtual world.

Robots: Walmart has deployed autonomous robots (AMRs), which provide real-time on-shelf inventory data to streamlines the supply chain. The robots offers various repeatable, predictable, and manual tasks, such as mopping up floors, identifying which items are low or out of stock, and even unloading boxes off delivery trucks. The robotic process automation (RPA) allows companies to reduce and automate routine tasks and augment manual studies with rule-based algorithms. For example, Michelin Solutions has deployed sophisticated robots to automate clerical tasks and leveraged advanced analytics for data-driven decision-making. In recent years the robots are being used to improve security in the travel industry, such as by monitoring access to buildings or tracking luggage. As on date, robots are not widely used in the travel industry, they have the potential to be useful in a number of ways, and their use is likely to grow as the industry continues to evolve. For example, Wegmans customers can scan and bag their own groceries through their app while they shop. Then, customers pay at a kiosk on the way out to finish the purchase. This reduces checkout time, and offers the brand deep insights into shopping behavior (like how long customers spend in the store, and which items they scan in which order, etc. [10]

Blockchain: The blockchain technology offers a decentralized, transparent, and secure platform for financial transactions, enabling faster and more cost-effective cross-border payments, smart contracts, and secure record-keeping. It also helps organizations to manage and track customer loyalty rewards, allowing travel companies to offer more personalized and rewarding experiences to their customers. For example, Scottish whisky distillers Glenfiddich has embraced the blockchain trend of non-fungible tokens (NFT), offering collectors’ editions of some of its high-end whiskies complete with their own digital tokens. The idea here was to introduce whisky investing and collectibles to new, younger audiences. It also helps streamline supply chain management by allowing multiple parties to securely and transparently access and update data. It is emerging as an important part of the digital transformation in the travel industry, and it can help companies to improve the way they do business and offer a better experience to their customers. For example, Alibaba takes the enormous issue of deadly fake food seriously. Blockchain has given the e-commerce giant new hope in the effort to track genuine food throughout the supply chain in real-time. The vendors on the e-commerce giant’s marketplaces, Taobao and Tmall, verify items’ authenticity using blockchain. In the case of meat, for example, the blockchain may store a cow’s DNA data with a steak package, marking the item digitally to authenticate its quality throughout the whole product lifecycle. This may give consumers a chance to scan QR codes for product safety data like quality metrics and origin information. [11]

Social media: Hasbro combines digital storytelling, video content, social media marketing, and its nostalgic brands to better connect to consumers. Hasbro also leverages social media listening and customer data to better anticipate and meet their needs. In yet another example. Target use new technology in their stores, introduced online ordering and increased their social media, web presence and online sales to increase their market share. In recent times, social media is used to engage with customers, share information and inspiration, and gather feedback and reviews. Social media offers customers an opportunity to share their opinions quickly and conveniently through the Internet. It has been playing an important role as information and engagement tool and is used for creating the brand awareness. It is observed that progressive companies have integrated its digital products more tightly with social media and intends to use social media information to drive content consumption. They view social media, mobile, and video to be key drivers for future growth. For example, In 2015, McDonald’s began installing kiosks where customers can quickly customize their hamburgers. McDonald also used social media to give away products related to the commercials they aired throughout the game. It was important for McDonald’s to have the ability to respond immediately to consumers and actively monitor social media trends in real time. The effort was a success and drew over 1.2 million retweets including high-profile celebrities such as Taylor Swift.

The future of digital transformation

According to Brand Arena ABB, the digital development and digital technology is designed to influence the business world in four ways: One, customers will expect more flexible and customer tailored solutions. Two, product development, maintenance and sales will change with a greater focus on data, analysis, and intelligence, Three, innovation will at a greater extent be driven through new cross-boundary collaboration. Four, organizations need to find novel ways of organizing themselves to meet the new challenges.

The future of digital transformation Lies in the hand of technology. As technology continues to evolve, the business will have to focus on adopting new technology for their productivity and business growth for example, they must prioritize cybersecurity, adopting the multicloud, and implement digital analytics frameworks. The future of digital transformation is bright, but it will only be successful if companies and business organizations are willing to embrace change and use technology to their advantage. We all know that despite the opportunity brought on by the new age digital technology, an estimated two third of digital transformation projects end up failing. For example, General Electric’s software operations facility which was intended to support their digital strategy, ended up firing employees and Nike ended up discontinuing their Nike+ products, even though the transformational initiatives in both cases arguably made strategical sense backed by right technology.

The journey of digital transformation has to be evolutionary, incremental and iterative. It involves existing technical and cultural change of an organization that leads to success of a business. There is no single solution, framework, established roadmap for the digital transformation of an organization that can be accepted universally. The success of digital transformation depends on the current state of the organization.  The organization need to redefine the development methodologies, business processes and culture as part of digital transformation initiative.

[1] What is digital transformation? Everything you need to know about how technology is changing business;  Mark Samuels; zdnet

[2] Digital Transformation Is Not About Technology, Behnam Tabrizi, Ed Lam, Kirk Girard, and Vernon Irvin, March  2019

[3] Digital transformation in sports: How digital transformation influence value creation in sports organizations; Nanna Juli Lauth Poulsen,

[4] The Impact Of Digital Transformation On Business Models: Opportunities And Challenges, Bernard Marr, forbes

[5] The Role of Technology in Digital Transformation; Holt Hackney, architectureandgovernance, February 2023

[6] What is digital transformation?, enterprisersproject

[7] What Are Some Real-World Examples of Big Data?.; Will Hillier; careerfoundry

[8] 29 Internet of Things Examples You Should Know; Mike Thomas

[9] 6 Companies That Nailed Digital Transformation With Innovative Mobile Apps; Szymon Nitecki; August 2023; netguru

[10] 8 Successful Digital Transformation Examples in Business; RJ Licata; terakeet

8 Successful Digital Transformation Examples in Business; 2022; RJ Licata; terakeet

[11] six real life examples blockchain based digital transformation; Andrey Koptelov; financialit

Digital Transformation

Definitions of Digital Transformation

by with No Comment BusinessDigital Transformation

The digital technologies inclusive of information, computing, communication and connectivity, have unleashed new opportunities for business model innovation. It has, over years, transitioned from being just an administrative tool to a one that drives organizational activities in a strategic way thereby supporting the realization of the business strategy. The new digital technologies have a growing impact on an organization’s activities due to the significant increase of computational power, storage volume capacity, and processing, which allows the organizations to make better decisions, enrich operational excellence and provide customers with an engaging experience. [1] Moreover, the rise of digital technologies and digital technologies applications has offered innovators and entrepreneurs opportunities to value creation and value capture.

The emergence of digital technology as game changer, in the recent years, have resulted into the bankruptcy of large and well-established companies that were disrupted by innovative business models which was tightly integrated with new digital technologies. Nokia, Kodak and Blockbuster are paramount examples of once a behemoth in respective industries failing to survive the change. On the one hand, they failed to acknowledge that the new digital technologies enable significant business improvements such as enhancing customer experience, streamlining operations, creating new business models, or transforming the traditional business. On the other, the brands that embraced digital technology and walked the path of digital transformation changed the way industry operates. For example, Netflix transformed the entertainment industry by offering on-demand subscription-based video services to its customers. Like the video rental company Blockbuster, Netflix also had a pay-per-rental model, which included DVD sales and rent-by-mail services. However, Netflix anticipated a change in customer demand with rising digitalization and provided online entertainment, thereby wiping out Blockbuster – and the movie rental industry – entirely. In 2007, Netflix survived as it used digital technology to transform the business model. It launched a video-on-demand streaming service to supplement their DVD rental service without any additional cost to their subscriber base.

In the business world, digital transformation challenges managers to rethink their business models, foster digital innovation as a key driver for economic success and adapt their organizational strategy, structure, and culture to the requirements of the digital age. For an example the luxury clothing and accessories brand – Burberry has always focused its digital strategy on driving improved customer experiences, and this includes launching virtual stores, where customers can get hands-on with digital likenesses of its products as well as receive personal one-to-one attention from the virtual sales associates with expert product knowledge.

No digital transformation discussion is complete without acknowledging the implementation of unconventional ideas of Elon Musk at Tesla.  Over the years, Tesla has innovated continuously to improve its product, make itself more economical, and reduce its carbon footprint by effectively using digital technologies like connected car technology and over-the-air software updates. Digital transformation at Tesla is not a one-time activity but part of the corporate culture. At Tesla they understand that the digital transformation is a continuous complex undertaking that can substantially shape a company and its operations.

Digital transformation is the strategic adoption of digital technologies. It’s used to improve processes and productivity, deliver better customer and employee experiences, manage business risk, and control costs.

Definitions of digital transformation

The term digital transformation has been widely discussed and extensively promoted both to and by companies in every industry to become overused. While generally accepted as a boon and often marketed as the only alternative to extinction for a firm, digital transformation remains a significant challenge for those assigned to implement it. [2] The journey of digital transformation is not easy and so is the evolving definition of digital transformation. There are various definitions of Digital Transformation from different perspectives but there is no generally accepted definition for the term digital transformation.

Digital transformation is the result of the digitization and digitalization of economies and societies, and it is an ongoing process. The term “digital” indicates that the changes will be driven by information technologies that allow real-time data processing and intelligently derive information to provide stakeholders with improved knowledge of processes and products.[3] It is also agreed that the term digital is less about one process and more about how companies conduct their business. It will only be apt to say that digital is the strategic application of advanced interactive technologies that end users access to facilitate transactions and interactions, that are logical, efficient and superior in experience. [4]

The term transformation expresses fundamental changes in organizations, which have an impact on strategy, structure and the distribution of power. The organizations can use business transformations to identify market obstacles, capitalize on evolving technologies, and adapt their business practices. Business transformations are designed to boost overall performance through increased revenue, lower operating costs, and better customer satisfaction and workforce productivity. [5] Hence, Digital transformation can be seen as a process of the continuous adoption of a changing digital technology to meet the ever-changing expectations of customers, employees, and partners. The implementation of technology in business processes is only a small part of digital business transformation.

Three dimensions of Digital Transformation

The academicians and practitioners both agree that digital transformation is a profound change in business that strongly influences the opportunities offered by digital technologies. It affects business activities, processes, competencies, and models to create value for the customers, acquire new capabilities in response to rapidly changing market requirements, manage risk, or improve efficiency. It is also agreed that digital transformation is not something that can be accomplished overnight. MIT Sloan Management Review sees it as a journey, a progression comprised of three phases – Digitisation, Digitalisation, and Digital Transformation. The first phase is the fundamental change from analog to digital or digitization. The next phase is the digitalization of industries: the act of making processes more automated through the use of digital. The final phase in this framework is digital transformation, which occurs when new digital business models and processes restructure economies. A successful digital transformation can happen when people, processes, and technology are considered as an integrated set, aligned to the corporate vision and business model. Let’s explore the three phases – Digitisation, Digitalisation, and Digital Transformation

Digitisation: Digitisation is the process of translating analog information and data into digital form – for example, scanning a photo or document and storing it on a computer. It is the most common way of converting analog information into digital form. For example, scanning a paper document, keying in data points into an Excel spreadsheet, etc. This is the first phase – where most traditional companies make errors that greatly impede their efforts.  Many organizations fall prey to the temptation to quickly acquire and incorporate new technologies, viewing them as panaceas and not as essential elements in a long-term strategy. The truth is that the process is much more complex and layered, and it requires careful planning. Coca-Cola Bottlers’ Sales & Services (CCBSS) adopted automated document scanning and processing in the first phase of the digital transformation journey. CCBSS worked on the change as it found that the then system in place was unreliable and needed a digital technology upgrade.

Digitalisation: Digitalisation is the use of digital technologies to change business processes and projects – such as skilling employees to use new software platforms designed to help launch products faster. It deals with information processing, or how digitized data can be used to improve workflows through automating existing processes. Digitalization refers to enabling or improving processes by leveraging digital technologies and digitized data. Gartner defines digitalization as the use of digital technologies to change a business model and provide new revenue and value producing opportunities. This is the next phase of digital transformation journey. In this stage it is mostly about act of making processes more automated through the use of digital. In this stage information is combined and thus connected and easier to use, to simplify or speed up some operations that were previously done manually. This implies that digitalization induces transformation rather than supporting and developing traditional ways of working. The CCBSS in the next phase of the digital transformation journey to help put its document processing efforts on track are using Ripcord’s robotics and ML software. The CCBSS can now flawlessly process documents. The new technology removes staples, accurately reads scans using ML, and automatically sends finished documents to customers – with near-zero error rates.

Digital Transformation: Unlike digitization and digitalization, digital transformation changes the way of doing business and the way things are done. It adds value to every customer interaction. During the process of digital transformation, businesses are reevaluating everything they do, from internal procedures to online and in-person customer encounters. Digital transformation includes all aspects of business that change due to the digitalisation of business processes, like new customer interactions, online growth strategy, remote work, and more. It is a completely new use of digital technology that solves new complex problems. These series of digital solutions can lead to new types of creative innovation, rather than just upgrading what already exists. This is the final phase in this framework is digital transformation, which occurs when new digital business models and processes restructure economies. Societies also evolve as people integrate the technologies into their lives and habits. Digital transformation is a systems-level transition that alters behaviors on a large scale. Dominos is one of the classic cases of an organization transforming itself regularly to be on the top of the growth curve. Over years, Dominos has invested heavily in multi-channel approach to customer experience – letting customers order pizza using just about any device or service you can name. It not only encourages one to order through mobile apps, but also offers option to order pizza directly from televisions, social media platforms, and home assistants like Alexa and Siri. The brand has worked on “zero-click” ordering to reduce customer friction to the bare minimum. Dominos in last few years have successfully transformed itself into a food-tech company.

Digital transformation takes a customer-driven, digital-first approach to all aspects of a business, from its business models to customer experiences to processes and operations. It is the process of using digital technologies to create new or modify existing business processes, culture, and customer experiences to meet changing business and market requirements. In simple words, Digital transformation is the strategic adoption of digital technologies. It is used to improve processes and productivity, deliver better customer and employee experiences, manage business risk, and control costs. The hotel chain Marriott uses digital technologies to prioritize customer relationships and personalize customer experiences. Marriott to drive customer satisfaction has automated processes such as booking, check-in and checkout. The brand strongly believes in the power of data drive customer experiences. It aims to build 360º customer profiles and make them available to personalize the entire travel journey, which requires accurate data collection and analysis. The digital transformation initiatives has helped Marriott gain stronger customer loyalty, boosting its revenue and market share.

According to Harvard Prof. Michael Porter, producing greater operational efficiency [using technology] is something that should be done but it’s not strategic.  Digital transformation is the strategic repositioning of one’s business in the digital economy. The digital transformation is an organizational transformation that integrates digital technologies, business processes, organization culture and people.

Digital transformation might appear different for each company, so it can be difficult to find a universal concept or a definition that applies to all. We can describe digital transformation as integrating digital technologies into all business sectors, resulting in profound changes in how businesses function and give value to consumers. [6] It is the use of technology to radically improve the performance or reach of enterprises. Let’s explore dimensions and understanding of various experts: Source: [7] [8] [9]

Matt et al. ( 2015 ) Digital transformation strategy is a blueprint that supports companies in governing the transformations that arise owing to the integration of digital technologies, as well as in their operations after a transformation.

Hess et al. ( 2016 ) Digital transformation is concerned with the changes digital technologies can bring about in a company’s business model, which result in changed products or organizational structures or the automation of processes. These changes can be observed in the rising demand for Internet-based media, which has led to changes in entire business models (for example, in the music industry).

Liere-Netheler et al. (2018) The use of new digital technologies (social media, mobile, analytics, or embedded devices) to enable significant business improvements (such as enhancing customer experience, streamlining operations, or creating new business models).

Horlach et al. (2017) Digital transformation as encompassing the digitization of sales and communication channels and the digitization of a firm’s offerings (products and services), which replace or augment physical offerings. Furthermore, digital transformation entails tactical and strategic business moves that are triggered by data driven insights and the launch of digital business models that allow new ways of capturing value.

Henriette et al. (2016) The digital transformation is a disruptive or incremental change process. It starts with the adoption and use of digital technologies, then evolving into an implicit holistic conversion of an organization, or deliberate in pursuing value creation.

Horlach et al. (2017) Digital transformation as encompassing the digitization of sales and communication channels and the digitization of a firm’s offerings (products and services), which replace or augment physical offerings. Furthermore, digital transformation entails tactical and strategic business moves that are triggered by data-driven insights and the launch of digital business models that allow new ways of capturing value.

Schmarzo et al. (2017) Digital transformation is the adoption of digital technology by an organization. Common goals for its implementation are to improve efficiency, value or innovation.

Fitzgerald et al. (2014) Digital transformation is the use of new digital technologies such as social media, mobile technology, analytics, or embedded devices to enable major business improvements including enhanced customer experiences, streamlined operations, or new business models.

Solis et al. (2014) Digital transformation is the realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touch point in the customer experience lifecycle.

Hinings et al. (2018) Digital transformation is the combined effects of several digital innovations bringing about novel actors (and actor constellations), structures, practices, values, and beliefs that change, threaten, replace, or complement existing rules of the game within organizations, ecosystems, industries, or fields.

Bondar et al. (2017) Digital transformation is a consistent networking of all economic sectors and an adaption of actors to new circumstances of the digital economy.

Martin (2008) Digital transformation is the use of information and communication technology, not when trivial automation is performed, but in the case where fundamentally new capabilities are created in business, public government, and in the lives of people and society.

Ismail, Khater, and Zaki (2017) [Digital transformation is a] “process through which companies converge multiple new digital  technologies, enhanced with ubiquitous connectivity, with the intention of reaching superior performance and sustained competitive advantage, by transforming multiple business dimensions, including the business model, the customer experience (comprising digitally enabled products and services) and operations (comprising processes and decision-making), and simultaneously impacting people (including skills talent and culture) and networks (including the entire value system).

European Commission (2019) Digital transformation is characterized by a fusion of advanced technologies and the integration of physical and digital systems, the predominance of innovative business models and new processes, and the creation of smart products and services.

Bloomberg (2018) Digital transformation requires the organization to deal better with change overall, essentially making change a core competency as the enterprise becomes customer-driven end-to-end. Such agility will facilitate ongoing digitalization initiatives but should not be confused with them.

Deloitte (2018) Digital transformation is the use of technology to radically improve the performance or reach of an organization. In a digitally transformed business, digital technologies enable improved processes, engaged talent, and new business models.

PwC (2013) Digital transformation describes the fundamental transformation of the entire business world through the establishment of new technologies based on the internet with a fundamental impact on society as a whole.

Westerman et al. (2011) Digital transformation (DT)- the use of technology to radically improve the performance or reach of enterprisers- is becoming a hot topic for companies across glob. Executives in all industries are using digital advances such as analytics, mobility, social media, and smart embedded devices- and improving their use of traditional technologies such as ERPto change customer relationships, internal processes and value propositions.

Bouee and Schaible (2015) We understand digital transformation as a consistent networking of all sectors of the economy and adjustment of the players to the new realities of the digital economy. Decisions in networked systems include data exchange and analysis, calculation and evaluation of options, moreover, initiation of actions and introduction of consequences.

Mazzone (2014) Digital transformation is the deliberate and ongoing digital evolution of a company, business model, idea process or methodology , both strategically and tactically.

Bowersox et al. (2005) Digital Business transformation is a process of reinventing a business to digital operations and formulate extended supply chain relationships. The DBT leadership challenge is about reenergizing businesses that may already be successful to capture the full potential of information technology across the total supply chain.

Digital transformation is reshaping the world.

The digital transformation is accelerating the pace of technical and organizational innovation, empowering new market entrants, and generating new categories of goods and services. In the last two decades the convergence of digital technologies including social media, smartphones, data analytics, cloud, and the IoT created both opportunities and significant threats to established companies. Some of the large corporates like Comcast, Netflix, Nike, Nestlé, Spotify, Sephora, UPS, and Domino’s used these technologies to their advantage. These new technologies have also emerged as the foundation for the new start-ups transforming the way businesses operate and changing the way people live; testament to it is the rise of platforms like Apple, Microsoft, Amazon, Alphabet (Google), Meta (Facebook), Tencent and Alibaba and emerging as tech giant. These organizations both, traditional and new age have increasingly invested in most of the emerging technologies like social media, smartphones, data analytics, cloud, and the IoT. These successful companies have also invested their resources in building and supporting data network and global data value chain – data collection through the user-facing platform services; data transmissions through submarine cables and satellites; data centres; and data analysis, processing, and use.

Digital transformations are an imperative as today’s leading corporations need to build bionic capabilities in order to harness the potential of disruptive technologies and integrate them into new processes, organization models, and ways of working. The consulting group BCG suggests six critical success factors for digital transformations – One, An integrated strategy with clear transformation goals; Two, Leadership commitment from CEO through middle management; Three, Deploying high-caliber talent; Four, An agile governance mindset that drives broader adoption; Five, Effective monitoring of progress toward defined outcomes; and Six, Business-led modular technology and data platform.

[1] Digital Transformation Framework; Tomas Alegria Garcia Aguiar

[2] Digital transformation and corporate strategy; Anna L. Denisova, Alexander N. Lopatnikov;  Management information technologies – 2022.

[3] Digital Maturity Assessment Model for the Organizational and Process Dimensions, Agnieszka A. Tubis

[4] What ‘digital’ really means ; McKinsey & Company; July 2015

[5] What is business transformation?; McKinsey & Company; April 2023

[6] Digital Transformation – More About People Than Technology; Serengeti

[7] A Systematic literature review of Digital Transformation Mohamed-Iliasse Mahraz , Loubna Benabbou, Abdelaziz Berrado, Proceedings of the International Conference on Industrial Engineering and Operations Management Toronto, Canada, October 23-25, 2019

[8] Key activities of digital transformation – comparative analysis of selected models, April 2023, Jakub Semrau, Mateusz Zaczyk

[9] Digital transformation: conceptual framework; Natalja Verina, Jelena Titko, J.  VGTU Press 2019.

Digital Transformation - Consumer Goods Industry

Challenges for Digital Transformation in Consumer Goods Industry

by with No Comment BusinessDigital Transformation

Digital transformation exercise apart from reimaging organization is mostly designed to drive customer satisfaction and retention by providing customers with products and services they require, whenever and wherever they need them. The tools consumer goods companies use include – mobile apps, location-based services, big data, and analytics to bring in a significant change in the way they do business and create a differentiated value proposition. When it comes to consumer goods, standards are exactingly high across the industry, and processes are often complex. Digital transformation across multiple vectors – from logistics to packaging to quality control – can both revolutionize efficiency and ensure that the highest standards are met. [1] The digital transformation strategies always have certain elements in common that can be attributed to four dimensions: the use of technologies, changes in value creation, structural changes, and financial aspects. These elements must be aligned with each other, to have a successful Digital Transformation that fully exploits its expected benefits. [2]

It is widely believed that the consumer goods industry is highly competitive, and companies must constantly innovate, invest in new technologies, and at times renovate organizational culture to improve the customer experience and stay ahead of the competition. The journey of digital transformation is almost all the time is challenging, especially in the consumer goods industry. The consumer goods industry is characterized by never ending product line, complex supply chain and distribution processes and integrating new technologies can be difficult and time-consuming. It is observed that digital transformation offers organization the opportunity to reimagine the way business is run through the effective use of digital processes, and technologies. However, there are challenges organizations face throughout every stage of the digital transformation journey. Some of the key challenges organizations face in the digital transformation journey includes – siloed decision making, legacy systems, risk-averse organizational culture, insufficient budget for technological change, looming digital skill gap, shortage of technological resources, and increased security risks. [3]

The road to digital transformation, however, is laden with challenges. The digital transformation challenges are not always directly related to technological concerns or emerging technical barriers. They also include people-centric issues, organizational structures, and other non-tech factors. At times non technological concerns are the biggest challenge.

Evaluate the current digital technology landscape and complexity around it. The journey of digital transformation involves legacy application modernization and the integration of various technologies, processes, and strategies, which can be intricate and challenging to implement and manage. Hence, it is important to understand that before exploring into new technologies, it’s crucial to take a comprehensive look at the existing digital setup of the organization including – recognize the systems and technology in place, exploring functionalities of the current technologies, and highlighting existing inefficiencies in the technology landscape. The digital transformation is too critical and complex exercise in a consumer durable industry and that makes the vendor selection an important activity. The consumer durable brand must choose their partners carefully.

Commitment to the journey of digital transformation. Commitment to the journey of digital transformation is the first thing where organization go wrong. Company leaders must understand and agree to the vision for the digital transformation of the company. Lack of agreement causes friction and delay in the smooth implementation of the plan.[4] It is important to understand that everyone in the organization across the board must be clear of the priorities and the measures to be taken while executing the plan.

In 2018, Revlon, an American cosmetics and personal care giant, initiated the rollout of a new ERP system. However, the migration was spoiled by inadequate planning, severely disrupting their production line, and hampering their ability to fulfill customer orders promptly. This ill-prepared ERP rollout wasn’t an isolated issue; it had been prematurely introduced across operations in 22 countries. The aftermath of this ERP implementation at Revlon was financially catastrophic. The company grappled with a staggering $64 million loss due to unshipped orders. In tandem with operational disruptions, investor confidence wavered, leading to a 6.9% plunge in Revlon’s stock price. This operational debacle culminated in a lawsuit, with investors seeking redress for the significant financial damages they endured due to the company’s underperformance. [5] This is not just one of the many cases that had hard luck with the digital transformation journey. The success of the journey is function of the commitment of the organization across ranks to truly bring digital transformation holds the key to the success of any digital transformation journey. Moreover, it also requires leadership level focus, an assurance of budget and resources, and an ability to pursue the initiative with conviction.

Being clear about digital technology implementation. Identifying right technologies for the business is one of the most crucial steps while drafting the digital transformation strategy. The range of digital technology solutions in the consumer goods industry is diverse. The organization needs to identify right technology from ideation to planning, production to inventory management to logistics, to customer engagement, the list of digital technologies used across all areas of a company is endless. In addition, there is also the challenge of choosing the right technologies that can really add value and matches the financial requirements.  Moreover, it is important to understand that technology expenditure is an operational expense and must be planned as a strategic investment. The consumer durable industry has many instances that talks of poor technology implementation stories, but the Hershey’s is one of the classic stories of wrong technology implementation decision.

In 1996, Hershey’s, a multinational chocolates, and desserts brand, embarked on a mission to modernize its patchwork of legacy IT systems. The chosen solutions for this transformation were SAP’s R/3 ERP, Oracle Seibel’s CRM, and Manugistics’ supply chain management system. With a budget of $112 million, the initial rollout of these new systems was projected to span 48 months. However, in a bid to pre-empt the Y2K dilemma, Hershey’s leadership accelerated the timeline, cutting it down to 30 months. This meant that crucial testing stages were curtailed. Aggravating the situation, the final implementation was scheduled for July 1999, coinciding with one of Hershey’s peak business periods. The result was catastrophic – systemic issues with the newly implemented ERP led to a failure to fulfill orders worth over $100 million, even though the required inventory was available. This debacle had huge financial repercussions, leading to a 19% decline in quarterly revenues and an 8% dip in the company’s stock value. [6] The demand of right technology opens-up opportunities for organizations to make processes more effective, efficient, and transparent.

Change resistance, resource constraints and skills gap are the key challengers. The commitment of digital transformation requires significant investment in people, process, and technology. This invest brings in a movement of change in the organization. Most of the times these changes are uncomfortable, and organizations face resistance from employees who are accustomed to traditional ways of working and are not ready to embrace new technologies and processes. At times educating people on the value that the digital transformation offers and inspiring them to walk through the journey of digital transformation is a difficult task. It is also observed that most of the resources are not on the same page of the digital transformation growth path.

This change management is one of the biggest challenges that brings down the success rate of any digital transformation effort. Moreover, there is often a shortage of skilled professionals with the expertise required to drive digital transformation efforts. This digital talent gap adds-up to the existing whammy that organizations must address.

Coca-Cola is a global consumer goods company and has established a digital academy to upskill managers and frontline team leaders across its business operations. In its first year, the academy trained more than 500 people in digital skills using a combination of go-and-see visits, immersive boot camps, and e-learning modules. Graduates of the academy have implemented about 20 digital, automation, and analytics approaches at ten-plus sites in the company’s manufacturing network. This has resulted in a boost in productivity and throughput by more than 20 percent. Digital skills training is now being rolled out to about 4,000 employees, resulting in targeted product development and personalized marketing campaigns. [7]

Legacy systems, strategy and evolving digital landscape. The digital landscape is continuously changing, making it difficult for organizations to keep pace with new technologies, trends, and customer expectations. Moreover, the outdated technology infrastructure and systems can hamper the adoption of contemporary digital technologies, leading to transitioning to new digital technology solutions. This makes important for business to develop a clear digital transformation strategy that aligns with an organization’s overall business goals.

The process of identifying the best technology roadmap is a challenging task, and inadequate vision or inefficient tech-leadership can hinder the overall digital transformation progress. The tech-leadership needs to acknowledge that digital transformation journey in consumer goods organization must include the need to improve the customer experience, optimizing the complex supply chain and distribution processes, and adapt to the changing consumer behaviors and preferences.

The challenges of integrating, managing, and maintaining new technologies to ensure data protection and compliance with ever growing privacy regulations is a critical aspect of digital transformation success.

AB InBev had the challenge of turning itself from an amalgamation of dozens of independent breweries into a single, unified entity using data to enhance business processes and improve the consumer experience. One of the ways AB InBev has done this is improving the supply chain by changing how stores are able to replenish their orders, developing a mobile application, creating opportunities for sales staff to talk about new brands and products with store owners. AB InBev has even created a tech innovation lab, Beer Garage, to explore ways that artificial intelligence (AI), machine learning (ML) and the internet of things (IoT), among other technologies can be used to improve experiences for consumers and retailers alike. Applications for this include “connected breweries”, where the quantity, quality, temperature, and a range of other relevant factors can be monitored across batches.  The company is also looking into software to monitor social media and gain insight into what consumers think of its brands. Through this approach, AB InBev will be able to create evermore relevant and meaningful content for their consumers and improve its digital marketing. [8]

Measuring success is mostly not easy task in the digital transformation journey. The successful business across the world is known for identifying and optimizing on the return on investment (ROI) but the measuring the ROI of any digital transformation projects is a challenging task as the success of digital transformation projects may not be immediately apparent or easily quantifiable.

Moreover, the difficulty in accurately determining ROI can lead to skepticism and reluctance to invest in digital transformation initiatives. It is important to know that the value derived from digital transformation initiatives often extends beyond financial metrics and includes improvements in customer experience, employee productivity, business agility, business model reinvention, and cultural transformation. It is also observed that most business functions or departments act on their own accord, defining and managing their touchpoints and adhering to different metrics and standards.

The consumer goods companies may run the risk of resistance to digital transformation initiatives without a strong commercial model and well-defined measurement metric and clear roadmap that demonstrate return on investment. It is important for business to get internal buy-in for the digital transformation. It is also observed that in many digital transformation initiatives did not get pass the pilot stage as there were no CXO level sponsorship or value data to support the business plan. Furthermore, efficiency savings is often overlooked as a means of funding innovation in their strategy.

The Future of the Consumer Goods Industry

Many consumer goods companies have been contemplating digital transformation. However, with changing consumer behavior, emerging technologies, altering work environment, and evolving market conditions, there’s a new urgency around digital transformation adoption. This changing business landscape has led to a significant industry-wide investment in innovative, game-changing digital technologies. The consumer goods companies have been grappling with faster product development cycles, supply chain disruptions, widespread skills shortages as well as increasingly complex consumer demands. Plus, there’s now growing and unavoidable pressure to deliver on sustainability and environmental interests. Despite all these pressures changing the pace of transformation, it’s clear that many companies still have some way to go before realizing the true extent of their digital vision. At present, 88% of consumer goods companies are capturing data about their assets and operations.[9]

We are living in the times when recognizing what’s holding your organization’s growth allows you to address the roadblocks in your digital transformation strategy. According to A digital future for consumer goods – How to kickstart your digital transformation journey, roadblocks to digital transformation in consumer goods industry includes – lack of skills and concerns over job security, getting internal buy-in for your transformation, meeting the expectations of conscious consumers, building trust between IT and operational technology teams, poor supply chain visibility creates lost opportunities, Tackling the cybersecurity risks that come with digitalization, and capturing data.  The challenges and roadblocks will remain part of the growth journey, but the future of the consumer goods industry is likely to be influenced by a number of factors, including changes in the global economy, advancements in technology, and shifts in consumer preferences. Some potential trends in the industry include the continued growth of e-commerce and the increasing use of digital platforms to reach consumers, the use of data and analytics to improve and personalize the customer experience, and the development of new, sustainable and eco-friendly products.

[1] Digital Transformation in the Consumer Goods Industry, Waliuollah Ali, March 2023, cxomag | https://cxomag.com/article/digital-transformation-in-the-consumer-goods-industry/

[2] Digital Transformation Strategies, Christian Matt, Thomas Hess, Alexander Benlian, August 2015, Springer Fachmedien Wiesbaden

[3] Digital Transformation Challenges You Need to Overcome in 2023, kissflow; https://kissflow.com/digital-transformation/digital-transformation-challenges/

[4] Why Digital Transformation Projects Fail: 7 Pitfalls to Avoid, treehousetechgroup ; https://treehousetechgroup.com/why-digital-transformation-projects-fail/

[5] 6 High-Profile Digital Transformation Failures, September 2023, Samantha Rohn; https://whatfix.com/blog/digital-transformation-failures/

[6] 6 High-Profile Digital Transformation Failures, September 2023, Samantha Rohn; https://whatfix.com/blog/digital-transformation-failures/

[7] Unlocking Customer Insights: How Digital Transformation Overcomes Challenges in the FMCG Industry, June 2023, Amihan | https://amihan.net/digital-transformation-fmcg/

[8] Digital Transformation: What is it? 10 Successful Big Brand Examples; September 2021;  | https://acquire.io/blog/digital-transformation-examples

[9] A digital future for consumer goods – How to kickstart your digital transformation journey