What are the benefits of digital transformation?
Why is digitalisation essential for the survival of your company? Discover the benefits of digital transformation.
A study by McKinsey, conducted among 1,500 executives, found that directors who are leading the digital race have the power to transform their companies with five times the speed and twice the intensity of their peers.1 In recent years, the speed of digital acceleration has been a trigger for the use of digital, but also a source of anxiety for many directors.
This has resulted in:
- an expansion of competition in all industries
- an increased pressure on profits
- a greater number of new entrants to the market, and
- a change in the sources of profit, to give just a few examples
For many companies, keeping up with the frenetic pace of digital transformation has become a question of survival. According to Gartner, 56% of executives found that their investment in digitalisation led to growth in their company's revenues.2
With 76% of companies investing in new technologies, digitalisation is no longer a matter based on hearsay. The benefits of digital transformation are indisputable.3 This article illustrates, with examples, the benefits of digital transformation.
How does digital transformation stimulate business growth?
By digitalising their processes, companies save time, money, and space. The benefits of digital transformation are thus significant and numerous.
The six key benefits of digital transformation include:
- Increased productivity
- Reduced operational costs
- Increased collection and analysis of data
- Streamlined communication
- Enhanced innovation
- Development of new skills
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Let us explore each of these individually, starting with increased productivity.
1. Increased productivity
According to a study by McKinsey, employees spend an average of 1.8 hours per day searching for information, or an average of 9.3 hours per week.4 This represents roughly 30% of their working time, and is a period during which they are not being productive.
With the appearance of the new technologies, however, this time can be reduced significantly. For example, automation makes it possible to share information quickly, scan large volumes of documents, and integrate data without having to enter it manually. In addition, modern Cloud-based platforms are valuable tools for streamlining processes within organisations. They help solve problems swiftly, and improve communication. This has a direct impact on the efficiency and productivity of teams.
2. Reduction of operational costs
While reducing operational costs has always been a priority for leaders, digitalisation has made this challenge significantly easier. Cloud computing, for example, helps to reduce operational costs. By migrating to the Cloud, organisations are able to stop investing in hardware equipment that takes up space and requires continuous maintenance. Therefore, companies reduce their operational costs by establishing off-site solutions which places maintenance in the hands of the vendor. Nonetheless, if a complete migration to a Cloud environment is not possible, a hybrid Cloud solution can be considered.
A study by McKinsey indicates that the digitalisation of information-rich processes can reduce costs by up to 90%.5 For example, a telecommunications company that offers a stand-alone prepaid service where customers activate their phones themselves will not need a back office. This results in a considerable reduction in operational costs.
3. Collection and analysis of data
With the emergence of Big Data, the collection, processing, and analysis of large data (on consumers, competitors, and more) enables strategic, efficient, and cost-effective decision making. An undisputed benefit for business growth, data collection and analysis is an integral benefit of digital transformation.
Big Data and predictive analytics improve the consumer experience. By targeting and anticipating their customers' needs in an accurate manner, companies are able to ensure customer satisfaction and loyalty. For example, Amazon is one of the best examples of harnessing the power of Big Data: it offers its customers one of the most personalised shopping experiences in the world of e-commerce. This is possible thanks to suggestions based on previous purchases and the site's 'most popular' products.
It is predicted that data analysis will always be conducted with a glimpse into the future, and that 150 trillion gigabytes of data are to be analysed by 2025.6 This shows that the benefits of digital transformation are numerous, and therefore include:
- Design and digitalisation of the customer journey
- Increased speed and agility thanks to the compilation and usage of customers' perceptions
- High rate of consumer adoption
- Personalisation of the customer's experience, leading to higher conversion rates, and brand loyalty
4. Streamlined communication
Digital transformation has profoundly shifted the way we communicate, and this phenomenon has forced companies to adapt or die indiscriminately. Enhanced communication is one of the many benefits of digital transformation: the exchange of information within teams and between managers is clearer, faster, and more effective. Today, all internal communication departments use digital technology, with a large part of their budget allocated to it. These investments extend beyond email, and include solutions that enable teams to communicate from offices as well as remotely. The appearance of connected, mobile-compatible platforms makes it possible to chat in a continuous manner with colleagues, send documents, and even organise and manage meetings.
For example, the Diethelm Keller Group uses Sherpany, a meeting management solution, to improve its leadership meetings as part of its digital transformation process.7 Thanks to the meeting solution, which was designed to help business leaders hold more effective meetings and share meeting documents in a secure way, communication within the Group has significantly improved. Employees now have 'easy access to all meeting documentation in digital format and greater independence in terms of location and working hours', according to Daniel R. Jagmetti, a member of the Diethelm Keller leadership. This is an undeniable asset that helps continue the management of projects efficiently, even in a remote set-up.
Communication tools help break down 'organisational silos'. They provide managers, and employees, solutions to communicate in an easier way. Thus, they ensure seamless information sharing and better integration of teams into projects.
Thanks to Sherpany's meeting solution employees now have 'easy access to all meeting documentation in digital format and greater independence in terms of location and working hours'.
5. Enhanced innovation
Digital transformation enhances innovation, allowing companies to be more competitive at lower costs. This is one of the benefits of digital transformation that is most sought out by business leaders. What's more, agility pairs perfectly with digital transformation as both contribute to innovation. The implementation of new tools boosts innovation as well as encourages the sharing of ideas within the company.
In the digital age, a company's ability to innovate is crucial as competition grows fiercer with each passing day. In such an environment, all companies are, understandably, turning to innovation: new processes, new products, and new services. Hence, the shaping of a culture of 'all that is new', stimulating and enriching for the whole organisation.
The Financial Times, for example, classified SEAT, the Spanish automobile enterprise, as 'leader in Europe in digital transformation'.8 This was owing to SEAT’s urban micro-mobility service, which was developed in collaboration with Segway, in its new innovation laboratory. Sometimes when digitalisation works in harmony with innovation, an entire industry experiences change.
6. Development of new skills
The arrival of new technologies encourages teams to develop new skills. Capabilities in Artificial Intelligence (AI), Augmented Reality (AR), the Cloud, data analysis, and many others, are appreciated more and more by organisations and employees alike.
Investing in this direction has become a priority. According to a report by Altimer, 31% of companies lack digital talent among their teams, and managers.9 Recruiting digital experts, as well as training existing teams, enables companies to develop new skills. It promotes agility and communication across departments, it increases the quality of teamwork, and retains talent.
The training of teams is of particular importance for any successful digital transformation. This stimulates the development of a digital culture within the company. The World Economic Forum estimates that 133 million new jobs are to emerge by 2022.10 This is a surprising number, but one which highlights the need to embrace digital ways of learning and working.
How to reap the benefits of digital transformation
The benefits of digital transformation have shown us that digitalisation is no longer a matter of hearsay. It is essential for the survival of any company. In a constantly evolving digital age, the transition to digital is more urgent than ever, regardless of an organisation’s size. While there are many benefits of digital transformation, before embarking on their digital adventure, it is important for leaders to set their objectives correctly. Because faced with infinite possibilities, it is easy to get lost.
Thus, surround yourself with digital experts and adopt digital solutions to help navigate and accelerate your digital transformation process. This way, you will reap the benefits of digital transformation much sooner.
1 'Just how fast is the ‘speed of digital’? Now we know', McKinsey, July, 2019.
2 'Gartner Survey Shows 42 Percent of CEOs Have Begun Digital Business Transformation', Gartner, April, 2017.
3 'Put your trust in hyper-relevance', Accenture, 2017.
4 'The social economy: Unlocking value and productivity through social technologies', McKinsey, July, 2012.
5 'Accelerating the digitization of business processes', McKinsey, May, 2014.
6 'Big Data goes big', Forbes, February, 2019.
7 'Comment la numérisation des réunions de leadership a augmenté l'efficacité du Groupe Diethelm Keller', Sherpany, September, 2019.
8 'The Financial Times recognises SEAT as a European leader in digital transformation', SEAT Media center, November, 2018.
9 'The 2017 state of digital transformation', Altimeter Prophet, 2017.
10 'Machines Will Do More Tasks Than Humans by 2025 but Robot Revolution Will Still Create 58 Million Net New Jobs in Next Five Years’, The World Economic Forum, September 2018.