Study: Digital Transformation Is Ubiquitous Yet Challenges Remain

This syndicated post originally appeared at Zeus Kerravala, Author at eWEEK.

Companies should be aggressive with digital transformation yet also ensure they have the right tools.

Digital transformation (DX) looks different for every company, but in essence, it involves integrating digital technologies into all areas of the business.

The key to DX is to drive fundamental change and transform how a company operates. Newgen Software recently surveyed 300 senior business and IT leaders in large enterprises around the world to understand where they are currently in their DX journey. The findings were published in Newgen’s 2022 State of Digital Transformation Research.

Digital Transformation Has Reached Ubiquity

The most interesting finding shows that every company—100 percent of the respondents—has embarked on DX in some way.

This is consistent with my research that found that DX had reached ubiquity with all respondents. The majority (77%) started DX within the past two years, showing that pre-pandemic DX was something businesses were talking about but not quite ready to execute. However, companies are still in the early phase of their DX journey, with only 49 percent currently transforming and 24 percent at the discussion stage.

The COVID-19 pandemic has accelerated DX initiatives for many companies, large and small, so it’s not surprising that DX has taken off significantly in the last two years. According to the report, about half of the respondents are currently implementing one or more initiatives within their DX portfolio, while 25 percent have reached maturity in DX.

Customer Experience Drives Digital Efforts

“There are several factors driving the push towards DX, such as the need to gain a competitive advantage and provide a better customer experience,” said Anand Raman, EVP and COO (Americas), Newgen Software.

Today, everyone wants an Amazon-like experience, which has heightened customer expectations. Companies are feeling the pressure to provide this experience, while also being available to customers 24/7 in a digital world.

“When it comes to DX, growth is the important focus for companies, and providing a better customer experience (CX) is a means to achieve that,” said Raman. My research shows that CX is now the top brand differentiator. An interesting factoid from my own studies is that last year, two-thirds of millennials changed loyalties to a brand because of a single bad experience. This certainly quantifies how important DX has become.

Digital Interest is High But Challenges Remain

Companies cited several challenges that are preventing them from completing their transformation. As is the case with implementing any new technology, many are concerned about security. Others feel they lack experience and don’t have the tools in place to undertake DX. The third biggest challenge cited by the respondents was the lack of management support. DX is complex, spanning departments, channels, and products.

So, what are companies transforming exactly?

  • Most (68 percent) are changing their front-end processes.
  • 61 percent are focused on the back end to stay in compliance and achieve efficiency.
  • Only 38 percent of the respondents said they are transforming both (end-to-end).

I found this interesting as it’s been my experience that transforming the front and back end simultaneously generally leads to better results, although it’s the minority of companies doing this. Many businesses embark on a crawl-walk-run approach to DX and these numbers certainly bear this out.

Companies are realizing that transforming complex parts of the business will be more valuable in the long run. While 50 percent believe changing simple business processes is important, the majority (93 percent) said transforming complex business processes is important because it helps manage information—not just documents and email, but also social media, video, and audio—to effectively provide better customer service.

Customer Engagement and Business Information: Near Term Initiatives

“The other two important areas being transformed are business information and customer engagement. When you talk about customer engagement like handling social media, those things became more important,” said Raman. “By looking at what customers are seeing on social media, companies can transform their customer engagement. It’s high complexity but also high value, so being able to utilize that kind of communication more effectively is a big differentiator.”

It’s clear from the report that the top-tier companies are significantly ahead, in terms of having implemented DX, having completed it, and having started as far as two years ahead.

Those top companies are doing better than the rest in digitally transforming their critical business areas. In fact, companies that are the most successful in their DX initiatives are more than seven times as likely to transform end-to-end. They’re looking at not just the front end or the back end, but across products, channels, customer journeys, and touchpoints.

This should be a word of warning to businesses that are approaching DX cautiously. If the business waits too long, the leading brands are going to break away from the pack.

The Right Tools Are Critical to Digital Success

Furthermore, the top-tier companies are using a rich set of tools for DX. The tools that the DX leaders found most important are those that tackle complex information. For example, enterprise content management, content-driven workflows, and unstructured information management were all high on the list.

These companies are also about five times as likely to use low code in DX. Most companies use low code to solve simple problems and automate processes that aren’t really impacting the business. The most successful companies, however, have been able to marry low code with their complex business problems. If a company wants to launch a new service or scale something, it can make the changes faster using low code.

“Digitally transforming end-to-end is about taking on harder problems to solve. These are problems that are going to impact the business and the customers. The tools companies are choosing are low code, as a way to address the complexity,” said Raman. “For these companies, the leadership and management support is there. They’re playing a key role in getting the results and the success.”

In summary, the best companies make it easy and seamless for customers to engage with them across products and channels. Those are the companies that have effectively automated their business end-to-end. They are using DX tools that can handle complexity and tackle problems that have the highest impact on their business.

Author: Zeus Kerravala

Zeus Kerravala is the founder and principal analyst with ZK Research. Kerravala provides a mix of tactical advice to help his clients in the current business climate and long term strategic advice.