What exactly is Digital Transformation?

Digital Transformation Business Transformation

What exactly is Digital Transformation?

…and does it really apply to me?

Companies replace or upgrade ERP and other business systems for a number of reasons all the time. But for the past few years, new terminology has been sending waves of fear and wreaking havoc upon CEO’s sense of order. One in particular is Digital Transformation. This post should help clarify what it is and help bring the terror level back down.

Digital Transformation sounds big. A full overhaul of unknown computer technology invading every facet of the company comes to mind. You may envision everything taken over by computers. What was once just science fiction is about to materialize throughout your very own workplace. The elements that once made your company unique reduced to a line of code somewhere in the system.

It’s not like that.

First things first, digital simply means “in an electronic system instead of on paper.” Basically, it is the elimination of unnecessary manual work.

A quick history of ERP system functionality

In the days when ERP came to the forefront, functionality in business systems grew at a manageable pace. Systems were upgraded much more often than they are today. Upgrades were less challenging because the systems were not all that pervasive to the overall functionality of the company. In the meantime, the basic technology behind the functionality began to expand. Since Y2K, basic computing power and capability has grown exponentially. Business system developers began to exploit what new computer power allowed them to do for both processing speed and user interaction. Because of this new power, upgrades grew so pervasive that changes became more traumatic. This was not only because they were touching more areas of the company, but because they ultimately still used the original technology, and realistically, this technology was no longer able to keep up. At the same time, business was demanding a change, something that first took hold when automakers forced companies to go to EDI, insisting they would not work with companies unless they could transact with them digitally.

Today, ERP and other business systems no longer manage just accounting and planning- they touch everything. A well implemented business system should impact nearly all areas of the business, but this is good because it allows streamlined access to information.

The opportunity you have with digital transformation is to move the entire enterprise forward through a change to a powerful and integrated system. The potential for improved profit, market growth, and customer satisfaction is all in play. The difference today in our digital world, is that this is not only a change in what the system does. It is also how the user is able to do it.

Now, about here you are probably wondering how this post is supposed to lower your fear level of a transformation like this. So, consider these three points.

First, any ERP replacement or even any business system replacement at all is now digital. So take digital out of the panic list because…

Secondly, we already live in a digital world, so extending that into our daily business lives isn’t as frightening as it feels. Think of ordering Starbucks on your phone. For many it is second nature, but it would have taken much more effort just 5 years ago and was unthinkable 10 years ago. Now think of business tasks in the same way. You can create a report, and it will integrate a terabyte of data in minutes with digital technology, whereas it might have taken a day or even a week of combining spreadsheets to get a comparable result.

Finally, the transformation doesn’t have to be done all at once. Many companies will have you in panic mode immediately by discussing the enormity of the project. Digital Transformation can (and usually should) be done incrementally as any ERP replacement would be done. Just make sure you start with a solid base of the right due diligence up front.

Set the project up the right way

Develop your business case and roadmap. Create the vision. Use this base to find the right software to fit your needs. Then you can take small steps toward a bigger transformation at the level of change your company can manage. Using this well-defined roadmap, you will be able to grow and adapt over time with the same system.

In the end, Digital Transformation is really no different from past changes you have made as a company, except these changes will last longer, be adapted to faster and better, and provide more value than you have probably become accustomed to. If you think about Digital Transformation as a business system change that simply offers better options as you need them, your expectations will be much more in keeping with reality.

David Warford
David Warford
Co-Founder, Managing Partner , KnowledgePath Consulting, Inc.
As co-Founder and Managing Partner at KnowledgePath Consulting, Inc. David applies his 30+ years of experience in the technology industry, exceptional leadership skills, and his commitment to honesty and transparency to ensuring client success. He drives customer relationships that span the globe in numerous industries and product categories.