What Everyone’s Getting Wrong About Digital Transformation

Digital transformation is all the rage right now, and technology companies are working hard to promote it. You can hardly take an action online or go to a conference without being bombarded by digital transformation messages from every angle. Some companies are even using it to sell items only distantly related to digitally transforming.

However, as the CEO of a company purpose-built for the cloud, which has been helping small and mid-sized growth companies modernize their business operations for more than a decade, I can safely say that digital transformation should not be the end goal.

Defining Digital Transformation

“Digital transformation” has become the go-to term covering anything from business process automation to utilizing artificial intelligence to going mobile. For the purposes of this discussion, I’ve found a few definitions that reflect the disparity of opinion regarding digital transformation:

• “Using technology to create differentiating ways of doing business with the aim of driving growth in new and existing markets.” — Simon Chan, Open Consulting Group.
• “Digital transformation (DX) is the novel use of digital technology to solve traditional problems.” — Wikipedia
• “Digital business transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.” — Gartner IT Glossary

While these definitions contain varying components of what could be a digital transformation strategy, they’re missing the core of what really is being done: The business is being set up to be agile and responsive, enabled by modern technology.

With modern technology, businesses can digitize their analog processes. Typical analog businesses run on disconnected systems and spreadsheets, leaving people to struggle with silos of conflicting data and a lack of information at their fingertips. Obtaining a “single source of truth” is not even possible.

Digital transformation can make a huge difference, but there’s a problem with stopping there. Taking broken or messy analog processes and making them digital doesn’t magically make a business whole: It merely creates broken or messy digital problems.

To truly transform a business, its systems, processes and people must all intersect.

A Stepping Stone

Digital transformation is only a stepping stone toward becoming a fully connected business — and becoming a fully connected business results in business agility, a necessary ingredient for success. Businesses that want to take on new opportunities, target new markets, and create new business models must be agile and responsive enough to do so.

If being connected — and therefore agile — is the end goal, the question is, “How do you become a connected business?”

Becoming a Connected Business

A truly connected business encompasses three areas: technology (yes, the “digital transformation” piece), people and processes, and peers and community.

1. Tools and Technologies

SMBs’ top technology challenges include finding a solution that will “best help” their company by increasing their security and providing better insights from their data, notes a recent SMB Group study on how business characteristics shape technology decisions and planning.

The shift to the cloud is continuing, according to the study, which offers the following observations:

• “SMBs increasingly likely to use cloud-only or hybrid.”
• “Trend seems irreversible — companies that have been in business less than 5 years favor the cloud in every category.”
• “New value proposition of the cloud as the on ramp to new technologies (AI, ML, NSP, etc.) taking hold.”

SMBs that embrace the cloud as part of their digital transformation strategy are taking a necessary step to becoming a connected business. Embracing cloud technology can help alleviate struggles caused by analog processes such as siloed data and deskbound workflows — but remember, technology is not a panacea. It’s only part of the solution.

2. People and Processes

Digital tools and technologies certainly can help make a business more cohesive and efficient, but the other vital component is employee input and buy-in. Seeking employee input during the digitizing process can uncover new efficiencies as well as increase employee satisfaction and buy-in.

After all, your team will be the ones using or impacted by these process shifts, and their involvement along the way can help make changes easier to adopt.

3. Peers and Community

Finally, businesses should seek input from industry peers and members of the user community for best practices.

Some may not even be in the same industry, but these people are solving similar business problems. After all, they say we all grow stronger together.

Connected business, SMBs and Success

This article is geared toward SMBs, not global enterprise businesses. Global enterprises possess budgets large enough to start multimillion-dollar projects with dozens (if not hundreds) of IT people at their service. SMBs need a product that is developed with a pragmatic viewpoint, using modern, innovative technologies to solve the real-world problems of mid-market businesses.

When SMBs implement a modern enterprise resource planning solution, they benefit from faster and better business insights, the agility to take advantage of new opportunities, and the capacity to future-proof their business — all of which spurs growth. However, just running out and buying cloud software and expecting it to be the cure-all is not the pathway to success.

“Nucleus is aligning all of our research to a new model that prioritizes business requirements over technology for tech’s sake,” wrote Ian Campbell, CEO of Nucleus Research. “All research now focuses on the four key business pillars: Finance, Production, Customers, and People. These are the strategic areas that most companies focus on.”

These strategic areas are all about connection — not digital transformation. Connecting the business requires investing time and energy into the business process work and the people who do it.

What are your problems, and how will the cloud-based ERP solution help fix them? The answers to these questions come from the people who handle the business processes every day, and who understand how automating their lower-level, time-consuming activities will make their lives easier and the business more efficient.

Ultimately, success is understanding that a connected business is the goal, and digital transformation is a step along the way. It’s also realizing that moving your business management applications to the cloud is not just for the sake of moving to the cloud. It’s about moving the business to a more efficient set of business processes, and connecting every aspect of the business through modern, innovative cloud ERP software.