In the previous articles in this series, we discussed exactly what a digital transformation is and what it looks like in terms of time and commitment across a company. Now, let’s dig a little deeper into what real impact a digital transformation can have on a business in terms of costs and benefits.
In a recent McKinsey survey, 64 business executives agreed that they must build new digital businesses if they want to be viable through 2023. Yet, many companies (31% of a 1,000+ survey group) have erroneously employed a “wait and see” approach to new technologies, due to the initial cost. This same survey reveals that 76% of employees indicate that having the digital tools they need at work makes them more productive, and more than half (53%) say it makes them more successful. Investing in the right digital tools increases productivity and employee satisfaction, which will decrease long-term costs.
Digital transformation could reduce the time it takes to get a product or service to market, suggests Forbes. Applying digital solutions to problems that arise using traditional methods can lower the time it takes a product or service to reach customers, while solving those problems at the same time. Digital transformations give businesses a model that streamlines workflow and automates many manual tasks, integrating data throughout the organization, and ultimately empowering team members to work more efficiently (Virtru).
Digital transformation can increase profits. According to a survey done by SAP Center for Business Insights and Oxford Economics:
- 80% of organizations that have completed digital transformation report increased profits.
- 85% say they have increased their market share.
- On average, leaders expect 23% higher revenue growth than competitors.
Deloitte reports that companies that are farther along in their digital transformation journeys are about three times more likely “to report annual net revenue growth and net profit margins significantly above their industry average,” than other companies who have not made as much progress in their transformation. This is a pattern that holds true across industries. Forbes states that investment in new technology can lead to higher revenues in the long run.
A company willing to undergo digital transformation will lead to a better company culture by empowering employees to be more creative, enabling hybrid work schedules, and creating more opportunities for collaboration. All these benefits create an environment where workers are engaged and more likely to stay, thereby reducing turnover and lowering recruitment costs (Forbes). In a time of low employment, when employers are struggling to hire and keep the their talent, employee satisfaction and engagement are crucial (Wall Street Journal).
While COVID-19 has forced the business world to start rethinking how they do business, one thing is clear; digital transformation is a must for any company that intends to survive. A willingness to invest in new technologies, reorganize and reshape the company will lead to a digital transformation that will keep companies competitive, improve employee engagement and productivity.