For the past half dozen or so years, “digital transformation” has been a popular but vague buzzword in business circles. As many established companies struggle to adapt to a rapidly changing marketplace, it’s clear to CEO’s and CFO’s that some kind of “transformation” is necessary.
But what does “digital transformation” really mean?
And is it right for your logistics company?
What is digital transformation?
Digital transformation is the strategic improvement of business operations and the value they deliver to customers by integrating digital technology into all areas of a business. In today’s business world, asking “who needs digital transformation?” is like asking “who needs air?”. Leveraging the opportunities offered by technology is a matter of survival. Industries like ICT, media, finance, and professional services have been leading the charge. Retail is another area in which we’re seeing a big push to digitize before it’s too late.
Vanguard CIO John Marcante says that in today’s markets, an organization’s successful digital transformation is a primary factor in its future success. “Just look at the S&P 500. In 1958, U.S. corporations remained on that index for an average of 61 years, according to the American Enterprise Foundation. By 2011, it was 18 years. Today, companies are being replaced on the S&P approximately every two weeks. Technology has driven this shift, and companies that want to succeed must understand how to merge technology with strategy.”
Digital transformation strategy in logistics
Other industries, like logistics, are widely acknowledged to lag behind in adoption of digital technologies. Cloud computing adoption reached over 50% only in 2018, while the amount of logistics companies ranking their data and analytics capabilities as advanced is just 10%. Yet given the importance of demand anticipation, seamless communication and coordination, and customer satisfaction, this reticence is simply unsustainable. The clear bottom line: logistics companies have just as much to gain, if not more, from digital transformation.
At the same time, the woes of established companies are exacerbated by competitors who are adapting. Often, these are scrappy new players who donned the digitization gloves as soon as they stepped into the ring. Traditional companies, on the other hand, are sparring with subpar equipment, handicapped by poor transparency, underutilization of assets, clunky user interfaces, and -- the Achilles heel of businesses -- outdated manual processes.
New digital platforms remove supply chain inefficiencies, solve problems associated with asset underutilization, improve demand-supply matching, and increase visibility and connectivity across systems. Implementing advanced analytics and control towers and digitizing core operations allows logistics companies to boost operational efficiency, connect stakeholders across the supply chain, and scale effectively.
Here, out-of-the-box solutions are rarely a viable solution for delivery of complex services. Because they provide opportunity for only limited customization or none at all, organizations quickly run into problems if they attempt to scale their business or modify processes. Custom SaaS does not have these limitations. With the right developers, it can be customized to the exact specifications required by an organization, and customized again when those specifications change.
Developing your digital transformation strategy roadmap
Digital transformation, regardless of industry, can be broken down into 5 pieces:
- Customer experience
- Operational agility
- Culture and leadership
- Workforce enablement
- Digital technology integration
A winning digital transformation strategy addresses all 5 of these areas. Think of the process like building a campfire. If you have kindling and logs but no matches, you won’t get flames. With matches and kindling but nothing to sustain the fire, your campfire will have a very short lifespan. A digital transformation effort that does not holistically address the organization is equally destined for failure.
Here, the stumbling block can often be the mistaken belief that digital transformation implies a purely digital solution. While intuitive and agile technology is certainly the backbone of any transformation project, it must be designed to address the root problems holding your organization back (hint: “outdated technology” is not a root problem). Bringing in a consultant who can objectively evaluate your organization is the first and, arguably, most important step.
Transformation also entails changes at the level of organizational culture. Digitization is necessary because of a greater demand to be efficient, agile, and predictive rather than reactive, among others. Agile technology must be supported by agile leadership, policies, and culture, from the top executives to the entry-levels.
How do you move beyond understanding the necessity of digital transformation to implementation?
Digital transformation is a hefty undertaking. The first and most crucial step in developing a successful strategy is understanding your objectives and your pain points. The importance of smart digital transformation consulting cannot be stressed enough. Bringing a seasoned individual on board who can see your organization through fresh eyes is essential if you want to accurately identify the real roadblocks to success. Remember, digital transformation starts with strategy. Digital solutions should be developed from those insights, keeping strategy as your development team’s guiding light the whole time.
Realware powers successful companies by combining thorough diagnostics and expert strategy with cutting-edge development. Talk to us today about how we can help you meet your business objectives.