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What is SAP Digital Transformation? (Detailed Guide)

Ever wondered why some businesses can grow astronomically in terms of revenues and margins whereas others do not? When it comes to running high-performance businesses, the goal has always been the same- boost efficiency, grow revenues, and cut operational costs. With digital platforms, software advancements, and technologies playing such a major role in our everyday lives, can businesses afford to ignore them?

This is where a Digital Transformation Strategy becomes important. It seeks to identify business goals and looks to integrate tech and digital solutions as a medium to reach those objectives. Relatively straightforward, you might think. That is not the case. While the need and importance of a digital transformation strategy have been felt in business circles for a long time, studies show that the process means different things to different people. 

In this resource, we are going to cover some of the following important aspects of a digital transformation strategy- 

  • Why should businesses go for digital transformation?
  • How can businesses be better prepared for making the change?
  • Mapping a digital transformation strategy for your business
  • Building a digital transformation strategy from scratch
  • Leading players that should be involved in the process
  • Digital transformation strategy frameworks

If you are a business founder, CEO, CTO, or any high-ranking executive in an organisation looking to implement a digital transformation strategy, check out what we have to say in the following sections.


Why is Digital Transformation Necessary for Businesses?

No one wants their business organisation to come across as a dinosaur. In other words, you want to keep evolving and modernise your processes accordingly. Fundamentally, a digital transformation strategy is geared to change the way your business functions or operates. There are four key areas that DTS helps you with- 

  1. Bring legacy processes in your business up-to-speed with the latest and best technological solutions available in our times. 
  2. Accelerate workflow and other processes in the organisation’s operations to boost productivity, streamline efficiency, and cut down on redundancy. 
  3. Improve cybersecurity measures and processes and prevent the businesses’ core data from being exposed to vulnerabilities. 
  4. Boost revenue generation and profit margins by bringing down operational costs and locating high-value opportunity areas for the business. 

Every business area is impacted positively when you opt for a digital transformation strategy. You learn so much when you go for systematic data collection. It can help you better your customer experiences, build flexibility and agility in an organisation, and build a solid resource management foundation. 

Many businesses fail to understand that a digital transformation strategy involves changing the culture of a business organisation. If a company cannot implement DTS at the cultural level, then it might not be a resounding success. The employees and team members of the business need to rethink how they were carrying out their day-to-day tasks before. 


How can Businesses be Better Prepared for Ushering in a Digital Transformation Strategy?

Your business will never be able to benefit from the smart integration of digital technologies in operations unless you have the basics right. DTS is not something that you get to implement right away from the get-go. It would help if you prepared by setting the groundwork and then building upon it. 

Let us look at five major ways how businesses can be better prepared for ushering in a digital transformation strategy- 

1. Understand your business model and see where DTS will fit in- 

The first thing businesses need to do is look at the model that they have right now. See the technological inputs you currently have across your manufacturing, sales, and service verticals. This will give you a fair idea about where DTS will be effective. You need to make technology a part of your processes in the future, and understanding or updating your business model will help you get there. 

2. Empower and encourage your team to embrace the new change-

Ushering in DTS will never be easy and will be met with stiff resistance. No one likes to change or adjust to a new way of working. Employees always become comfortable following processes they have had for the longest time. This is where the leadership needs to play an encouraging role. Make everyone understand that technology will make their lives easier and help the organisation grow. 

3. Pick and choose DTS tools that will become a part of your organisation-

Implementing a digital transformation strategy can involve using thousands of technological tools and software. But not all of them might be the best fit for your business. This is why rather than getting influenced by what others are doing, understand which tech tools will best work for your business. If a particular tech tool is not contributing to efficiency or improving productivity, it should not be considered. 

4. Have dedicated training modules and programs for the employees-

You cannot expect everyone in the organisation to take on new technologies in the same way. People will take time, and there is no harm in giving them that time. If you want your DTS to be a success, ensure that you have training programs for your employees. This is the guiding stage where the onus and responsibility of teaching employees how to adjust to new tech lie with the organisation and the management. 

5. Check out digital recruitments and remote working opportunities- 

There is no denying the fact that the Coronavirus pandemic has altered the way we work. Suppose you are a business that feels that you will be better off with credible and skilled remote working professionals. In that case, you need to make technology a part of your recruitment and collaboration processes. Understand the pros and cons of doing this for your business. If the positives outweigh the negatives, integrate tech into your recruitment. 


Mapping a Digital Transformation Strategy for your Business

Many businesses can be guilty of trying to steamroll a digital transformation strategy. In other words, they want the fastest and best execution without understanding key points. 

For example, before you try to get where you want to get and figure out how you want to get there, you first need to pay attention to where you exactly are! This means where your business stands as we speak. 

According to experts at the Harvard Business Review, the best thing to do is to “start mapping your current business model.” They go on to say that every business model has nine core or key elements- 

  1. Partners
  2. Activities
  3. Resources
  4. Customer Relationships
  5. Customer Segments
  6. Revenue Streams
  7. Costing Structures
  8. Channels
  9. Value Propositions

Your business model is a complex interplay of these nine core elements. This means that the mapping process of your DTS needs to begin by identifying and outlining the relationships each of these nine elements has. It is also about understanding how they come together as an organic whole. 

Mapping a digital transformation strategy needs to have a ‘vision’ at its foundation. It needs to be an organisation-driven approach that is wedded to the very culture of the employees. 

Understanding which technologies can help you on your DTS journey is also a significant part of your mapping process. Let us check out some of the technologies that need to be considered during the DTS mapping- 

  1. Cloud computing technologies
  2. Artificial Intelligence (AI) and Machine Learning (ML)
  3. Augmented Reality (AR) and Virtual Reality (VR)
  4. Digital Platforms (Search and Social) and transitions
  5. Internet-of-Things (IoT)
  6. Advanced Robotics (Manufacturing businesses)
  7. Mobile Technologies

The thing to note is that not all technologies might apply to all business forms. You might even want to consider rolling them out one after another just to ensure proper strategy execution. 


Building a Digital Transformation Strategy from Scratch

It’s finally time to start building your digital transformation strategy. Before you start picking up the tech tools and software, make an assessment of where the world is currently at. Understand how embracing tech will affect your business, employees, customers, and profits. Once this is done, start with the following six steps to build your DTS-

  • Step 1: Put together a Road-Map for the technology-

In the last section, we spoke about mapping your digital transformation strategy. This step is all about that. Understand where your business is at, what you can do to improve it, and then sit down with the technologies that will be best suited to get you there. You need to be honest about your requirements and not fall prey to what others are doing. 

  • Step 2: Invest in Upskilling the Present Talent in your Organisation-

There is a reason why upskilling has become the favourite watchword in Silicon Valley. The management needs to play a proactive role in identifying the best talent and investing in upskilling them. Rather than hire from outside, you can give confidence to your best performers by investing in courses, modules, and training programs. 

  • Step 3: Moving to an Agile and Flexible Working Model-

Businesses that survived the disasters of the pandemic were the most agile ones. You need to bring flexibility into your business operations, model and culture. The shift from ‘this’ to ‘that’ should not take you months. Rather it should be over within a few days. Implement a new methodology for better risk calculations, innovation, and productivity. 

  • Step 4: Get the Most Modern Technology On Board with your Business-

Technologies have a very short shelf-life. If you have been contemplating your DTS move for over a year, you will need to start again. This is because the tech that was there one year back might have become old, redundant, or obsolete now. Understand that a DTS powered by the latest technology will generate the maximum impact for your business operations. 

  • Step 5: Make Data Management the Foundation of your DTS Move-

Everything begins and ends with data in modern business organisations. What your customers are buying and engaging with to which verticals in your business are not performing can be measured with data analytics. With robust data, you can inform and improve various operations, teams, and employees in your business organisation. 

  • Step 6: Push Scalability, Adoption, and Growth of DTS-

Starting a digital transformation strategy is not enough; you need to grow and scale it up. The reason why technology is favoured is that it can lead to drastic scalability. This requires a conscious and aggressive push towards tech adoption, data management, and putting the learnings into the execution process. Unless you push aggressively, growth will not take place.


Leading Players that should be Involved with the Digital Transformation Strategy Process

Every business needs to make a start somewhere or the other as far as digital transformation is concerned. The question remains: Who should helm this move and lead it?

It is important to understand that a strong commitment to change at the very heart of any digital transformation strategy. It would be best if you had creative zeal, leadership acumen, technical knowledge, and empathetic skills. 

According to experts, to move the needle on DTS, three major players are required-

1. The Leader- 

A digital transformation strategy needs to be led by someone. It can be the organisation’s CEO, Founder, COO, or any executive that has been designated the task of leading from the front. All decisions, planning, and executions will flow from the leader. He moves the needle as far as DTS is concerned. A leader takes calculated risks and allocated resources accordingly. 

2. The Technologist- 

A leader will need constant support and encouragement from the technologist. In most businesses, the CTO takes over the role of the technologist for DTS. They understand the technology and are responsible for procurement, support and implementation. They are the arms of DTS; without them, no successful rollout is possible. 

3. The Communication Specialist- 

Putting in place any strategy requires healthy communication between the different stakeholders. The role of a communications specialist is an underrated one. They are the ones responsible for getting everyone on board. You can say that delivering a positive message for DTS and influencing the culture is where communication specialists excel.


Digital Transformation Strategies Framework

According to a leading report released by McKinsey, 70% of all DTS experiments fail within the first year itself. A major reason why that happens is that businesses go into DTS uninitiated. To be precise, they fail to engineer digital transformation strategies with a proper framework in mind. 

A framework helps in overcoming three major challenges that businesses face when it comes to the implementation of digital transformation- 

  • Resistance to the change in culture that DTS requires
  • Poor or non-committal leadership 
  • Zero collaboration between employees and verticals

To overcome these challenges, experts suggest using frameworks that can help bind operational efficiency and boost work productivity. 

Let us look at one successful digital transformation framework below- 

  1. Identifying the goals, outcomes, and objectives of digital transformation. This has to be spelt and written in a detailed manner for everyone to understand and get on board. 
  2. Formulating a robust plan of action that takes care of everything from mapping to identification of problem areas that can act as hindrances. 
  3. Select the right technologies to help a business realise its dream of being more productive, efficient, and profitable. You do not need all the tech in the world. 
  4. Putting in place the right leadership to carry forward the entire process. The leader needs to be at the helm of the journey right from the start of the process. 
  5. Training the employees and team members to understand the intricacies involved in digital transformation and get them on board. 

When it comes to frameworks, there is no one-size-fits-all approach that works. A framework that works for one business might not be for another one. Think of a young start-up that makes software products or payment gateways. Do you think they will have the same challenges of a roadmap for DTS as a hundred-year-old legacy business that sells plumbing products and solutions? I guess not!


The Final Takeaway

A digital transformation strategy is always a journey and never a destination. With technologies evolving at the drop of a hat and customer expectation expectations changing with every new viral reel, businesses need to acknowledge the fact that DTS is always going to be a part of their structures and operations. How can it be? 

Take up the example of successful businesses during the pandemic, and you will see a lot of examples where technology helped businesses stay afloat and grow and generate profits. At the other end of the spectrum, you had companies with little or no tech/digital presence and experienced the worst- shutdowns, layoffs, debt, etc. 

A great digital transformation strategy can be a game-changer for a business organisation. It can very well be the magic wand you were looking for to drive growth, generate revenues and push profit margins. What do you think about digital transformation strategies?