What Digital Transformation Is — And Isn’t

As companies in every industry focus on their digital transformation plans, the term itself gets murkier and murkier. In a sea of jargon and marketing lingo, it’s hard for many to answer the question: What exactly is digital transformation in 2018?

Confusion exists for good reason. Companies have invested billions in information technology for decades and embraced the internet for all the revolutionary impact it has on business processes and commerce. You’d be hard-pressed to find a B2B company that hasn’t digitized any of its processes, whether through CRM platforms, ERP systems or more. Is this not digital transformation? Is this not a journey we’ve been on for many years? What’s different?

Let’s walk through what digital transformation is (and, importantly, what it is not), so you can assess, build and implement your own digital strategy.

What Digital Transformation Used To Be

Looking back on how businesses have embraced technology to reshape processes over the years, digital transformation has emerged in three waves. The first two, while important, are notably about serving the needs of the enterprise itself, with less focus on the needs of the buyer.

• The First Wave: The initial round of digital transformation encompasses technology we take for granted in our daily working environment today. Companies bought technology to increase productivity and simplify internal processes: ERP systems, automated payroll systems, basic HR platforms and more. Remember when you had to request personal time off by submitting physical paperwork? That was before this first wave of digital transformation — one that made life easier for businesses, but didn’t address the customer.
• The Second Wave: After digitizing internal processes, businesses embraced the second wave of transformation: digitizing relationships with buyers. For example, if you were a glass supplier to auto manufacturers, you’d need a way to sync up your own digital systems to trade information more easily. You’d sign an OEM agreement and digitally replicate the same processes you previously completed over the phone or on paper. With technology you could more easily receive and confirm orders from buyers, exchange funds, and automate general basic processes. While this wave allowed businesses and buyers to interact more efficiently, it didn’t fundamentally alter the relationship. Sales didn’t happen over the web, businesses just started bringing processes online to simplify what was already happening.

These two waves share a common theme: Essentially, they allowed businesses to do more with less people. That’s great. But today, that’s a given. If you’re still at this stage, you’re not undergoing a true digital transformation — you’re just catching up. So what does it mean to undergo a digital transformation today?

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What Digital Transformation Means Today

• The Third Wave: This last phase, put simply, is about how businesses can sell more stuff to more people. How can we get customers to spend more than they would otherwise? How can we reposition our brand as not just a seller of products, but truly a solution provider that helps solve our buyers’ problems?

This means creating engaging experiences for any potential buyer, not just those we have existing relationships with. B2B buyers are independent; in fact, 59 percent of B2B buyers want to research online rather than interacting with a sales rep. And while the complexity of B2B process ensures it will never perfectly mirror the B2C experience, the third wave will bring about the customer-centricity that buyers are used to as consumers.

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Smart leaders are thinking the way they do everything. How do you sell a fleet of bulldozers to a new customer? How do you enable a buyer to get replacement parts for a jet plane, without always talking to a sales rep? Finding the answers to these questions require business process innovation, not just automation.

While companies have spent the last few years mastering efficiency, they face a new challenge. It’s not just about streamlining processes anymore — it’s about creating entirely new ones. While the first waves of transformation brought existing processes online, this last wave truly empowers the end customer.

This latest phase of digital transformation will not be easy to implement. But it has the most potential for radically transforming your brand value proposition. The winners in the previous phases were adept at digitizing current processes and implementing technology quickly and effectively. The winners in this phase are those that can apply tech to truly innovate the selling process and create new offerings to solidify customer loyalty.

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