7 Digital Transformation Best Practices for Organizations in 2024

Today’s customers are looking for convenient and personalized ways to purchase goods and services. These expectations are putting companies in a race against rapid digital transformation. Yet less than 30% of such initiatives are successful. However, as the figure below shows, the likelihood of developing a successful digital platform increases threefold when companies have clear goals, a strategy, and execution. In this article, we therefore present best practices that companies should consider before embarking on the digital transformation journey.

1. Define the business problem

Production optimization, customer satisfaction, sustainability, etc. – they all require the use of different technologies and the implementation of different strategies. In this context, companies must keep in mind that technology is just a tool to do business and introducing technology just because it is fancy will lead to a loss of resources. Digital transformation should serve the business. By understanding the business problem, companies can set a clear goal and KPIs they want to achieve through digitalization, which helps define a strategy.

Recommendation: Take a design thinking approach by clearly understanding and defining the user requirements with the help of domain and line of business experts. 

2. Prioritize collaboration between teams

A business is inherently a team effort, with people of different talents and specializations working in harmony and synergy toward a specific outcome. In tasks like digital transformation that require multidisciplinary work, synchronization of efforts becomes even more important. IT, management and relevant departments must collaborate on the project. The business mentality should prevail throughout the company so that IT management and the various departments can work efficiently and the team can focus on goals of the project.

To overcome these challenges, companies should establish a Center of Excellence (CoE) that serves as an institutional entity for the successful implementation of the digital transformation plan. CoE ensures:

• Avoiding duplication of work and costs by clustering tasks within the company.
• Create a schedule for each task and monitor the time spent.
• Determine domain expertises and create a platform to spread the know-how they have through the workers.

It is important to note that CoE can be centralized or federated, both of which have some advantages and disadvantages. A federated CoE encourages group work more, on the other hand, foregoing the rapid decision making associated with a centralized CoE. Most companies set up a CoE with a spectrum between centralized and federated. It is advisable for companies to choose a CoE type that reflects the corporate culture. 

Recommendation: Establish a Center of Excellence (CoE) by determining which services to offer (AI/ML, APIs, Data Science) and which line of businesses to support.

3. Ensure a culture that allows for change

Culture is one of the most important pillars for a successful digital transformation. Firstly, the use of technology always involves risk-taking and experimentation to be successful. Secondly, the high failure rate of digital transformation initiatives shows that companies have no luxury of ineffective use of the workforce. In this regard, a corporate culture can be an enabler for a successful digital transformation. Such a culture should adopt following values:

• Importance of hypothesizing, testing and proceeding with positive results.
• Importance of being a sense of community for increasing workers’ contribution.
• Importance of being open mindedly searching for more effective methods.

In order to learn more about enabler culture and ways to build such culture you can read our article of Organizational Culture: Core Piece of Digital Transformation. 

Recommendation: Establish a strong HR department by incorporating targeted hiring practices. 

4. Introduce a corporate governance system

Companies must support their cultural values through an appropriate corporate governance structure in order to increase their chances of success. A suitable governance system should include:

• CIO office: Assembles the necessary teams, ensures coordination between them, and monitors each step of the digital transformation by determining relevant KPIs.
• Line of business leaders: Responsible for executing tasks determined by the CIO with a given budget. Works towards functional goals and KPIs.
• Digital transformation council: Provides the necessary communication between the line of business leaders and the CIO. The most important function of such a council would be to set the budget and allocate it among the line of the business leaders.

Recommendation: Restore corporate governance by determining the level of hierarchy within the company.

5. Look through the perspective of customers or users

Enterprises must seek an answer to the question of what kind of services are in demand and what are the requirements in order to streamline the user experience. For example, establishing an effortless and computerized interface to interact with external customers is an essential tool to support them during or after the buying process. 

By using telematics, behavioral analytics and process mining, companies can better understand the behavior of their customers. This information can be transformed into tailored offers. For example, clothing companies can increase sales by offering different online deals to customers with different preferences. 

Recommendation: Determine customer trends and preferences by running surveys and using behavioral analytics tools. 

6. Take risks and try new methods

Try to follow the footsteps of large companies in digital transformation, but this approach doesn’t work.  Because SMEs have tighter budgets, less sophisticated human capital, and fewer opportunities for promotion than the giants. Therefore, SMEs need to try new things and take risks to break this vicious circle. 

For example, an SME may not be able to purchase the latest and greatest machine learning platform. But they may be able to run AI/ML tests in house using open source tools. Or, an SME may not be able to hire top data scientists, but they can outsource data science tasks to technology consultants.

An important point is that mistakes can occur during experiments. In the quest for the uncertain better, no one wants to risk the previous working version. Therefore teams need to version their data and record their working systems in case of failure.

Recommendations: Take into account your budgets, human capital, and your context while testing new approaches and taking risks.

7. Mind the technology legacy cost

Technology is improving rapidly. As a result, some of its applications will become obsolete within a decade, leaving sunk costs behind. To minimize the cost of technology legacy, companies need to thoroughly understand existing trends and their potential impact on market dynamics. In this regard, it can be beneficial to follow conferences on current technology trends, enlist the help of technology consulting firms, and monitor competitors’ technology investments.

Recommendation: Determine the ROI of new technology investments by taking costs and short term benefits into consideration. Follow emerging technology trends and their potential impact on your industry and markets.

If you would like to learn more about real-world examples of digital transformation, read our article 31 Digital Transformation Case Studies.

You might also want to see our list of digital transformation consultants.

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