What Is a Digital Transformation Strategy?

Written by Coursera • Updated on

A digital transformation strategy offers key benefits to companies, including increased revenue, better customer experiences, and long-term company flexibility.

[Featured Image] A manager discusses a digital transformation strategy with her team.

A digital transformation strategy is a plan designed to improve business performance through the increased use of digital solutions. Digital transformation is a broad term, but it may range from automating customer service to becoming a remote-first company to utilizing artificial intelligence in decision-making. This business strategy often has many benefits, such as increased revenue and efficiency, reduced operational costs, and more. Many of these benefits come from streamlined operations and reduced errors from automated solutions. When creating a digital transformation strategy, companies often develop short- and long-term plans. 

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This article will examine why digital transformation strategies are important, how to develop a strategy, and what benefits you can expect from implementing digital transformation solutions.

Why do you need a digital transformation strategy?

Businesses excel from implementing digital transformation strategies for varied reasons, depending on the industry and the value delivered to customers. Companies that implement digital transformation strategies can typically expect the following core benefits.

Improved efficiency

Digital transformation strategies often integrate internal and external systems. This involves utilizing digital devices, platforms, media, data, and technology in business operations.

Bringing together your systems, processes, and workflow lets you improve efficiency across departments. This speeds communication, provides convenient access to company information, and can help employees perform their responsibilities more efficiently. 

Faster decision-making

One of the key outcomes of digital transformation is often access to higher volumes of relevant data. This data helps professionals make informed decisions and validate their processes. Data can also help companies get buy-in from stakeholders and feel confident in the organization's decisions.

Competitive advantage

Businesses typically benefit from taking advantage of the latest technological advances and emerging technologies, keeping them on the same level as their competitors. This type of digital transformation often attracts customers and enhances their experience with the company.

Digital technologies may increase your company’s value to customers and more effectively reach and engage your target market. When other companies are not using the same technologies, your company has a better chance of gaining a competitive advantage within the market.

Easier future change

A flexible technology core allows companies to innovate and drive change continually alongside the latest technology. This can help you scale your business, partner with outside organizations, and consistently promote sustainable change to attract and engage customers. When you stay with a foundational technology or system that cannot change, you have a higher chance of falling behind and missing valuable opportunities.

How do you develop a digital transformation strategy? 

Building a digital transformation strategy takes time, effective communication, and engagement with professionals across the company and company partners. When developing your digital transformation strategy, consider the following steps.

Determine your business’s current status.

First and foremost, you will want to determine where your business currently stands regarding utilizing the latest digital technologies. For example, if your company is already highly digital, scaling to use more advanced technologies may seem like a small leap.

If your company is currently limited to paper correspondence, upgrading to the most advanced digital solutions may take longer. Taking the transformation one step at a time and working toward short-term milestones can help create sustainable change

Know the purpose and vision—the why—of your transformation.

Knowing why you are designing a digital transformation strategy can help to build support for the changes within the company that are likely to result. Digital transformation is a broad term that can have many meanings.

A great place to start is sitting down with your business’s strategic goals and mapping a desired trajectory over the next few years and 10 to 15 years into the future. 

Incorporate your organization’s strategic goals.

Aligning your digital transformation with your organization’s strategic goals can help determine what areas will likely benefit from streamlining processes. For example, if you provide a physical product to customers, then having a streamlined quality assurance (QA) process could help ensure the products' high quality.

If you are providing a digital service, then focusing on a faster and more intuitive digital interface could entice customers to continue using your service.

Map out your technology solutions.

There are many tools available for business professionals. Mapping out existing business processes and how employees are completing their tasks can provide insight into what solutions may be the most beneficial.

Project management tools, time tracking tools, social media management tools, and internal shared platforms are great ways to begin implementing digital solutions. Creating a game plan for implementing each solution, including actionable steps, the implementation timeline, and how they will build on one another, will help ensure the transition goes smoothly.

List any challenges and opportunities you foresee.

Do you anticipate specific challenges or resistance to implementing digital solutions? Be upfront with these challenges and work with your team to brainstorm ways to overcome these obstacles.

While many challenges remain unforeseen, preparing your team for the challenges and changes likely to occur during the transition period can minimize the impact on employees.

Identify who can help you.

Partners are crucial to successfully implementing a digital transformation. You will want to engage experts in each area to help effectively implement new technologies within the organization. This can minimize errors and ensure the plan follows the company-wide strategic vision. Engaging industry experts also creates opportunities to learn from other companies and find the most effective solutions.

Start small. 

Implementing a digital transformation strategy takes time, often leading to organizational cultural changes. Starting small and creating “proof of concept” will help to engage company members and demonstrate why the technological solutions will be beneficial on a larger scale.

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Benefits of digital transformation  

There are many benefits of implementing digital transformation solutions. Companies often see benefits over long periods, which vary depending on the organization. Many benefits seen by companies who implement new digital solutions include:

Reduced costs

Digital solutions can reduce operational costs in a business, increasing the organization's efficiency, productivity, and profitability.  

Increased revenue

Digital solutions streamline processes and allow human time and resources to be spent outside of redundant and tedious operations. This can drive innovation, improve customer experience, and drive growth for businesses that increase revenue.

Improved customer and user experience

Digital solutions can enhance customer communication and experiences with your organization. Customers should be able to navigate your site easily, find the services or products they seek, and communicate with your company about their experiences. Digital solutions often make this a more intuitive experience for customers and improve their satisfaction.

Decreased human error

Task automation and error review are essential parts of more effective digital solutions. When humans complete repetitive tasks, human error is more likely than an automated process to complete them. Implementing quality assurance measures and streamlining redundant tasks can improve a business's quality.

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Challenges of digital transformation 

There are challenges to implementing a digital transformation, but with the right planning, you can minimize these challenges and lessen their effect. Common challenges include:

Lack of buy-in from risk-averse executives and employees

As with any change, adjusting to new norms can be difficult. Employees may resist change or need to be made aware of how it will benefit them and the company. As a facilitator of these changes, you must work with employees to ensure every company member clearly understands why the transformation is taking place and how it will benefit them.

Insufficient budget

Cost is a common factor in digital changes. Many digital solutions cost money, and you must make the down payment before seeing the longer-term benefits. Mapping a clear trajectory for how the costs will lead to long-term financial benefits may help minimize resistance.

Lack of appropriate IT skills

As with any new task, training is essential to ensure employees can effectively use new technologies. Engaging industry experts to teach company members how to take advantage of new solutions can help minimize challenges caused by a lack of skill.

Legacy systems

A legacy system is an outdated software or hardware still in use. If your company uses legacy systems, transitioning to newer methods may take time. Having a transition plan to minimize downtime and inconvenience is essential.

Slow ROI

Return over investment (ROI) may take a long time for company members to see. Being realistic from the beginning and not promising unachievable turnarounds in results is essential to maintaining credibility and keeping company members and stakeholders on board.

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Next steps 

Learn more about digital strategies through courses on Coursera. To start, consider taking beginner Specializations such as Leading the Modern Day Business Specialization by the University of Virginia, which includes courses such as Digital Transformation.

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Written by Coursera • Updated on

This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.