Let’s start by busting the myth that digital transformation is a result of technology alone. Changing your company’s software, hardware, or digital processes won’t be enough to deliver meaningful, sustained business benefits. Digital transformation requires a focused strategy.
Businesses know that the lift a successful digital transformation can bring is needed today more than ever.
“We are undergoing a massive digital transformation wave,” observes Michael Nemeroff, head of Software Corporate and Investment Banking at Truist Securities. “Organizations that design a winning strategy can navigate the uncertainty and gain a competitive edge.”
Digital transformation strategies can encompass many elements, including harnessing IT automation to trim manual processes and boost efficiency, using machine learning and AI to become more intelligent and relevant, and acquiring new skill sets in order to dial up innovation.
We talked to Truist experts about how businesses can tap into digital disruption. Here are five ways you can take your business operations to the next level:
“We are undergoing a massive digital transformation wave. Organizations that design a winning strategy can navigate the uncertainty and gain a competitive edge.”
Head of Software Corporate and Investment Banking, Truist Securities
1. Optimize information technology.
Few of an enterprise’s challenges are as crucial as building a bridge to agility and flexibility. The ability to change direction on a dime—whether it’s the result of a pandemic, changing business conditions, or a supply chain disruption—distinguishes the winners from everyone else.
What exactly does this mean? At the foundation of the digital enterprise are cloud frameworks that, as Stellar Tucker, head of Technology Corporate and Investment Banking at Truist Securities, puts it, “allow companies to digitize nearly every aspect of their business. Cloud computing makes it possible to adopt new software and systems quickly—and scale them effectively.”
The resulting efficiencies can help reduce manual errors, streamline processes, optimize supply chains, and unleash automation at scale. Gartner predicts that organizations can eliminate nearly 70% of routine managerial work through automation.Disclosure 1 This can lead to lower costs and better data protection. In the end, employees can focus on higher-value work rather than manual processes, while an organization can seize new business opportunities.
A good example of digital transformation is in the payment automation space, says Scott Hesketh, head of Commercial Real Estate Treasury Sales at Truist. Automated payments cost a few cents per transaction, compared to upward of $5.00 to $7.00 per check. The impact can be enormous across a company or multiple properties. What’s more, “It can free people to do higher-value work,” Hesketh says.
2. Harness machine learning and AI.
It isn’t enough to be fast and agile. It’s also necessary to be smart. Machine learning and various forms of artificial intelligence provide digital fuel that rockets performance to a new level. This can translate to predictive analytics tools and machine learning that help an enterprise understand data more effectively, as well as AI capabilities that manage everything from robotic systems to chatbots. McKinsey & Company calculates that AI high performers invest at least 20% of their budgets in AI-related technologies.Disclosure 2
These tools are available today, and high-performance companies are already using them to gain a competitive advantage. For example, consumer goods companies are using machine vision to detect nearly imperceptible anomalies in products and packaging. Apparel retailers are tapping augmented reality to create virtual dressing rooms and even measure customers through their smartphones. Others are introducing AI for robotic process automation, natural language generation, and recommendation systems.
The key, Tucker says, is to separate hype from opportunity—and evaluate use cases carefully. This may mean piloting new technologies and scaling them up quickly when they unlock value.
3. Acquire the right skills.
Harvard Business Review points out that digital transformation “starts with people.”Disclosure 3 Yet navigating today’s business landscape requires diverse skill sets that extend far beyond IT. Gartner notes that five non-IT functions now encompass three-quarters of the demand for digital skills.Disclosure 4 These include positions in areas such as finance, sales and business development, marketing, engineering, and R&D.
While it’s wise to develop skills and knowledge in-house, it isn’t realistic to lean too heavily into this approach. Nemeroff says that businesses can borrow a lesson from the tech industry: “Bring in consultants and outsource when it makes sense.” Another option? In some cases, acquiring a small company with niche expertise or forming a partnership with another organization pays dividends.
Achieving digital dexterity is key.Disclosure 5 This concept also extends to alternative work arrangements and remote work. “Overall, people need to be more open-minded about looking at skill sets in context with individuals and roles. You have to be a bit creative about how you fill jobs and address labor shortages,” Tucker adds.
4. Enhance the customer experience.
Automation, efficiency, and raising the corporate IQ level are all worthy objectives. Yet none of this matters if a business doesn’t connect with its customers. Today, the signal-to-noise ratio has reached an unprecedented level. Consumers are tuning out marketing efforts and other communication like never before. For instance, a 2021 study by Forrester and marketing firm PFL found that 61% of consumers feel inundated, and 63% say businesses prioritize style over substance.Disclosure 6
There’s no easy way out of this problem. A starting point, though, is to focus on delivering content at the right time and place. AI can help with personalization, but it must be managed and controlled by humans. Likewise, self-service options can prove transformative for both a business and its customers. However, it’s also essential to back up any automated system, such as an AI chatbot, with old-fashioned human support.
Companies must strive to make things easier, faster, and better for customers. When there’s value in it for both the business and its customers, everyone wins. Consulting firm PwC reports that when companies deliver a great experience, consumers are willing to pay up to a 16% premium.Disclosure 7
5. Establish a framework for innovation.
In corporate boardrooms and on the front lines of business, few words get bandied about as much as “innovation.” Yet the concept is often misunderstood, misused, and misapplied. It isn’t necessary to constantly swing for the fences. You don’t always have to introduce new products and services. Improving a product—or the way you deliver it—can prove transformative.
McKinsey & Company discovered that companies that master innovation generate economic profit 2.4 times higher than others.8 How can an enterprise develop a framework that supports incremental innovation? First, it’s critical to understand that innovation is dependent on numerous factors, from fast and flexible technology to the right corporate culture. The common denominator among successful companies is a focus on understanding unmet customer needs, interpreting macro trends such as automation, determining the feasibility of any given initiative, and building a business model that can monetize the product or service and create value, McKinsey notes.
In practical terms, innovative companies give people time to think, freedom to act, and latitude to experiment. They recognize that small failures—and the ability to learn from them—fuel big wins.
Reaping the rewards
Building a strategic and focused framework that supports digital business provides a compass for digital transformation. Organizations that do this are equipped to reset their financial foundation, realign operations, digitize core processes, and seize growth opportunities. They’re also able to develop a stronger and more resilient workforce.
“Nobody can predict the future,” Tucker concludes. “But if you have the right technology and the right business process framework in place, you can ride disruption and digital transformation to your advantage. Regardless of what happens, you can improve productivity, efficiency, and bottom-line results.”