Digital Transformation 101: What It Is and How to Get It Right

Businesses worldwide and in every industry recognize digital transformation as a critical need in today’s dynamic marketplace. Research shows that 70% of organizations have or are developing a digital transformation strategy, and global spending on digital transformation is expected to reach $6.8 trillion by 2023. But, even as awareness of and budgets for digital transformation increase, confusion remains high as to what it is and how to get it right.

So, for clarity, I’ll address both topics today.

What Digital Transformation Is (and Is Not)

Varying definitions of “digital transformation” abound. Wikipedia defines it as the “adoption of digital technology by an organization.” Gartner considers it to be “anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.” And Tech Target says it is “the incorporation of computer-based technologies into an organization’s products, processes and strategies.”

These definitions aren’t wrong. They’re just incomplete. While it’s true that adopting modern technology—such as cloud ERP solutions—to replace manual, analog processes and systems is critical to becoming a digitized and connected business, an essential component is missing: the human factor. An organization’s leadership team and employees must be ready, willing, and able to use any newly adopted technology. If they aren’t, then the promising technology just becomes a useless expense.

Getting company-wide support for a digital transformation strategy is a multilevel process. Businesses must first gain leadership support for the proposed changes. The company’s executive branch wields the financial power, is responsible for approving all projects, and sets the overall tone for the organization. Wholehearted leadership support for the digital transformation process will encourage employees to not only accept but embrace the incoming technology, process, and system changes. It will also encourage them to offer valuable input about how the digital transformation should proceed.

For any business, digital transformation is complex and requires wide-ranging support. It also requires dedicated and persistent effort. In other words, digital transformation is not a one-time process with a defined endpoint. Instead, it’s an ongoing journey that will continue to evolve alongside fluctuating external circumstances, such as the pandemic.

The pandemic accelerated digital transformation by forcing many businesses to convert their workforces from onsite to remote quickly. In the process, it has revealed companies’ fragility in the face of unexpected crises and shown how important it is for them to become resilient and future-proof.

How to Get Digital Transformation Right

To briefly recap, we’ve learned that digital transformation is an ongoing journey. Through it, disconnected businesses become—and remain—connected, agile businesses as they secure support from the top down, implement modern technology, and use this technology to improve processes, procedures, and strategies. Such improvements are designed to help them thrive during unprecedented crises and as they enter an unknown future.

Understanding what digital transformation is and what it should accomplish is the first phase of the digital transformation journey. The next phase involves breaking down this knowledge into individual steps.

For an organization to succeed today and into tomorrow, it must take advantage of a comprehensive business management solution that provides a “single source of truth,” real-time data, seamless integration between departments and third-party applications, and built-in remote access anytime, and anywhere. All these attributes can be found in a cloud-based ERP solution. But before making an ERP investment, the entire organization must accept the proposed digital transformation plan.

1. Attain leadership and organizational buy-in.

While this may sound simple, it comes with inherent challenges. For example, the executive team may be concerned about the costs and time commitments associated with purchasing and implementing new technology. Telling the C-suite executives what a modern ERP solution does in terms of efficiency, scalability, and profitability will convince them that such an investment is necessary for today’s hyper-competitive and tech-savvy marketplace.

If the leadership team champions the digital transformation project, employees will be encouraged to see its value even as they prepare for disruptions to the daily norm.

2. Choose the right cloud ERP solution (and partner).

Once organizational support is secured, it’s time to begin the ERP research and ERP evaluation process. Businesses must carefully weigh the pros and cons of competing solutions—appraising their costs, usability, functionality, and underlying technology.

Two things can simplify the in-depth assessment of each solution: a business management system evaluation checklist and a list of essential questions. These questions may include:

• Is this ERP system a true cloud solution? (e.g., Was it built for the cloud from its inception, or has it been manipulated after the fact?)
• Does it rest on a future-proof, universal platform with built-in mobility and low-code/no-code customization capabilities?
• Does it allow an organization to fully integrate with other systems, equipment, resources, software, etc.?
• Does it allow for remote collaboration?
• Is it a flexible solution that helps organizations grow affordably and flex with unexpected events?

The answer to each of these questions must be “yes”. However, it’s also critical that the ERP vendor is a partner, not a predator.

In his Whitepaper, “ERP Vendor Selection: Find a Partner, Not a Predator,” analyst Brian Sommer says doing business with a technology firm that has a “bad culture” (e.g., sees its customers as prey rather than partners) is a recipe for disaster.

Great cultures can be found in yogurt, acidophilus milk and some firms. Unfortunately, great cultures don’t always exist in technology firms that you’ve come to rely upon. And, if you do business with a technology firm with a bad culture, it could be a very expensive, frustrating, long-term decision. Can your organization afford to be stuck with a wrong choice for a decade or more?

Obviously, no organization can afford such a poor decision. To help businesses make a good ERP choice, Sommer provides the telltale signs of predators and partners. Predators are short-term focused and all about the checkbook. They set traps and use confusing, voluminous contracts. Partners are committed to a long-term relationship. They align their goals with the customers’ goals and continuously improve their products.

Sommer wraps up with this sage advice: “Choose your friends and your technology vendors wisely.”

3. Create strategies that focus on agility and resiliency.

Implementing the right cloud ERP solution allows businesses to prepare for—and respond to—any situation that arises, rather than reacting after the fact. This proactive behavior is the exact opposite of what stagnant businesses relying on disconnected, legacy solutions do. In a recent article, Acumatica CEO John Case describes such agility as a “core competency and a state of mind.” He also says that being an agile business is “fast becoming a requirement for success in uncertain times,” listing the top three things an agile business does.

1. It welcomes change and pursues opportunities.
2. It adopts new technology.
3. It changes the work environment to retain talent.

Agility requires businesses to let go of traditional models and adopt new, exciting strategies to help them overcome unexpected challenges.

Where to Go from Here

Achieving lasting digital transformation success is a long-term commitment. Each goal met is a stepping stone to the next goal—and the next. But businesses must also understand that their goals can only be met with a combination of technology, people, and processes.

In a digonomica article on extracting value from cloud ERP, Jon Reed notes, “At its best, I think digital transformation simply gets at the fact that you can’t adapt to modern business with tech alone. The culture and people must come with it.”

He’s absolutely right, and, at Acumatica, we pride ourselves on being a trustworthy partner, walking alongside each customer throughout the digital transformation journey. In fact, our Customer Bill of Rights—the only bill of rights in the ERP space—assures customers that their needs are our top priority.

These rights include:

1. An easy-to-understand and not frequently modified End User Licensing Agreement (EULA).
2. A flexible, open platform for rapid integrations.
3. Consumption-based licensing that does not inhibit business growth.
4. Sustainable pricing with annual increases of no more than 3%.
5. ERP implementations without hidden fees.
6. Deployment flexibility.
7. Ownership of and access to THEIR data, anytime.
8. Consistent, 24/7 customer service.
9. Local business expertise.
10.  Dual layers of support.

For businesses just starting, or already in the thick of, their digital transformation journeys, Acumatica, our Value Added Resellers (VARs), and our award-winning cloud ERP software can help make the way smooth and successful. To learn more, contact our experts with any questions or to schedule a demonstration.

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