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Understanding the digital transformation

Digital transformation

Overview

What is the framework of digital transformation?

A company embarking on a digital transformation project must above all define clear and specific objectives. It might scrutinize practices related to customer service experience, operational efficiency, organizational culture, staff expertise, and technology infrastructure in order to stay competitive, for example. Throughout the process, the company focuses on the long-term rather than the short-term outlook.

During this journey, the company will identify:

  • which processes could be improved,
  • which outdated technologies need to be replaced,
  • which data could help it become more effective,
  • which skills it needs on its staff,
  • which digital tools are likely to increase its performance.

A dedicated team of experts can lead this digital shift, or barring that, an external partner can advise the company. Because this investment varies widely according to the size of the business and its industry, the digital transformation priorities are weighed against the budget allocated to the project. The expense doesn’t end with the purchase of the tech tools, but also includes its operation and upkeep. The company should set a timetable based on defined goals and available resources, and resist the temptation to run several projects concurrently.

What is driving digital transformation?

A company sets off on a digital transformation because, above all else, it wants to improve productivity and increase profits.

Sometimes, it may also seek to retain talent on its workforce while attracting new skills, by offering its teams the tools and equipment to make their work simpler and to let them innovate.

It may also want to enhance functional efficiency, especially if it operates in a very competitive market. To do so, it gathers data that shows which processes need burnishing, and which ones waste time and resources. This might reveal how it stacks up to its competitors.

Or, the company may want to upgrade the quality of its products and services to more quickly meet even its most demanding clients’ needs, with a view to fostering loyalty. And sometimes, it has to communicate with clients instantly, for example when an update is released or when a product part has to be replaced.

The benefits and risks of a digital transformation for an organization

Digitizing a company means that it can automate its activities electronically, document them through data production, signal gaps and anticipate problems. As a result, it becomes more efficient and its production costs decrease.

More concretely, a company embarking on a digital shift can aim to:

  • streamline its processes;
  • evaluate its staff performance;
  • offer customized products and services;
  • better support innovation;
  • gain visibility;
  • promote communication with its teams, partners and customer base;
  • predict disruptions in its industry;
  • keep up with the digital evolution.

For example, a manufacturer could use technology to monitor its production line, systematically control the quality of its products and services, and improve it as needed. It could implement technological solutions (the Internet of Things) to inspect its equipment in real time and check for breakdowns or required maintenance. The collected data helps managers assess the company’s performance and make the required adjustments.

Setting off on a digital transformation is not without risk. The company has to get everyone on board, then secure its infrastructure, and ensure compliance with legislation on the protection of personal data. We’ll get back to that.

The role of security in digital transformation

Security in digital transformation

What are the risks related to digital transformation?

Digital tools have become so indispensable that any company that hesitates to digitize jeopardizes its relevance, and ultimately, its very existence. That said, it’s up to the company to make sure that staff understands and accepts the upcoming changes that a digital transformation brings, so that they embrace it. Otherwise, they will become demotivated and lose interest, compromising the chances of the project’s success.

Carrying out such a project bears some risk. A company launching into this adventure can’t lose sight of its strategic objectives. By sticking to the set order of priorities, the project will meet the most critical of its goals without getting scattered.

Another risk of digitizing is that companies expose themselves to threats of cyberattack, as hackers’ schemes evolve at the same speed as technology. On a different note, legislation specific to the protection of personal data is becoming more stringent. It’s important to closely follow new legislation.

Regulatory risks: taking into account data’s regulatory constraints

As the company works on its digital transformation, it has to stay current on the regulations and legislation that govern data protection, in Canada and internationally. These laws set out the parameters of personal data collection and, depending on the use the company wants to make of the information, the type of consent it has to obtain from data holders. Breaking the rules entails heavy fines.

In Canada, the Personal Information Protection and Electronic Documents Act (PIPEDA) defines general rules for the collection, use and disclosure of personal information by private businesses under federal jurisdiction, and by most companies that are not under federal jurisdiction (with the exception of private companies in Quebec, Alberta and British Columbia). PIPEDA applies to personal customer data but also to the employees of affected businesses.

Furthermore, elected officials in the House of Commons in Ottawa are studying Bill C-11 (An Act to enact the Consumer Privacy Protection Act and the Personal Information and Data Protection Tribunal Act and to make consequential and related amendments to other Acts). Once adopted, this law will impose new obligations on companies.

In Quebec, companies are subject to a law similar to PIPEDA: the Act respecting the protection of personal information in the private sector. Companies in Alberta and British Columbia must comply with the provisions of the Personal Information Protection Act (PIPA). What’s more, Quebec is studying Bill 64 (An Act to modernize legislative provisions as regards the protection of personal information), which would detail the obligations of private organizations and public institutions.

Federal and provincial laws state the “bare minimum” for companies doing business in Canada. However, most companies that sell products or services outside Canada should keep abreast of the regulatory frameworks abroad. For example, the European Union ratified the General Data Protection Regulation (GDPR), which entered into force in 2018. The GDPR is strict on violations, with penalties that can amount to 4% of the company’s annual global revenue.

In the United States, California ratified, also in 2018, the California Consumer Protection Act. Note also the Freedom Act, adopted in 2015, to which was added the CLOUD Act (Clarifying Lawful Overseas Use of Data Act) in 2018. These laws differ from the European and Canadian laws in that they are primarily intended to enable US intelligence services to obtain information on private individuals for the purpose of national security and defense.

Security risks: securing data and tools

A company has to take all the necessary precautions to secure its data and infrastructure. The first priority is to examine the assets vital to sustaining activities, followed by an assessment of the company’s ability to manage the risks they entail. This methodology helps prioritize efforts.

It must then review its procedures, set up new controls, and implement necessary updates and backups. Depending on its circumstances, it could acquire security tools and equipment such as firewalls, anti-virus software, spam filters, an administrator-privilege management system, or an information segmenting system.

Training the staff in cybersecurity to adopt safer habits is a good practice, since that is often where the fault line shows up. Thereafter, the company needs to stay vigilant. A periodic analysis of cybersecurity measures can only help deter cyberattacks.

Risks associated with change management: the evolution of HR systems

Because businesses rely on their teams’ cooperation to get through the digital transformation, teams must be engaged from the start to get their commitment to the project. Setting up a committee that includes rank-and-file, team leaders, managers and executives keeps the lines of communication open during the project. Members discuss next steps, obstacles to overcome and solutions to mobilizing teams.

Likewise, the company should keep all staff informed of the upcoming changes. Managers who know how to listen to employees who raise concerns can help them through their misgivings. Training sessions help teams become more comfortable with new tech tools, support their compliance with new procedures, and possibly even help them become more effective.

Who are the actors in a digital transition?

Actors in a digital transition

Digital transformation has implications for the entire company

Digital transformation extends beyond just an IT project: people are at the heart of it. A company embarking on an endeavor of this kind has to recognize that all its team members are affected by the changes that new technology and new work methodologies bring in their wake.

New technology means that staff can work anywhere, anytime, ushering a culture of immediacy. It is incumbent on the company to put guidelines in place for a healthy work environment by defining the hours within which it is acceptable to communicate with other team members, for example.

What’s more, digital transformation paves the way for innovation. First, the automation that comes with the technological shift exempts employees from some repetitive and time-consuming tasks. Then, teams use this time to come up with new project ideas and question existing procedures. This causes the skills required of staff to evolve, hence the need for ongoing training. Then, as new technology is adopted, the skills sought to fill vacant jobs also change.

Along the same lines, the digital shift pushes the company to constantly adapt to its clients’ needs, to limit risk, or to keep up with technological trends. There again, the employees are on the front lines. They have the potential to take the company to new heights.

Digital transformation: the whole organization has to own it

Management sets in motion the vast project that is digital transformation, but all employees contribute to its realization to ensure its success. Communication is essential. Team members must be informed of the reasons behind the changes that are to come..

Employees should be trained to identify risks and find solutions, to appropriate, master, and adapt the new tools so they can better manage data, be proactive when a problem arises, and possibly even increase their productivity. They should also be able to convey new ideas, to experiment, and to innovate in order to optimize business operations. The organizational culture should encourage such initiative… and should give people permission to make mistakes!

Taking down silos creates a synergy between multidisciplinary teams and promotes the emergence of collaborative cells. Decision-making grows to include all the company’s activities as well as customer needs, an approach that relies on continuous process improvement.

Preparing the teams and planning a successful digital transformation

A digital shift should not be rushed. It challenges all business processes, which can cause anxiety and even fear among staff. Taking it step by step leads to better decision-making, avoids jarring the teams, and leads to the desired transformations in the end. Managers who are aware of this and available to listen to these concerns can better support their teams.

To get through this, it helps to explain to employees the extent of the digital transformation and the reasons behind it. Staff will better understand its relevance and will be more inclined to get involved. Training sessions help staff keep their skills up-to-date, stay engaged and keep motivated to bring this to a successful conclusion.

Digital transformation is also a cultural transformation

With any digital transformation comes a change in the organizational culture as new ways of thinking and acting are adopted. A top-down style of decision-making, hallmark of a strict hierarchy, gives way to a corporate culture based on accountability, cooperation, continuous improvement, and innovation.

Investing in collective intelligence to improve effectiveness has long been a good practice. A company engages teams in a sustained way when it empowers them, and they in turn become more motivated and show greater interest in the company’s performance.

Ways to do this include professional development and initiatives that foster the emergence of creative ideas and collaboration between teams. This can take the form of a suggestion box, or assembling a team dedicated to innovation and to presenting the results of performance indicators. The birth of a workable idea should be celebrated, and the team rewarded for this key contribution. Job descriptions would then mention the need for initiative in the workplace.

A company changes when its leaders change

Sitting on the sidelines doesn’t get the project over the finish line. Managers participate in this big project as real agents of change. They might need to reconsider their approach, and base it on trust rather than on micromanagement. When they mobilize staff to try out new things, teams feel invested in the company and get in the habit of questioning the status quo.

When a company digitizes, recruiting practices also change. Candidates that are open to new ideas and collaboration are more likely to quickly get up the learning curve. Properly supported, these recruits actively participate in an organizational culture of accountability, continuous improvement, and innovation.

Teleworking and digitization: results so far?

Teleworking

Operational needs and industrial sector permitting, digitization has given teams the tools to work away from the office and become more autonomous. Their productivity has increased and, when they share a relationship of trust with management, they have suggested innovative ideas. Team cohesion fosters collaboration, which is key to digitization.

For hackers, on the other hand, telecommuters are a prime gateway to get at a company’s infrastructure. It’s essential to not only deploy all necessary cybersecurity tools, but also to hold cybersecurity training and to regularly remind personnel of basic security guidelines.

Telecommuting: a way to accelerate digital transformation?

Teleworking accelerated the digital shift as it became clear that people could accomplish as much work, if not more, from home. No fewer than 90% of workers relegated to their homes during the COVID-19 pandemic state that they were “at least as productive” as in the office, according to a Statistics Canada survey in April 2021.

74% of SME leaders are considering letting their staff continue to work remotely after the health pandemic, as indicated in a winter 2021 study by Business Development Bank of Canada that surveyed 700 Canadian companies. When planning their digital shift, companies should keep in mind that businesses are now revisiting the need to lease or buy space, and opting to just set up unassigned workstations in their remaining offices.

Structural and organizational challenges of teleworking

Digitization lets staff get its work done whether they are in the office, at home, in a café or even on a client’s premises, full time or part time. Team leaders might think about modifying their management style, for example managing by results, in addition to doing regular check-ins through individual discussions and department meetings.

Procedures and devices keep data secure, while policies create a better work/life balance by establishing a time window when team members should keep an eye on their inbox, and by letting them specify which communication methods they prefer or when they are not reachable.

For a smooth telework experience, the company has to make the appropriate tools and equipment available to its team members (computer, headset, mouse, etc), in addition to setting up the necessary infrastructure (cloud computing, remote access network, communication and collaborative work platform, etc).

Putting digital transformation into practice

Is your team ready to innovate?

Staff called upon to innovate has to be highly motivated, enthusiastic about the project, empowered to take risks and, consequently, to make mistakes. As a conversation develops between staff and managers, staff feels valued enough to share their ideas and question the status quo. Managers must be open to these new suggestions and be frank about their potential. A relationship of trust between managers and staff benefits everyone, while micromanagement tactics just slow everyone down.

A company that wants to make room for innovation begins with incremental steps so that staff notices the developing climate of openness. To foster innovation, the company can give staff the time and opportunity to learn about the latest technology trends, or it can institute a mentoring program. A company-wide brainstorming session can bear fruit, and job descriptions could mention the need to be innovative.

Improving customer experience

A priority of digital transformation is improving customer experience throughout their journey. This encompasses brand exposure, the quality of the products or services, their usefulness and post-purchase customer service.

By going digital, a company becomes able to:

  • measure traffic on its digital platforms;
  • gauge the effectiveness of its digital marketing campaigns;
  • identify the most popular products and services;
  • determine the buy and drop rates of online shopping carts;
  • evaluate customer loyalty;
  • assess satisfaction levels;
  • calculate the average time to solve customer-service issues.

With such data on hand, the company can adapt its business processes to be more customer centric, find areas for improvement and implement new ideas.

Optimizing processes

Digital transformation optimizes business processes. Digital tools have the advantage of being able to detect quality issues and wastes of time and resources. Not all operations need to be rewritten, but the ones with loopholes can finally be addressed. Problem processes are eliminated if they are unnecessary, automated if they are merely repetitive, or enhanced and adapted to new technology. Processes that show promise from the start can simply be digitized.

Throughout a process review, indicators are used to continuously evaluate performance across the company. Introducing new tools and breaking down silos presents a chance to clarify and modify the responsibilities of all staff roles and promote teamwork.

Digitizing outputs

As the name suggests, digital transformation means moving from analog to digital. If the required expertise is not available in-house, the services of a specialized firm can be retained to help with the transition.

Tech tools and online storage reduce the reliance on paper files. Depending on needs and resources, content to be digitized gets first consideration (invoices, forms, reference documents, archives, etc), and can be automatically transferred to the desired format (PDF, Word, Excel, JPEG, etc). This requires digital storage space and a document management system. Cloud solutions are popular as they give staff access to documents anytime, anywhere, in addition to running updates in real time. Departments can designate some files as restricted-access.

In the next stage, procedures and processes are evaluated for digitization. Mapping them reveals which could be improved or eliminated. In the final stage, new tools take care of resupplying, production tracking, accounts receivable, etc. Digitization can also imply automation or robotization, such as immediately issuing an invoice when a client places an order.

The use of big data in digital transformation

Digitization generates a large volume of data which paints a picture of the company, forecasts the possible course of events, and guides decision-making. A company can seek to leverage big data by considering its volume, variety, accuracy, value and speed at which it is generated. Tools are available to store, extract, process, analyze and compare all this information.

To make sense of all this, new roles are defined: data manager, data scientist, or data analysis coordinator. A data management policy governs the creation, treatment, use, transmission and lifespan of the data, which a data expert oversees. This prevents conflicts and ethical issues.

The key point to remember is that data should support business processes, and not the other way around.

Measuring digital transformation

Measuring digital transformation

How do you measure the effectiveness of your digitization project?

This large project doesn’t merely consist in acquiring new technology, but in fundamentally transforming company processes. Certain performance indicators help assess the extent of the digitization project’s success. They apply to all departments, given the disruption that they all went through.

The strategic objectives that were initially established must be top of mind. Companies can correct their course by making small adjustments, by changing their direction entirely, or by reallocating its budget. Another option: staying the course.

Which indicators are tracked during digital transformation

A subset of performance indicators evaluates the success of a digital transformation. It depends on the industry and the strategic objectives, and can vary from one company to another, and from one project to another. Above all, these indicators must be specific, inclusive, measurable, and backed by reliable data.

The following are some of the relevant performance indicators:

Employee engagement

  • New tool adoption rate,
  • Number of tech support requests,
  • Satisfaction rate,
  • Number of complaints,
  • Level of collaboration,
  • Productivity.

Impact on business activities

  • Traffic on social media platforms,
  • Conversion rate,
  • Number of sales,
  • Average shopping-cart dollar value,
  • Profit increase attributable to digital activities,
  • Number of customer complaints,
  • Digital marketing campaign results.

Impact on operations

  • Time elapsed between submitting an order and providing the service,
  • Total hours worked,
  • Production costs,
  • Number of issues that came up in the production chain,
  • Percentage of activities carried out digitally.

 

Return on invested capital

Return on invested capital

Laying out clear and specific objectives at the beginning of the digital transformation is crucial for measuring the ROI. Without this, the contribution that the new technology makes to the initiative is hard to evaluate.

Depending on the objectives defined in the preparatory stage, the company may track the following:

  • Increase in revenue;
  • Decrease in operating cost;
  • Job elimination;
  • Reduction in the number of errors or issues in the production line.

Qualitative data such as this also comes into play:

  • New skills learned;
  • New expertise acquired;
  • Customer and employee satisfaction;
  • Staff retention rate.

Calculating the return of invested capital takes place over the long run, after the company has had a chance to build up its data, to analyze it and to assess the extent to which its investments have been profitable.

Digital transformation: three case studies

Fabrique Arhoma

Based in Montreal, Fabrique Arhoma supplies bread and pastries to restaurants, hotels, caterers and shops on a daily basis. It wanted to move away from printed forms in favor of an app that would closely track orders and reduce the number of errors. Unfortunately, no existing digital tool met its needs.

After an analysis of its internal processes, Spiria came up with a custom application for the bakery that records orders in addition to managing production, billing and delivery.

This new tool is so efficient and user-friendly that the training time for new users has gone down by 60%. Customer service has 30% more available time to take phone orders, and the number of errors when taking orders has decreased. Finally, La Fabrique Arhoma is now better able to accurately calculate the amount of dough that it needs to produce each day, thus reducing its costs.

Evenko

The shows and large events produced by Evenko in Canada and in the eastern United States generate large quantities of data, but various outdated systems handled it inefficiently. The producer wanted to group all its data on one common, collaborative management platform to improve its operations.

Entrusted with supporting Evenko, Spiria created the Nucleus web application with the help of Microsoft’s .Net framework. This app was ergonomically conceived to enhance the production teams’ operational efficiency. Nucleus drafts and edits contractual agreements, in addition to providing access to past agreements.

Evenko can add users, new functions and procedures, as needed. With this new tool, executives base their decisions on the full picture of business data and plan live performances even more tightly.

ALLPharma

Pharmacie Luong et Leclerc wanted to offer its Montreal customers digital options to order medication online by taking a photo of their prescription, and to web-conference with their pharmacist. After a review of all available technological tools, it called on Spiria to commission a mobile app.

Spiria experts first analysed pharmacists’ needs and drew a list of required features, given available resources. The simple and accessible ALLPharma tool was created to overcome health professionals’ and patients’ reluctance. The former can manage orders online, while the latter have access to a user-friendly mobile app to order their medications and ask questions.

This digital transformation was a success. Originally conceived for Apple iOS, the app was adapted to Android devices. The pharmacy was able to differentiate itself from its competitors and improve its customer satisfaction rate.

Ready to take the leap?

Spiria

A digital shift entails monumental changes. Both management and personnel are called on to think and react in new ways, with a focus on continuous improvement and innovation. The entire company culture has to evolve.

Digital transformation is one of the important milestones in the life of an organization. As we’ve seen, to be successful, it has to be meticulously planned. This means establishing clear and specific objectives from the start. Staff are involved in discussions early on to obtain their buy-in. Cybersecurity gets extra attention to safeguard the organization’s assets.

This type of project requires a customized approach. The experts at Spiria have the necessary competences to guide organizations in this gripping adventure. They advise companies and develop tailor-made applications to improve processes and secure their growth.

After all, nothing less than the company’s very sustainability is at stake.

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