The advantages of the digital transformation of a company

In the digital era in which we live, business transformation has become an imperative need for companies that aspire to prosper in an increasingly competitive and dynamic business environment. The digital transformation of a company is not limited simply to the adoption of new technologies, but involves a complete or partial restructuring of processes, organizational culture and business models to fully embrace the opportunities offered by the digital world as the Business digital transformation is key to adapting to this new digital era.

In this article, we will explore digital transformation and its various types in depth, from process optimization to improving customer experience. Additionally, we’ll examine the crucial role data plays in this process, from informed decision making to personalizing customer interactions. Through practical examples and case studies, we will discover how data analysis drives a company’s digital transformation, enabling them to achieve new levels of success and competitiveness in the digital age.

Digital transformation and its types.

What is digital transformation?

Digital transformation refers to the process by which organizations integrate digital technologies into all areas of their business, fundamentally changing the way they operate and deliver value to their customers. It is not just about adopting new technological tools, but about redefining processes, organizational culture and business models to make the most of the opportunities offered by the digital era.

At the heart of digital business transformation is the idea of ​​leveraging technology to improve operational efficiency, optimize customer experience, drive innovation and keep up with ever-evolving market demands. From process automation to creating digital ecosystems, digital transformation encompasses a wide range of initiatives that have the main objective of driving the long-term growth and sustainability of organizations. There are several types of digital transformation, each focused on specific areas of an organization and aimed at achieving particular objectives. Some of the most common types include:

1. Process transformation.

This type of digital transformation of a company focuses on optimizing and automating an organization’s internal processes, using digital technologies to improve operational efficiency and reduce costs. From implementing business management systems to adopting cloud collaboration tools, process transformation seeks to eliminate bureaucracy and streamline operations to drive productivity and profitability. A massive case is industry 4.0, in which factories and warehouses are digitized, such as the use of artificial vision systems that detect product failures.

We could also use simpler examples for the digital transformation of a company, such as loading invoice data into Excel, since this can easily be done by any OCR program. These programs are responsible for extracting the information found in an document or invoice, and transfer that extracted text into the real world to transfer it to the digital world, or what would be in this case, an excel. With that we could think of other ways to automate processes, for example, a law firm that uses an AI-based computer program to summarize long documents, or highlight the laws that are talked about and have access to the text of that law through the program. This is how this type of digital business transformation makes our lives easier.

2. Transformation of the business model.

Here, the goal of enterprise digital transformation is to completely redefine one or several business models of an organization to adapt to the changing demands of the digital market. This may involve creating new digital products or services, expanding into new markets through online platforms, or adopting data-driven subscription and monetization models. Business model transformation is essential to ensure long-term relevance in an increasingly competitive business environment. It does not necessarily have to imply a completely radical change to what the company has been doing, but simply digitizing certain processes and adapting to the digital needs of customers.

Changes to the business model as part of a company’s digital transformation strategy can begin with automating or digitizing certain processes of the business model itself. This will logically depend on each company, since it is difficult for companies from more locations to digitize their products. For example, dentists, clothing stores or warehouses cannot digitize their business model, but what they can do is digitize some or all of the processes by which they obtain customers. The dentist can optimize their website and add a simple system like Calendly so that users can make reservations without having to call, clothing stores and warehouses can implement a digital inventory with a recommendation system for rotating certain products according to the season.

3. Transformation of the customer experience.

In this type of digital business transformation, the focus is on improving the customer experience throughout the entire journey, from acquisition to loyalty. This involves the implementation of digital solutions that personalize interaction with customers, such as artificial intelligence chatbots, as could be done by integrating large language models such as GPT-4 or Bard to a website, so that they can answer user questions. since in principle these models would be trained with data and information from the company, providing a much more effective solution when providing answers.

Of course there are other ways to improve the customer experience, for example using predictive analytics and advanced customer relationship management (CRM) systems, in simple words an example of this is recommendation algorithms that can be used in franchises. of restaurants and stores, in which taking into account the history of customer invoices and the same purchase history of a company, see which product would be ideal to leave when reaching the line, since these, according to the algorithm, would have a greater tendency to be purchased when the customer was going to pay, this is how these two approaches, both algorithms and the use of language models, contribute in their own way to improving the user experience, as part of the digital transformation of businesses, increasing profits and “loyalty.” “of the user to certain products or services of a company.

Data on digital transformation in Europe.

Regarding the use of AI as part of the digital transformation of a company, the most updated and complete data that I could find regarding digital transformation is based on the data from the European Commission report with data from Eurostat with data from 2021. Here you will find a summary of what I found most relevant about that report.

Northern countries lead AI adoption, being those that use it the most: Denmark (24%), Finland (16%), Netherlands (13%), Luxembourg (13%) and Slovenia (12%). In turn, those that use AI the least turn out to be Romania (1%), along with Cyprus, Greece, Estonia and Poland, all of these with around (3%). While Spain is in the “average” with 8% of companies using some type of AI as part of the process transformation.

It is also worth highlighting the use of these AIs according to their purpose, size of the companies and the type of AI that is used, which are summarized very well in the two graphs below. It must be taken into account that all this data predates the boom of LLM models such as GPT-4 or Bard, however they show something illuminating: Data analytics is becoming relevant within companies regardless of their size, without However, it is up to 5 times more likely to find some type of AI in large companies. In addition, you can see how the three pillars of adoption are in administrative, sales and logistical processes, with special emphasis on data analytics and deep learning for image, audio and text processing.

Data as a factor in the digital transformation of a company.

Among the numerous digital technologies that drive innovation and digital transformation, Artificial Intelligence occupies a prominent place due to its ability to automate tasks, analyze large volumes of data and offer valuable insights in real time. AI is transforming virtually every aspect of business, from customer service to supply chain management, and its impact will only continue to grow in the years to come. The main benefits of using AI as a process transformation strategy are:

1. Process automation.

One of the most obvious applications of AI in the digital transformation of a company is the automation of processes. By using intelligent algorithms and machine learning, organizations can automate routine and repetitive tasks, thereby freeing up time and human resources for higher value-added activities. From generating reports to classifying emails, in this sense, Artificial Intelligence in recent years has been responsible for revolutionizing not only household tasks, but also the way in which companies’ daily operations are carried out.

2. Improvement in customer experience.

Another important aspect of AI in digital transformation is its ability to deliver personalized experiences and relevant recommendations to customers. By analyzing real-time data, AI algorithms can understand individual customer preferences and offer content, products or services tailored to their specific needs. This not only improves customer satisfaction, but also increases conversion rates and encourages brand loyalty. As we mentioned previously with the examples of using chatbots as part of customer support or with recommendation algorithms that recommend inventory rotation, or even preventive maintenance of machinery.

3. Increase business competition and agility.

The use of data for digital business transformation contributes to increasing competitiveness and business agility by providing organizations with a clearer and more detailed view of their operating environment and the market. By leveraging advanced data analytics, companies can quickly identify emerging trends, customer preferences, and growth opportunities, allowing them to nimbly adapt to market changes and make better, faster strategic decisions than their competitors. This increased responsiveness allows them to stay ahead of the competition and capitalize on new opportunities, resulting in greater success in an ever-evolving business environment.

4. Decisions based on data.

Using data analytics to make data-driven decisions is essential in digital transformation, allowing organizations to identify opportunities, optimize processes, forecast trends, evaluate performance, and personalize the customer experience. By analyzing large volumes of data, companies can obtain valuable information that allows them to make more informed and accurate strategic and operational decisions, allowing them to adapt nimbly to market changes, drive efficiency and innovation, and remain competitive in an constantly changing business environment. Although this is not part of the digitalization or transformation of processes, it is part of adequate strategic management and digital transformation of a company that is beginning to achieve a greater number of clients or products.

Final conclusions and what to do now.

In addition to the adoption of advanced technologies such as artificial intelligence, it is also important for companies to consider process automation as part of their digital transformation strategy. By making the most of available business data and information, companies can gain valuable insights and gain a significant competitive advantage in an increasingly competitive business environment. If you are considering embarking on this journey, here are some key recommendations:

1. Assess your needs and automate simple processes: Before starting any digital transformation initiative, it is essential to understand your business needs and objectives to ensure you are investing in the right solutions for your company.
2. Invest in data analytics and digital technologies: Data analytics and digital technologies are essential for digital transformation. Consider investing in data analytics solutions, artificial intelligence, and other advanced technologies to drive innovation and growth in your business.
3. Automate simple processes on your own: Don’t underestimate the power of automation. Implementing software solutions like OCR or booking tools like Calendly can help simplify and streamline your internal processes, freeing up time and resources for higher value-added activities.
4. Consider strategy consulting: If you feel overwhelmed by the digital transformation process, consider working with strategic consultants who specialize in this field. They can help you develop a customized strategy and guide your business every step of the way to digital success.
5. Stay updated and open to innovation: The digital transformation of a company is a continuous journey, so it is important to stay aware of the latest trends and emerging technologies to boost the growth and competitiveness of your company.