Digital transformation is a term that appears with frequent regularity in the business sphere, especially in a post-COVID world. It has become an inescapable truth that for businesses to thrive into the future, advancements in technology will have to be the driving force behind their success.
But what is digital transformation? What does being a digital-forward company entail? And what are the drawbacks of digitalisation on employers and employees?
By David Monaghan, Deputy Editor, Business & Finance
What is Digital Transformation?
The term ‘digital transformation’ is used ad nauseam in panel discussions, blog posts and forums. As a consequence, it has become divorced from tangible meaning. Definitions are broad as it can mean different things to different companies.
To break it down to its essentials, digital transformation is the incorporation of digital technology into all facets of business operations. The aim is to streamline production processes to deliver high value products and services to customers.
The change is also cultural, as it repositions how a company works ‘behind the scenes.’ It encourages experimentation and a reworking of pre-existing models of practice.
With the advent of COVID-19, and the normalisation of ‘work from home’ business practices, digital transformation became the phrase on everyone’s lips. Consumer expectations shifted, as did employee behaviour.
Sandy Pentland, a professor at MIT Media Lab, described at the time how “optimised automated systems in areas like supply chain management broke down when faced with rapid shifts in both demand and supply.”
Many people turned to online retailers for food, groceries, personal shopping, and more. According to an Irish consumer trends post-COVID report, published by KPMG in March 2021, 68% of Irish consumers do more online shopping now than before the pandemic.
68% of Irish consumers do more online shopping now than before the pandemic
Employees too now enjoy a greater work-life balance with work-from-home and hybrid models, and have incorporated digital into their working lives. A strong broadband connection, and software to communicate with colleagues and employers (such as Zoom, Skype, Slack, etc) are essentials.
But what happens if broadband speeds slow to a crawl, leaving employees without a way to connect to work? What if a retailer’s website breaks down from increased demand? These are among the many questions people have in the move to digital practices.
The pandemic proved that a company’s ability to adapt to rapid changes is dependent on technology, and stable technology at that.
Digital transformation, if incorporated as intended, can streamline production. For example, the streaming age has created a way to fast-track the delivery of content to our home viewing devices, whereas in years past, we would have had to browse retailers shelf by shelf to find films or TV shows to watch.
Classes, music concerts, book readings and more have moved to the online sphere.
“Third-level educators quickly adopted digital for recruitment with webinars replacing open days and digital delivery of programmes and assessment speedily implemented,” wrote Lisa-Nicole Dunne, founder of Mantra Strategy, in 2020.
This aids prospective students who cannot travel the distance to attend open days.
Dunne also cited software such as Menuu.com, which expedited ordering capabilities to restaurants to move online in droves.
The streaming age has created a way to fast-track the delivery of content to our home viewing devices, whereas in years past, we would have had to browse retailers shelf by shelf to find films or TV shows to watch.
According to a survey released by Valoir in 2021, companies that lead with digital transformation see twice the revenue growth of those who lag behind, although it varies depending on industry and what section of the company is involved.
“Factors driving growth are the ability to significantly automate manual internal processes to reduce costs, moving to cloud technologies, and implementing new customer service models such as multichannel self-service,” writes Joe McKendrick, contributor at Forbes.
When multinational coffee chain Starbucks experienced financial difficulties in the mid-2000s the group created a new role for VP of digital ventures to integrate technology with its fledgling business model.
They appointed Adam Brotman to the role, who introduced free wi-fi in stores worldwide. Starbucks introduced mobile payments and loyalty cards, and in 2012 booked $3 billion in payments via this scheme.
Starbucks is a textbook example of using digital transformation to progress business.
According to the American National Bureau of Economic Research, “working from home saved workers around the world an average of 72 minutes in commute time every day in 2021 and 2022.”
Not only do employees save time by axing their commute, they also save on transportation and have more time for household chores and child-rearing duties.
In a blog post on the process of digital transformation, cloud-based software company Salesforce noted that “digital transformation encourages businesses to reconsider everything, including traditional ideas of teams and departments.”
This can mean “knocking down walls between departments.” For example, a company’s social media presence can encompass both service and marketing, combined by digital platforms that “capture customer information, create personalised journeys, and route customer queries to your service agents.”
While seemingly a positive development on paper, with communication between different departments becoming strengthened, it can lead to complications.
An experienced marketer, trained in the field and ready to share their expertise, can suddenly find themselves with new responsibilities for which they are unprepared. Their roles may shrink and they may require upskilling.
New technologies can cause anxiety for whole industries as they try to adapt, for instance ChatGPT, a chatbot launched by OpenAI in November 2022, uses language models to mimic human writing. It is free and easy to use.
A useful resource for copywriting, sure, and a fun way to while away some spare time.
However, ChatGPT “can write presentable student essays, summarise research papers, answer questions well enough to pass medical exams and generate helpful computer code,” states Nature, a weekly international journal publishing peer-reviewed research in science and technology.
“It has produced research abstracts good enough that scientists found it hard to spot that a computer had written them. Worryingly for society, it could also make spam, ransomware and other malicious outputs easier to produce.”
An experienced marketer, trained in the field and ready to share their expertise, can suddenly find themselves with new responsibilities for which they are unprepared.
“Just shovel ever-larger amounts of human-created text into its maw, and wait for wondrous new skills to manifest,” writes Ross Andersen of the Atlantic.
What does this mean for the future of, say, journalism, copywriting or marketing if a random input of information can lead to easily-generated content? Do creators upskill in tech, or move on to other ventures?
Indeed, many jobs may be lost if work processes become automated. Alana Samuels, writing for Time magazine, cites a paper by economists at MIT and Boston University that suggests robots could replace 2 million more workers in the manufacturing industry alone by 2025.
In the move to streaming services for film and television for example, many suddenly found themselves redundant with the closure of DVD rental stores internationally. Not all companies have the necessary resources to train employees in technology.
This is to say nothing of the increase in isolation felt by some employees, who may feel fragmented as a result of digital transformation. The slow eradication of ‘weak tie’ friendships – that is, tenuous connections we have with strangers and acquaintances – deepens our sense of aloneness.
Those working from home may also not have the technological advantages nor the adequate space to work their jobs satisfactorily.
Bob Moritz, Chairman of the PwC Network, and Carol Stubbings, Joint Global Leader, People and Organisation, stated that they endeavour to “give [their] employees opportunities to gain the knowledge, tools and ability they need to use advanced and ever-changing technologies in the workplace and their daily lives.”
Motitz and Stubbings plan to invest US$3bn in upskilling. This comes as a result of the group’s own research into technological advancements in the workplace, which shows that “one in three jobs is likely to be severely disrupted or to disappear in the next decade because of technological change.”
“This could affect almost half of all low-skilled jobs and a third of semi-skilled jobs,” they say.
According to Moritz and Stubbings, approximately 37,000 PwC employees have been digitally upskilled through immersive training in data analytics. The group’s proposed investment is as much about preparation – that is, “anticipating the right skills for the future” – as it is training employees in technologies of today.
The Way Forward?
Digital transformation is inevitable. Businesses who wish to succeed in the future need to implement technology into their pre-existing models. In the move to digital, however, it is important to remember the needs of employees and take note of the necessary training and upskilling required to create a seamless transition.
To learn more about digital and business transformation, take a look at Dublin Tech Summit, which promises to host discussions and keynotes on this topic and more.
DTS23 Early Bird Tickets Available Now
Offer ends 31 Jan
About the author: David Monaghan is Deputy Editor of Business & Finance.
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