Digital Transformation: Key Factors Of Success

Digital transformation is a critical opportunity for small and medium-sized businesses to thrive in the digital age. However, not every business is capable of doing so. This article will examine the challenges and key success factors in digital transformation.

Why digital transformation is necessary

As mentioned in the article Digital Transformation: Definition and Essence, "Digital transformation is the process of transforming the overall and comprehensive operations of the government, the economy, and society into a digital environment."

This definition defines digital transformation as a systemic economic and societal change. Changing the system completely creates value and opportunities for society as a whole. This is the future that businesses must aim for to keep up with technological trends and market demands.

Businesses can use digital transformation to maximize their potential and capacity. Many positive changes will occur in organizations as a result of solutions integrated into core operations, including:

- More centralized and efficient information and resource management.

- Enhanced flexibility and connectivity between departments.

- Cost reduction, time-saving, and improved operational efficiency.

- Improved customer experience.

- Enhanced competitiveness of the enterprise.

- Difficulties and challenges in digital transformation

According to Forrester, only 11% of businesses succeed in their digital transformation efforts. This is clear evidence of the difficulties and challenges of the digital transformation process, which are key factors in determining a company's success or failure.

Altering Habits

Businesses will face numerous challenges during the digital transformation process. Changing non-digital habits is the most difficult of these.

Businesses have been working in a non-digital environment for a long time. The culture of the organization is also based on that mindset and is deeply ingrained in the collective perception. When transitioning to a digital environment, long-standing business habits such as fear of change, non-responsiveness, being rough around the edges, and waiting for the perfect moment must all be changed.

On the other hand, while changing an individual's habits is difficult, changing the habits of an entire organization is far more difficult. This requires tenacity on the part of business leaders.

According to a survey conducted by human resources consulting firm Capgemini (France), 62% of respondents identified corporate culture as the most challenging aspect of the digital transformation process. A company that lacks a digital mindset and an innovative culture will struggle to succeed in digitalization.

Businesses must focus on building a digital culture, avoiding old habits, creating a flexible and collaborative work environment, and forming a digital mindset to eliminate old habits in order to succeed in the digital transformation process.

Consciousness and accurate perception

The most difficult challenge in business digital transformation is raising awareness and correct perception.

Digital transformation is, in essence, a revolutionary shift. As a result, it cannot be done without profound awareness. The business leadership team understands the importance of a long-term and firm transformation strategy. This team, however, is currently dealing with serious misconceptions about digital transformation.

Digital transformation is extremely costly.

Businesses will spend more than $2 trillion on digital transformation projects, according to IDC. This may cause small businesses to feel pressed and unprepared to carry out their digital transformation process.

However, in reality, according to a recent survey, 88% of large corporation Chief Information Officers (CIOs) admit to having failed or had to postpone their digital transformation.

Money, therefore, is not the solution to the problem of successful digital transformation.

Digital transformation is a playground for Tech titans.

When it comes to the success of digital transformation, people frequently think of impressive technological development Tech unicorns. Uber and Grab, for example, defeated traditional taxi services with more efficient business models. Netflix competes with traditional entertainment channels by providing diverse and convenient content. Furthermore, Spotify is redefining global music listening by establishing a music ecosystem that connects users with artists, etc.

The above mindset has had a significant impact on businesses. Some traditional businesses mistakenly believe that digital transformation is only for high-tech unicorns and startups, which causes concern among small and traditional businesses.

However, the truth is that the size of the company has no bearing on whether or not digital transformation is successful. Every business can be digitally transformed, and the person at the top is the decision-maker.

According to the IDG report, 38% of large corporations are pursuing digital transformation, while 55% of start-ups are. In addition, there are numerous examples of SMEs that have successfully undergone digital transformation.

Digital transformation is not necessary for stable businesses.

Digital transformation is not a fad or a personal preference; it is a necessary step to survive and thrive in the digital age. However, many business leaders continue to underestimate the importance of digital transformation and lack a clear strategy for implementing it.

Meanwhile, the fourth industrial revolution is propelling the digital economy forward. If businesses do not adapt and transform in time, they will kill themselves. Digitization is unavoidable; the important thing is to begin digital transformation early to meet market demand and improve business competitiveness.

A business may be stable now despite not implementing digital transformation. However, it is unclear whether that company will be able to maintain its current business situation in the coming years.

Key factors of successful digital transformation

Three fundamental factors determine the success or failure of digital transformation.

Human

According to Dr. Truong Gia Binh, Chairman of FPT Corporation's Board of Directors, people play an 80% role in a company's digital transformation, while technology plays a 20% role.

This demonstrates the significance of people in the digital transformation process. Personnel awareness and capacity are two critical factors. Business leaders must be aware of the issues to effectively motivate and lead digital transformation. The business's employee community must be aware of digital transformation, develop a digital style and mindset, and foster a customer-centric business culture.

If the team agrees to increase its capacity and competitiveness, the company has already achieved 80% of its success on the digital transformation path.

Technology

Technology is both a prerequisite and a determining factor in the quality of digital transformation. The technology factor here includes: digital infrastructure; digital platforms; and specialized digital technologies for each field and industry.

Currently, many digital technologies are used in a variety of fields and industries. AI, predictive analytics, robotics and automation, IoT, geospatial data, blockchain, and open government data are among these technologies. They have become and continue to be platforms for significant innovations in management, policies, and processes worldwide. As a result, in order to undergo digital transformation, businesses must invest in technology and have a thorough understanding of digital technologies to select the best ones for their operations.

Institutional

Digital transformation is the process of changing and improving the organizational system, processes, and business operations of a company to utilize and apply new digital technologies. However, to succeed in digital transformation, it is not only necessary to make changes in business but also to create a suitable and supportive institutional framework for digital transformation. Creating a favorable environment for businesses to undergo digital transformation requires the establishment of an institutional system, including legal sandboxes.

Understanding the challenge is the first sign of success

In summary, realistically assessing the strengths and challenges of the company, predicting difficulties, and preparing for change are the key factors for the success of the digital transformation. Technology is not a barrier, and a willingness to harness the power of technology will help businesses move forward with confidence. A cool head is needed to understand the business model, competitive context, and customer psychology before applying technology.

If you require assistance with your company's digital transformation, Bac Ha Software is a solid choice. We will provide the most appropriate solution for your business needs and scale, based on our team of experienced experts and years of experience consulting and implementing digital transformation for businesses in various industries. BHSoft is proud to be a leading digital transformation consulting firm in Vietnam, offering digitalization services and optimal digital transformation solution consulting to SMEs across a wide range of industries.