What is Digital Transformation?

Let’s start by defining Digital Transformation. According to Wikipedia, “Digital Transformation is not necessarily about digital technology, but about the fact that technology, which is digital, allows people to solve their traditional problems. And they prefer this digital solution to the old solution.” It is critical to understand that Digital Transformation is about solving traditional business problems. Digital technologies are merely the tools used to solve these problems, and they are used ONLY because the solution they offer is preferred to prior methods.

Since the beginning of commerce, storekeepers have needed to understand their customers. How many pairs of boots should I stock, and in what sizes? Do I need to stock for farming or ranching? What percentage of my clientele have children, and what should I stock for them? With Digital Transformation these types of questions can be quickly answered. Commerce software today, whether web-based, POS, or CRM can easily segment your clients based on both their browsing and/or buying habits, and clients can span multiple segments. For instance, you can create a rule that allows you to categorize a customer, or potential customer, by creating a condition that says something like: if a customer comes to the web store more than three times, and browses more than ten items in a particular category, then add them to a segment for that category.

Further, based on their personal profile you can create even more targeted personalization for them. This then allows you to develop segment-specific landing pages and highly targeted emails. As you build this data, you are solving that age-old problem of, “who are my customers and what are their interests.” Extensions we have seen in modern software that aids Digital Transformation allows you to create a single email message that has targeted information for multiple segments. As an example, you could create a newsletter for all of your cyclist customers, and you could create two messages and even two separate offers in the email – one for your male customers and one for your female customers. Now, you can send a single email with two completely different messages depending on the customer’s profile.

To embrace this Digital Transformation, you need to be willing to look at your data in a whole new way. In most corporations today, the application(s) you have purchased dictate corporate data structure, particularly master data. Your accounting system will dictate what data should be collected to represent a customer, product and vendor. However, in parallel, your POS, WEB store and CRM are doing the same thing. However, they are likely collecting slightly different data. Data that is more in line with what they need. This is where Master Data Management comes into play. For more information on MDM, please read the blog Master Data Management.

So, why is Digital Transformation important to your company? In recent studies by Forrester Research and the Gartner Group respectively it was discovered that of the companies that are starting to embrace Digital Transformation their executives predict that nearly half of their revenue will be driven by digital by the year 2020. In the Gartner Group survey; 56 percent said that their digital improvements have already increased profits.

We are often asked, “Where should we start?” The answer is different for each company. There is no right answer. Most companies will start where they can see the best operational improvements, or the best return on investment and that will be different for every company. However, before you start, it is good to get your head around the need for Master Data Management, and the improvements it can bring. Trying to implement Digital Transformation without accepting the need for Data re-Architecting will likely lead to delays and/or failure.

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