Digital transformation can be a costly endeavor initially, one that also takes time to yield results. However, technology offers unparalleled efficiency gains and ways to better serve customers—results well worth the effort of going digital. The consequences of not embracing digital transformation can be a significant blow to organizations. In this article, we take a look at the true cost of companies failing to implement digital transformation.
Loss of Competitive Advantage
Embracing innovation early invites multiple opportunities to the business. For example, enriching customer-facing operations with technology can result in amplified digital experiences for customers.
Digital experience is described as all actions that a customer takes via a digital medium (e.g., online product reviews, tech support on a smartphone). Digital customer experience is an inherent part of customer experience. It’s often the digital experience that affects the customer experience as a whole.
These days customers expect a polished and streamlined digital experience—bad interactions, or lack thereof, can negatively impact a brand’s image.
With great digital customer experiences, however, businesses can expect more sales and more loyal customers.
Failing to modernize processes that could improve the customer digital experience might drive the customers to competition. Leaving digital transformation out of your business plans can cost you valuable sales. Today’s customers expect high-quality digital experiences, where the service is more intuitive, automated, and personalized.
Less Money and Revenue
Digital transformation and digital solutions can help companies save money on infrastructure cost. At the same time, they can also use these solutions to transform businesses and operations.
For example, AI, machine learning, automation can increase output and performance as well as simplify many processes. This is especially visible when compared to operations relying on human labor and traditional machines and technologies.
Robotics offer modernization of on-site operations at warehouses and factories, which in turn leads to higher output and less waste.
Legacy infrastructure is often inefficient and requires substantial resources to maintain. For example, on-premise server infrastructure requires a dedicated IT team and generates other costs (e.g., electricity, storage space). When replaced with a highly performant cloud environment, the reduction in server maintenance costs is significant. Moreover, cloud-based technology and service-as-a-software solutions offer additional, disruptive features that can further enhance business operations.
Lower Sales
By not capitalizing on various analytical technologies and not implementing solutions designed to enrich the customer digital experience (regardless of the industry), companies miss out on key insights and sales opportunities via other channels.
Analytics offer improved business effectiveness, becoming a significant driver for success.
Various technology solutions give business owners access to formerly unavailable insight and information. For example, customer behaviors, purchase patterns, and audience segmentation. Companies can use customer insight to tailor the sales process and identify areas in the sales funnel in need of improvement.
Reduced Productivity Levels
When it comes to productivity, digital transformation greatly boosts efficiency in the workplace. Studies have shown that employees accomplish their work up to five times faster in a digital environment. For example, automation of administrative tasks through software lets employees attend to more demanding and creative duties. Without digital tools facilitating the execution of these tasks, productivity levels drop.
A company that doesn’t adopt digitalization can experience lower work efficiency compared to innovators.
Other solutions such as artificial intelligence, machine learning, or robotics can decrease the cost of infrastructure or manufacture, and also propose other cost-saving and process-optimization techniques.
Stunted Company Growth
Although a company may opt to not invest in new technologies and innovations, this doesn’t mean its competitors won’t. In any business context, early adopters of technology will have a learning advantage.
They can adapt faster to changing trends and demands than those who have not embraced digitalization. Furthermore, the early adopters will embrace future innovations more easily compared to those who are just starting off.
In extreme situations, it may also come to a point where the laggards’ growth will be stifled because they won’t have the resources to adapt anymore. The gap between them and their innovative competitors will be too big to bridge.
Approach Digital Transformation with the Right Mindset
Technology can help companies reduce costs, labor, and overhead. Digital transformation lets organizations gain competitive advantage and opens the doors to growth and bigger revenues. However, it’s only when the organizational mindset undergoes a shift and the company becomes eager to adopt new solutions that these possibilities can be realized.
Every technology implemented at a company should be able to tangibly solve the problems for which it is employed. If it doesn’t, it can become a source of redundant spending.
For more ideas on how to go digital, read our Guide to the Digital Workplace.
Darren is the Content Director at Convene. Driven by his passion for content writing and knowledge of digitalization, he takes pride in providing content that helps drive digital transformation. Over the years, he has written blogs related to digital meetings, board management, and modern governance.
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