What does it mean when a company undergoes a “Digital Transformation”? How do enterprise data warehouses (EDW) come into play? Let’s find out.
Digital transformation is something that more and more companies are going through. What is digital transformation, you might be wondering? Well, this refers to the partial or complete centering of a company’s processes in a digital space. These processes can be both on the customer side as well as the intra-company side, and when done appropriately they can bring about a large array of competitive benefits. By implementing an enterprise data warehouse (EDW), a company stands to see boosts to its hiring process, employee evaluation schemes, detection of foul play among executives, inventory efficiency, customer service prowess and much, much more.
These benefits arise because digitalization allows a company to access hitherto unheard of quantities of data from wide-ranging sources, where previously intuition would have been the only recourse. Data about sales, user activity, site visits, employee decisions and much more can be integrated on an essentially one-stop-shop digital analysis platform. Using the “extract, transform, load” strategy (ETL) or some modern variant on it, any modern company can peruse information that could put it over the top against hungry competitors in the marketplace. This is part of the Big Data revolution that has swept up the 21st century thus far.
It must be noted, however, that the benefits conferred by implementing a digital transformation are far from automatic. Unfortunately, the human mind does not evolve at the speed of the technology it devises, and barring a completely unforeseen breakthrough in the field of genetic editing, it will not do so anytime soon. As a result, companies that employ an EDW risk being swamped with the massive swaths of data and not knowing what to do with it. What’s more, they might even make a deleterious decision based on some trend they spotted in their spreadsheet which turns out to be merely a confound or sampling error. Thus, companies must be very careful to balance digital engagement with their human intuition about what is right and wrong. This interplay can be compared to the interplay between a bloodhound and its human guide – without the hound, the guide will be unable to track down a fugitive. Without the human guide, the hound won’t know what to look for. When human and machine work together in synchrony, magic can be made.
Digital Transformation Cases
Those looking for real life digital transformation examples needn’t look far. Such examples abound. Take the games company Hasbro, which used reams and reams of data to focus its ads on parents who are buying games for their children. They found out which ads people were responding to, what platforms they were using the most, and which products were producing the most loyalty and satisfaction among the customer base. This entertainment behemoth spend an ungodly amount of money and time on this transformation, and even made the command decision to release online versions of many previously physical games. They multiplied their ad spending by over ten times! Their investment appears to have paid off, though, as the company’s stock price is holding out stronger than ever, in an environment where many old titans of the industry got knocked out by the tsunami of digital evolution. Remember Blockbuster? Yeah, so do we.
Another case of digital transformation is the sandwich giant Subway, which hired tons of digitally oriented staff. From marketing to graphic design, store design and everything in between, Subway was aggressive in taking on new staff. Instead of automating everything and firing vast swaths of staff like many mediocre companies do, Subway invested in digital talent (although it has instituted self-serve kiosks, the consequences of which are still being debated). As a result, Subway is humming along as strong as ever. Of course, it doesn’t hurt that their sandwiches are just delicious…
Where Should I Start?
Your digital transformation can start anywhere, but some places are more foolproof than others. The first thing you can do is use digital willingness and competence as a vector in your hiring process. In other words, when looking to fill a position in your company, ask the job applicant about how they feel about working in the digital space. Do they enjoy analyzing data? Are they competent with social media marketing? Do they show a penchant for learning new techniques as they appear in the world? Once you fill your staff with digital-friendly people, future transformations into the digital space will proceed much smoother for both you and your staff.
As for concrete steps, what can and should be moved to digital quickly is records. Payment history for your employees, tax information, work hours logged, data about office supplies and service operations to it such as renovation and plumbing, sales, etc. An immediate benefit you will notice is that physical space will be opened up as all those pesky binders and filing cabinets are no longer clogging up your office! Though, it should be noted, this might be a sort of nostalgic loss for some. Many industrial organizational (IO) psychologists recommend preserving some elements of traditional office stylings if for no other reason than to foster a more human-friendly atmosphere. This is especially true if your company is a player in a creative sphere like the aforementioned Hasbro.
Another big thing you can do is transform your company’s marketing presence to the digital sphere. This could involve veering into the wild world of social media, or just placing ads on social media creators’ content. One of the fastest-growing forms of content these days is the podcast, and its independence from traditional marketing giants provides many juicy opportunities to carve off your own segment of the market and boost your brand. Find a popular podcast, or one that you think could become popular, and reach out to them about a sponsorship deal. It has to be with a podcast host who enjoys your product – keep that in mind! What will happen is the host will record a short spiel about how they love your product and use it in their lives (remember – this must be true. If they try to fake it, everyone will know), and then they will provide a link to your platform and usually a promo code. Their listeners then go to your site, use the promo code that was given to them to buy some of your products at a discount and everyone goes home happy. You gained an extra customer, and the podcast host gains what you give them for the sponsorship.
This strategy is great because you get to personalize your target audience and use digital strategies to figure out who exactly this is. You can run data analyses until the cows come home about which creators gave you the most customers, how many customers became regulars, and much more. You can attract users to your mailing list, acquiring contact information in the process. This kind of deep connection to your customers is borderline unprecedented.
Can a consulting company help you with the transformation?
In a word: yes. The entire point of digital transformation is to make running your company easier and more efficient – so what good is it if the process of transformation itself causes you a massive headache? No good! This is where a consulting company steps in.
These guys know their stuff. They’ve read countless company histories, dealt with clients from all across the economic spectrum, had successes, seen failures, etc. It’s their job to absorb as much information about your company as they can in a short space of time and fit that into statistically-developed models of company growth and development, after which they will spit out a series of recommendations.
One of the most important pieces of knowledge a consulting company has is about mistakes that eager businesses make. For example, over and over again companies focus purely on getting the highest amount of advertisement out to the largest amount of eyeballs. They view this as the only way to grow. But they are forgetting the “why” – why do people need your product? Who’s buying it? These are not tertiary questions; they are the most important questions to answer, no exceptions. Thus, you need to analyze data about your target audience demographics. Who are they? You might have no idea, or you might have an idea that is proven false by an analysis of digital purchasing patterns from beta tests or rollouts of your product to focus groups. What’s more, you can use data from surveys to improve your product – a well-written survey will allow you to extract data about customer satisfaction and advice in a streamlined fashion. Digital transformation consultants know about all this and more.
However, you should be careful. To put it bluntly, many consulting companies simply suck. Others are cruel and immoral, and some are both. A bad consulting company will make reprehensible recommendations to you such as “fire X, Y and Z staff”. This is disgusting behavior. The reason they do is because when you remove staff members, you will of course see a short-term boost in profit due to your expenses going down. One less salary to pay, one less cubicle to maintain, one less meal at the staff party to order. What will most often happen, however, is that your company will begin to sustain hemorrhages in unforeseen areas. Maybe other employees will have to start picking up the fired employees’ duties; maybe ad quality will suffer; maybe employee satisfaction will go down, etc. All these factors will tarnish your company’s reputation and prevent you from hiring top of the line employees in the future – why would they come to your company? Not to mention the pure immorality of firing someone purely to boost your bottom line. So be wary about “consulting” companies whose consulting consists merely of this type of lazy and toxic advice.
Measuring the impact of Digital Transformation
How does one measure the effectiveness of a transformation into the digital arena? The answer is not as simple as it might seem at first glance. Revenue, okay. But this is not the whole story. You might see an initial dip in revenue as you integrate digital records and overhaul previous systems of record-keeping on ink and paper. Any renovation project costs money, after all. You will also make some mistakes and missteps – this is inevitable. Don’t fret. The impact of your transformation may take months or even years be felt. What if your sales go down but you position yourself as a leader in the online market which is set to grow in the coming years? That is a positive impact. Or what if your transformation attracts new and talented employees to your company – this will have a snowball effect down the road.
Another way to measure impact is employee satisfaction. Are your employees happier with their day-to-day workflow? A properly implemented digital transformation will facilitate this. Your employees will be spending less time on tedious tasks like writing down obnoxiously long records of sales and instead can devote their time to analyzing those sales and trying to improve them. On the other, a hastily or cluelessly integrated digital transformation will leave employees frustrated with the constant screw-ups and absurdities of the new system. “Why can’t we just do it the old way?” they will say. And they will be right. You have to provide them a superior alternative.
And of course, revenue is the best way to measure impact. Eventually, gains should show up in this vector. Most research shows that this is indeed happening:
The business impact of digital transformation
So, is it time for your company to embrace digitalization? The answer is probably yes, but it has to be done carefully. A consulting company will give you the greatest chance at a smooth transition, though you are of course free to navigate the waters on your own. Good luck!