Digital Transformation
Digital transformation as a term is relatively self explanatory. It’s changing organizational processes and infrastructure through technology, often software or cloud based.
It’s a buzz term and in vogue at the moment, but in the tech sector we need to approach trends with caution (remember how well the whole crypto thing worked out?).
Digital transformation without a plan, or without intention is not going to end well.
The Derived Value Lens
Framing digital transformation through a value lens is critical. Derived value is the value of an initiative without considering the cost as part of the value equation.
In other words, if you spend $10,000 on an initiative, the derived value of this initiative is $0, unless you can realize value beyond that initial cost investment.
Every organization derives value differently, but we like to categorize value into four categories:
- Efficiency
- Revenue
- Brand
- Risk Mitigation
Efficiency: Saving Time and Money
Deriving value from improved efficiency is a common place for many organizations to explore digital transformation because it is easy to quantify that value to the costs as usually we can categorize the value in this category as a dollar amount.
Common examples of derived value through digital transformation focused on efficiency:
Revenue: Make More Money
Making more money through digital transformation is categorized as deriving value through revenue. Essentially it is leveraging your digital infrastructure to open new revenue streams or increase the selling capacity of current revenue streams.
Common examples of derived value through digital transformation focused on revenue:
- Adopting e-commerce for services and products
- Implementing subscription models or recurring revenue models
- Data monetization through partnerships
- Offering opportunities for digital marketing or advertising to external parties
- Cross selling and upselling through data analysis
Brand: Stand Out
Deriving value through brand or reputation is sometimes more challenging to quantify, as the intangibles of reputation and brand are sometimes harder to measure. However, a better reputation leads to better staff, retention, increased clients, and a number of other incredibly important aspects of a business.
Common examples of derived value through digital transformation focused on brand and reputation:
- Online brand visibility through a visually effective website and social media accounts
- Content marketing through blogs, videos, webinars, and infographics
- Social media engagement to interact with clients and a relevant community
- Online reviews and ratings to increase credibility
- User experience design to enhance a brand’s reputation
Risk Mitigation: Protection
Risk mitigation through digital transformation focuses on being proactive and compliant. The derived value is peace of mind as well as that critical safety net in the event that something does go wrong.
Common examples of derived value through digital transformation focused on risk mitigation:
- Implementing cybersecurity solutions to reduce the risk of data breaches and unauthorized access to data
- Digital solutions to store and control access to critical information to ensure continuous operations
- Using learning management systems or online training to increase staff best practices
- Adopting automations that streamline regulatory compliance
- Adopting digital infrastructure that allows for data encryption and increased privacy of information
Start Now. Start Smart
Only deployed initiatives derive value.
Planning and developing something has only potential value. If you plan or develop an aspect of digital transformation for 1 year, you’ve derived no value from that year.
Instead, try to focus on what digital transformation can be implemented as quickly as possible. Start deriving value now.
License available software or systems, engage with experts, develop a minimum viable product. Digital transformation should not be viewed as a grand undertaking. It should be focused on deriving value as quickly as possible, leveraging technology and experts, applicable to your unique context and needs.
Are you curious about where digital transformation is most likely to derive value for your organization? We have designed a template on a Miro Board using a Decision Pool that will help you find that answer. Give it a try and reach out if you would like to go in more depth about digital transformation as it pertains to your company.
Written by: Nathan Plumb – Managing Director
