Data Analytics: The Gateway to Digital Transformation

“Digital transformation” is a term that can both unite and divide audiences in a single conversation. Delve into the topic at a conference or a cocktail party, and people within earshot will quickly agree that it’s a good thing—an initiative that every organization should undertake if it wants to stay competitive. But just as quickly, the same people will start a debate about what digital transformation really is and what an organization should do to make it happen.

The topic comes up often in discussions with customers, leading to studies about what’s driving companies’ successes in digital transformation. In short, the answer is data.

4 Key Traits for Transformation

One study, done jointly by the SAP Center for Business Insight and Oxford Economics, revealed that the top 100 “transformative” companies hold four key traits. To be a leader in digital transformation, companies must focus on true transformation, transforming customer-facing functions first, investing in next-generational technology using a bimodal architecture, and being talent-driven. The study showed digital transformation leaders that possess these qualities are two-and-a-half to four times more likely to report value from next-generation technologies. Additionally, the technology area these digital stars are committed to most is big data and analytics. Overall, 94% of companies leading in digital transformation are investing in this category. In comparison, only 60% of non-leaders are making similar investments.

High adoption totals illustrate that data and analytics are helping to create a gateway to digital transformation. Companies that are investing in these technologies and using them wisely are the ones that will stand the best chance of executing on their digital transformation initiatives.

Here are four ways digital transformation leaders are using data and analytics to set themselves apart from the competition:

1-They Are Focused on “True” Transformation

Digital leaders aren’t dipping their toes in the water on transformation efforts—they’re going all-in. The SAP/Oxford study found that 96% of these leaders describe digital transformation as a core business goal, and five times more leaders than non-leaders are changing their organizational structures to accommodate transformation-based moves.

Transformation initiatives can’t be confined to just the IT department. They can’t be trial balloons. They need to be supported by senior management, instilled as long-term strategies, and underpinned with investments in next-generation technologies. Companies that put a priority on digital transformation are the ones that come out ahead.

2-They’re Using Analytics and Other Strategies to Transform Customer-Facing Functions First

Unlike previous strategic technology shifts that focused mainly on streamlining internal business processes, the digital transformation revolution is largely focused outward—toward the customer. Companies that are making customer experience the first step in transformation are taking a lead in the market.

According to the study, 92% of leaders report they have mature digital transformation strategies and processes in place to improve customer experience, and 70% say their efforts are paying off in improved customer satisfaction. Leaders are collecting customer data and using it to engage with—and not just target—customers. Analytics that ferret out insights such as preferences and usage patterns can increase sales. They can also contribute to self-improvement loops that help companies learn how to continuously build better products and experiences.

3-They’re Investing in Recruiting and Training to Drive Analytics-Based Processes

Digital transformation leaders are focused not only on the transformation process—they’re investing heavily in the talent to drive the initiatives. Overall, 48% of leaders listed investing in digital skills and technology as the most important revenue driver in the next 2 years, compared with just 30% of the others, according to the SAP/Oxford study. The winners in this game are putting money into recruiting and training to make sure they have the skills to compete.

A separate study, “Data 2020: State of Big Data,” revealed that companies are worried they won’t have the skills they need to pull off digital transformation initiatives. Looking specifically at data scientists, this study shows 78% of respondents believe there will be a shortage of people with the right skills to successfully work with data. If data and analytics are driving transformation, recruiting and training the right people will be a major priority in the years ahead.

4-They’re Committing to Cross-Departmental Collaboration

Digital transformation cannot be carried out by one department. It has to be a cross-departmental function where an organization moves as one, focused on a common agenda and an interrelated series of goals. There can be individual projects targeting short-term initiatives, but they must tie to a larger mission. Issues such as technology use, training, customer engagement, and product quality belong to everybody, and efforts to transform them should be owned by everybody.

For IT professionals, this means more holistic support and leadership to enable these efforts. IT can be the true driver of digital transformation, ensuring teams are prepared to successfully execute transformation projects. IT leaders will be expected to implement systems that capture and make use of data, and more importantly, enable teams to explore and analyze the data.

But are some divisions more relevant than others? According to the big data study, a few areas stand out as primary stakeholders in the use of data for strategic corporate initiatives. These include Operations (61%), Finance (52%), Sales and Marketing (49%), and Human Resources (43%). In other words, if an organization is going to use analytics and data to track KPIs in sales, marketing, and finance, all the key stakeholders should be involved in the execution of the project.

Time Will Tell

Digital transformation is a catchy phrase that everyone has heard but very few have mastered. Time will tell what exactly it means for our companies, and the industries in which we exist, but one thing is clear: Data is critical to companies who will lead in the future. Those who make good use of data can take a giant step forward in their transformation initiatives. Those who don’t may very well be left behind. ?