Digital transformation has now become the mean of survival. It is now not a thing of the future but has indeed become a competitive necessity. The evolving world of technology, demandingly elevating customers' expectations, and the prevailing new-normal have made this inevitable evolutionary process the norm of organizations worldwide.

Digital transformation benefits and empowers organizations to enhance efficiency, accessibility, adaptability, and effective preparedness for current and future challenges. Many players in various industries are putting a premium on digital ecosystems. Some statistical data states that the prize from the digital transformation of industries could be $100 trillion over the next decade (World economic forum report). Spendings on digital transformation technologies and services worldwide from 2017 to 2024 rose from 0.6 to 2.39 trillion USD (Statista). In 2019, it was predicted that the digital transformation market would grow at a CAGR of 23% from 2019 to $3.3 trillion by 2025 (Research and Markets).

Pitfalls of Fast Tracking Digital Transformation

Wisely transforming into the fast-tracking digital landscape is the key, but along with it comes various challenges. Defining a framework for digital transformation is a lot harder than it seems and probably one of the most challenging initiatives that any organization will be taking up. According to a study by McKinsey, 70% of digital transformations fail just because they are not done wisely. Common pitfalls include lack of employee engagement, inadequate management support, poor or non-existent cross-functional collaboration, rigid mindsets, and last but not least, lack of accountability. Organizations need to have a better understanding of what digital transformation means for business.

Major reset in the mindsets and behavior

Adopting technologies for the sake of technology can do more bad than good. Technologies that work for some might not work for others. Many companies are clueless and don't know where to start for digital transformation in business. A deeper understanding of specific goals and assessing organizations' strengths and weaknesses are needed to succeed in digital transformation rather than plunging into the unknown headfirst.

Digital transformation has now become a business strategy as opposed to a technology strategy. Some of the digital transformation trends in financial services include:

• Organizational Agility:
  Companies need to respond effectively to disruptions.
• Increased Collaboration:
  Under specific regulations and standards, a business needs to adopt team structure as an operational model, emphasizing working collaboratively and communicating effectively.
• Risk Management:
  Firms need to emphasize large volumes of data pertaining to collection, storage, and analysis to improve compliance management.

Considering digital transformation, a one-off.

Every new technology or innovative strategy adopted by an organization will inevitably lead to more challenges in digital transformation. Digital transformation is not a one-off thing. It is a continuous pursuit that involves sustained improvement in every aspect, especially to maintain organizational alignment-transforming processes, products, and services to meet new market trends and adapt to tomorrow's challenges. The 'Everything-now' approach should be converted to a "Focus-now' approach, which will help eliminate confusion and deliver the expected results. Often organizations fall for the delusional belief that they will engage in a one-off digital transformation project by buying or developing the digital tools based on the action plan. These digital tools and processes will be assumed to solve all their digital challenges for the next five years, practically impossible. Organizations cannot possibly know all the challenges and changes they will encounter during the digital transformation journey. All the interdependent changes and interworking of the digital tools in the digital transformation process can't be foreseen initially.

Cultural change in the organization

Stakeholders in digital transformation are not just the C-Suite and IT departments; they are also the employees. The C-level willingly needs to open up to the idea of information sharing with their employees and vice versa, henceforth providing company-wide input on the transformation process. Even though your digital transformation strategy should start at the top, every department and employee needs to clearly understand their role in the process and how their work will contribute to reaching these goals.

Many companies fail to comprehend that their business strategies need to be constructed on a solid data foundation, and they are required to make data-informed decisions. Collecting precious digital transformation data and failing to use it is a colossal mistake, which means the road map for the respective digital transformation is without a solid plan.

How to avoid these challenges of digital transformation?

First off, be very clear in what you are trying to achieve and then focus on doing it right, which is what's truly essential if you want your business not just to survive but prosper in digital transformation growth, along with a mandatory need for close collaboration between all the business units and functions within an organization with consistency and clarity.

Some of the drivers for digital transformation would be:

1. Initially, go through due diligence and establish the trajectory and full potential of the business.
2. Data Engineering will provide sustainable and standardized data, which is of utmost priority in the digital transformation route. Data Engineers will collect, translate, and validate data for analysis and build data warehouses to empower data-driven decisions. These data warehouses are based on a critical process called ETL- Extract, Transform, Load, which eventually provides extreme flexibility and full access to data at any time. Data engineering helps Data scientists to offer valuable insights that could disrupt industries. Once struggling to keep up with the vast amounts of data, companies have significantly benefitted from data engineering.
   
   
   
   
3. Start with a Minimum viable product, i.e., a basic launch-able version of the product that supports minimal yet must-have features that define its value proposition. An MVP is created to enable faster time to market, attract early adopters, and achieve product-market fit from early on. Once the MVP is launched, initial feedback is awaited, based on which reiteration is done to fix bugs and introduce new features that the early adopters suggest. MVP enables early testing with actual users to check the efficacy of the solution provided. It allows a team to collect the maximum amount of validated learning about customers with the least effort. Releasing a product faster and within a budget is a prerequisite for a successful new product development process. Some benefits of building an MVP;
   
   - Early testing opportunity
   - Focus on building the core
   - User intelligence and gathering feedback
   - Allow market validation
   - Time efficient
   - Cost-efficient
   
   
   
   
4. Identify inefficient business processes that need optimization.
5. Develop a transformation plan with initiative and financial projections wholly owned by the line leaders and then launch a full-scale effort to drive value to the bottom line, which could also be done with the help of digital transformation services.
6. Shift your business priority based on deeper customer intelligence.
7. Define new roles and redefine the existing ones to improve the efficiency of the process.

Digital transformation best practices include changing the mindsets and behaviors to sustain the transformation and putting in place processes and tools to ensure proper execution and timed delivery. It is also imperative to get feedback from everyone and simultaneously streamline the processes, which might be overwhelming but will play a huge part in digital transformation success. If the process is defined clearly, then the hassle can be minimized. Another essential factor that helps in digital transformation is introducing courses and extensive training programs to close the possible knowledge gap among employees and enhance their domain knowledge.

Digital transformation will also help jobs become more efficient and effective. Jobs will be optimized doing the routine processes and allow the working body to look upon more critical tasks and gauge new opportunities at a broader strategic level to expand the business. According to a survey by KPMG, 91% want digital solutions, and 88% think that such tech is a vital part of their employee experience. Simultaneously, tech workers feel that they spend 40% of their time at work doing their primary job, and the rest of time they are looking upon minor or irrelevant tasks, that is precisely due to lack of standard workflow processes and poor work prioritizations, which is where the digital transformation of those process will come into play.

Digital transformation has become a crucial part of modern organizational life. It is a smart move, hence, should be done very smartly. Moreover, to cater to the challenges of digital transformation, a pragmatic and dynamic approach is required, which will eventually have a practical impact in the longer run.

NETSOL Technologies has been a strong flag-bearer of digital transformation, innovation, and superior customer experience. The company takes pride in being the pioneer to introduce complete digital transformation solutions for the global finance and leasing industry.

If you are interested in a FREE consultation regarding digital transformation for your finance and leasing business, click here.

Written By:
Kamran Khalid, Head of Business Analysis Group & Head of PreSales at NETSOL Technologies Inc.




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