Digital transformation is near the top of the boardroom agenda for a growing number of companies. Eight in ten (82%) of CEOs surveyed last year by research company Gartner said that their companies had begun a digital transformation project.

Common aims for projects include cutting costs, improving efficiency and customer service and launching new products and services. Technologies often used in digital transformation projects include machine learning and artificial intelligence, cloud computing and “Big Data”.

However, the results of digital transformation have been mixed, research suggests. One in five digital transformation projects by businesses in the UK have failed, according to research published last year by technology consultancy Econocom.

Common reasons for projects failing included a lack of understanding of technologies, picking the wrong technology platform and insufficient skills and budget, the research also found.

In the last decade, many businesses have switched much of their information from paper to an electronic format. Digital transformation is the next stage. “[Digital transformation is] using technologies to provide services in a more innovative way,” says Diana Xhumari, founder and CEO of Tegeria , a digital transformation consultancy. “It’s a way to reinvent yourself.”

Digital transformation isn’t just for large companies heavy IT infrastructure. Cloud computing has cut the cost of computing power, while public sector organisations are also shifting their focus to digital transformation.

Umbar Shakir , client director at Gate One, a consultancy specialising in digital and business transformation, says one of its clients, a UK housing association, got a “social return on investment” of £1.50 for every £1 it spent on its digital project. The project included a new enterprise resource planning (ERP) systems, more online services and improving customer service.

Over 70% of repair bookings are made online, compared to about 15% before the project. Resident queries are dealt with quicker.

To encourage new ideas for the digital project, housing association staff pitched ideas in a ‘Dragons’ Den’ style, Shakir says. Colleagues voted for ideas via Yammer, (business communication software). Winning ideas got funding.

Basic digital transformation types include the automation of tasks within a business, such as HR, finance and managing customers.More advanced transformation projects look to leverage machine learning and AI, or virtual reality and augmented reality technologies in e-commerce and retail.

Marketing departments are using machine learning technology with “Big Data” technologies to spot trends and patterns in vast amounts of data. It helps them to predict market trends and customer behaviour. Much of the research and analysis of a digital transformation project can also be done using “business analytics” and “data visualisation” software, such as ‘Power BI’ by Microsoft and Tableau, or Google’s “G Suite” of cloud computing, productivity and collaboration tools.

Digital transformation doesn’t have to be expensive. Often, it’s about using existing IT more effectively, not buying expensive new software. It can be done for thousands of pounds, especially if you use free “open source” software. One Tegeria customer, a UK SMBs that makes education software, had a problem with its CRM software. The company’s CRM system didn’t provide sales staff with enough information about customers. Most staff thought the system was a waste of time and didn’t update it regularly.

“The problem with CRM [software] is that most people don’t get the best from it because of the way it’s implemented and used,” Xhumari says. The first step was to agree the main purpose of the digital transformation."
“We had to sell the vision about a digital transformation journey,” Xhumari says. “One of the deal breakers in digital transformation is how well the company management sell it to the [workers]."

“You need to translate what the vision means for each worker, for example, what it means for sales staff (higher commissions, job satisfaction) and for people managing the sales team … to help them achieve, for example, quarterly targets. A new CRM system could give early war"

Do your homework before starting a project.

“Use contractual rights to check performance and verify the supplier’s statements: conduct audits and inspections,” says Deirdre Moynihan , a solicitor at Kemp IT Law. “Ask for performance updates and involve third party experts if necessary.

Technology is only part of a digital transformation project, though. Changes to business culture and ways of working can be equally as important. Businesses should reassure workers that that digital transformation will make their jobs easier and isn’t an excuse to cut jobs.

“A lot of digital transformation is [aimed at improving] customer response times and customer service, which can threaten people’s roles because previously manual tasks are not being automated,” says Dale Vile, CEO of Freeform Dynamics , a technology analyst and research company.

“Automation, machine learning and AI, [are] not necessarily putting people out of a job but disrupting their jobs,” Vile says. “If [you] don’t handle the people and cultural aspect of a digital transformation [project] it can backfire.

Returns from a digital transformation project typically take longer to measure than other IT projects because they are usually larger and involve more changes to IT and business processes.

Straightforward projects, such as automating business processes like invoicing or sales, can garner demonstrable benefits with a few months. In large companies, for more complex projects, it may take one year or more before any benefits can be measured, experts say.

The measurements for performance could include the job satisfaction of employees, their productivity, customer service and a company’s nimbleness – for example, launching new products quicker or changing strategy.

“One thing that’s impossible to quantity [with digital transformation] but can have a huge impact is [being] able to make decisions much quicker and confidently … as you have more data available,” Vile says. “Once you get used to it it’s very hard to go back.