Digital Transformation is an umbrella term for how businesses adapt their business models to accommodate new technologies like Artificial Intelligence (AI) and big data analytics, enabling them to understand their customers and markets better while also increasing efficiencies across departments through automation. 

Digital Transformation was once relegated solely to IT but has now moved into every department, including marketing, finance, customer service, etc. These other departments also recognize the massive impact on their industry.

The pace of digital transformation is quickening with innovations in technology, enabling organizations to be more efficient and competitive.  The focus of many organizations on transforming how they operate has become increasingly important as competition increases, new players emerge, emerging markets expand, customer expectations continue to rise, and at the same time, businesses are being asked to do more with less. 

To avoid missing out on these opportunities or, worse, getting disrupted by new business models that leverage big data analytics and AI requires companies to embrace digital transformation – a journey that can often be complex, overwhelming, and risky without the proper guidance.

So what are some of the essential elements for success? The answer lies in assessing your organization’s maturity toward building a data-driven culture and identifying where you are falling short by using an approach based on “people, process, and technology.” 

In this article, we look at the need for digital transformation in the age of AI and how to avoid potential failure in this highly competitive landscape.

What is Digital Transformation?

Digital transformation, by definition, involves changes in an organization’s technology infrastructure and business model—and often cultural elements as well. Companies need to consider three main factors while going through a digital transformation: their strategy (i.e., what do they intend to achieve?), their operations (i.e., how should they execute on their strategies?) and their workforce (i.e., who should be involved in these transformations. In other words, digital transformation is about using technology to improve the way you operate your business.

Reasons why Digital transformation Fails

Encompassing legacy systems while embracing groundbreaking new technologies like AI creates both opportunities and challenges for employees, business leaders, and IT.

The challenge for employees is how to leverage the new technologies to meet the needs of organizations now and in the future without disrupting day-to-day operations or having a negative impact on productivity.

The challenge for business leaders is understanding what skills their workforce needs to execute digital transformation successfully while also blending processes, people, and cloud technology with strategies designed to drive greater efficiencies.  

The challenge for IT is ensuring they have the right tools at their fingertips that allow them to manage all this complexity both effectively and efficiently so they can become partner consultants by providing insights into data that empowers everyone across an organization – even those who don’t understand advanced analytics – making it easier to make predictions about customer behaviors and other practical applications for decision-making.

The need for Digital Transformation in the Age of AI

Artificial Intelligence (AI) is defined as “the theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.”, according to Lexologoy.

While some firms recognize this trend and are investing heavily in AI or outsourcing their digital transformation efforts, most firms do not recognize how much change they will need to make nor the potential impact on customers – which is largely why many organizations are failing when it comes to digital transformation efforts. They don’t realize how much they need to change their business and IT practices and instead stay focused on replacing things like spreadsheets and manual processes with software.

One of the biggest changes expected from AI is the ability for organizations to make better decisions at a faster pace, which may be achieved by collecting vast amounts of data from automated sensors and leveraging machine learning algorithms that can learn from this data. 

In fact, Forbes estimated that “ Artificial Intelligence will have increased the productivity of people doing knowledge-based work by 40%.” As companies aim to become more customer-centric, they must streamline operations and leverage technology in ways that allow them to provide a personalized experience to all customers based on what they know about them. Thinking beyond just the CIO, we’re starting to hear more about how AI will affect every employee – from finance and marketing to HR and IT.

However, while many organizations are investing in this transformation, there is still the potential for failure due to five main reasons:

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1) Digital Transformation is More Than Just Hiring a Chief Digital Officer

While many organizations may be hiring a chief digital officer and thinking that their job is done when it comes to digital transformation, this isn’t always the case. That’s because becoming more of a software-driven organization requires more than just hiring one person. 

Instead, you need an entire team of people with technology skills who can help your business evolve its processes moving forward. Businesses have realized that they need to do more than just hire a CDO. They also need to make sure that business models are aligned with what the technology can enable, cultures are agile and ready for change, processes are designed around data-driven decisions, talent is appropriately trained, incentives are properly aligned, and resources are available.

To succeed in this age of AI requires companies to step up the level of digital transformation maturity – especially by ensuring there is greater sharing across all departments rather than having separate silos where employees focus on their specific tasks. Without bringing together leaders who understand how all functions work together toward achieving bigger goals, organizations will never be able to compete effectively or provide customer experiences that stand out from competitors.

2) Getting Employees Onboard

When it comes to digital transformation, it’s crucial that everyone is on board. This includes employees who may be concerned about the impact such a change will have on their jobs and even customers (which is why you should always engage them in dialogues throughout this journey).

As AI is adopted by most industries, we’re going to see that humans must become more involved with the driving value of technology. So gamifying your staff into roles where they can leverage data and AI, and doing so with the right training, means there is less chance of failure when implementing AI moving forward.

3) Planning For Rapid Change While Still Focusing on Strategy And Execution

The pace of innovation is not slowing down anytime soon – which is why businesses need to constantly be putting their AI strategies together.  Large organizations can have suffered from a digital disruption that is driven by new market entries or powers changing the rules of an existing business model. This means companies must remain flexible and focused on delivering rapid change while also balancing customer service needs and strategic objectives with startup investments and new venture developments.

4) Focusing on Current Business Priorities While Still Planning Ahead For Digital Transformation

Businesses today are faced with challenges where they must focus on improving operational cycle times, meeting regulatory requirements such as GDPR, gaining more insights into customers’ purchasing decisions in order to personalize their experiences even further, and reducing costs across departments. These urgent business priorities often land when organizations are undertaking digital transformation projects – and can distract them from taking a longer-term approach to this change. Focusing on strategically important initiatives such as AI (that will help drive future revenue or reduce costs) requires companies to execute using their current resources while also experimenting with new technology solutions and tools for the long run.

5)  Not Having The Right Infrastructure in Place Before Going All-In on AI Technologies

There is a significant barrier to entry when it comes to digital transformation and AI – as companies will need talent, tools, data, and infrastructure in order to implement these technologies successfully. Without any of these things coming together, you can be sure that your strategies for digital transformation will fail miserably.

This means not only investing in inexperienced data scientists who understand deep learning algorithms and how to create them from scratch but also having the right systems that allow AI to work at scale across different departments within an organization. Lack of infrastructure affects all stages of this process, which impacts both the speed at which projects are implemented as well as their potential for success.

Overcoming Digital Transformation Failure In The Age Of AI

If you want to avoid digital transformation failure in the age of AI, it’s important to know your industry and what its biggest challenges are before throwing R&D dollars at a problem that doesn’t really exist. You don’t need to solve every single issue all at once – instead, take small steps and expect setbacks and failures along the way. It can be helpful to talk with other companies who have already implemented this change to see what worked for them and hear about mistakes they made so you can strategize around avoiding those specific issues if they come up.

Organizations that successfully implement change during digital transformation use strategies such as data-driven automation, robotic process automation (RPA), machine learning capabilities, and predictive analytics tools. The power of data is at the core of how these changes are made possible. Mastering your data and finding ways to leverage it will be key in determining whether or not your digital transformation is a success.

Artificial Intelligence is used for the personalization of customers’ experience and for value creation. It’s still hard to predict which AI algorithms are the most fruitful thought, so investing in R&D has become more crucial than ever before. Digital Transformation is no longer an option if you want to keep up with competitors – take small steps instead of expecting success right away, learn from other companies who have implemented change and try to avoid making their mistakes. The power data should be at the core of how these changes are made possible.

What’s Next?

The best thing about planning for business changes with emerging technologies is that organizations can set themselves up for long-term growth by implementing tools that will adapt to changing trends while pursuing existing missions. With AI and machine learning at your fingertips (and an understanding of what these technologies mean for your organization), you’ll be more capable of reaching revenue goals and meeting customer needs – which means better ROI over time even if there are initial bumps in the road to full implementation.

If you’re looking for a deeper dive into solutions, strategies, and how to successfully implement them, we’re happy to help – just get in touch with a member of our team here.

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