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Pros & Cons of Digital Transformation

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8 min. read

It’s no secret that we live in a time of significant change. One of the distinguishing features of the development of modern society is the departure from traditional forms of interaction. Now, almost all spheres of life have been “digitized”: digital libraries are established, loans are issued through online banking, tickets for suburban trains and long-distance trains are purchased on the carrier’s website, and goods are purchased in two clicks on the Internet. Schoolchildren and students are switching to distance learning, and more and more employers are transferring their employees to remote work. Let’s try to identify the pros and cons of digitalization.

WHAT IS DIGITAL TRANSFORMATION?

Digital transformation (digitization) introduces digital technologies for generating, processing, transmitting, storing, and visualizing data in all areas of human activity. Digitalization is defined by politicians, scientists, and economists as one of the main trends in the development of the economy and society as a whole. Every year, more scientific and journalistic works are published on this issue. Attention to this phenomenon is constantly increasing.

The term “digitalization” first appeared at the end of the 20th century. In 1995, the American computer scientist Nicholas Negroponte from the University of Massachusetts voiced the concept of a “digital economy.”

The World Bank’s 2016 Digital Dividends report on the state of the digital economy highlights the following advantages of digital transformation:

  • growth in labor productivity;
  • increasing the competitiveness of companies;
  • reduction of production costs;
  • creation of new jobs;
  • increasing the degree of satisfaction of human needs;
  • overcoming poverty and social inequality.

At the same time, digitalization has potential risks:

  • unauthorized access to information and other cybersecurity threats;
  • digital division: gaps in the level of education and conditions of access to digital services and products between citizens and businesses within countries, as well as between states.

Nevertheless, the digitalization of each sector of the economy and the country as a whole is becoming an inevitable phenomenon, and for the digital economy to become a reality, it is necessary to solve the following problems:

  • low level of digital literacy of the population;
  • lack of IT infrastructure,
  • lack of IT specialists;
  • “traditional” consciousness, focused on working with material rather than digital objects;
  • the rigidity of corporate structures;
  • the need for a radical restructuring of business models and management paradigms.

MAIN BENEFITS OF DIGITAL TRANSFORMATION

DIGITAL TRANSFORMATION

IMPROVING CUSTOMER EXPERIENCE

Customers are one of the main benefits of digital transformation. Every day they interact with commercial and government companies, many of which have already begun to transform their activities. In such cases, the client sees that modern technologies make processes faster and more straightforward and expects similar changes from other enterprises.

Digitalization technologies allow for organizing the most personalized interaction, which most customers prefer. Digital communication channels, omnichannel, artificial intelligence, robotization — we already face all this daily. For example, the digital transformation of banks could not do without chatbots, and the pharmaceutical industry is actively using modern mobile devices in its work.

FLEXIBILITY AND ACCELERATION OF BUSINESS PROCESSES

To be successful, you need to be fast and flexible: change not when there is an opportunity but when there is a need. The digital transformation of business processes ensures that companies make decisions quickly, quickly adapt work to the requirements of the current moment and satisfy customer needs.

INNOVATIVE OPPORTUNITIES FOR BUSINESS DEVELOPMENT

Digitalization of business opens the way to innovative ways of developing enterprises:

  • Cloud technologies allow several teams to work on the same project simultaneously and use the company’s resources effectively.
  • Using the Mobile First strategy, the company receives and monetizes mobile traffic, which has already caught up with traffic from stationary devices in terms of its indicators.
  • Ready-made solutions allow you to save time on solving problems. Various applications, extensions, and connectors optimize the company’s work and require minimal time spent on their implementation and adaptation.

All these and other digital transformation technologies have lowered the threshold for entry into many areas. Starting your own business and developing it has become more accessible thanks to the many tools provided by the digitalization of industries and enterprises and other benefits of digital transformation.

USING MODERN TECHNOLOGIES FOR WORKING WITH DATA

Information is a crucial resource in the modern world. Humanity generates vast amounts of digital data every second that take up storage space and help companies do business. To take full advantage of the available information, it is necessary to accumulate, structure, and analyze it.

The digital transformation of the enterprise contributes to this thanks to progressive technologies, for example, Big Data (big data) or Artificial Intelligence (AI, artificial intelligence). They are aimed at processing information flows, based on which it is possible to make decisions, adapt offers to specific customers, and predict their behavior.

DISADVANTAGES OF DIGITAL TRANSFORMATION

NEED FOR FUNDING

It is the most significant digital transformation challenge for most companies. You can buy a bunch of equipment, software, gadgets, and sensors, or at least build your own data center. Still, if funding stops or management considers it inappropriate, for example, integration and training, the project can quickly fail. If we talk about small and medium-sized businesses, they generally choose to save on automation and digitalization, especially in a crisis. Of course, this is fraught with an even more significant backlog within the industry, but they prefer not to check the likelihood of success in principle.

digital technologies

REJECTION OF CHANGES BY STAFF

Another difficulty on the way of everything digital, electronic, and automated in companies. Each employee who boycotts innovations and the development of technological infrastructure in the company has their own motives: fear for their job, fear of control, difficulties in handling equipment, low level of computer literacy, gray schemes, and so on. This phenomenon has another unpleasant feature: usually, only employees with “weight” in the company who know their actions’ significance can boycott. And this means that they are likely to lead the closest employees and subordinates, and the process will get out of control. Technologies in such conditions are simply ineffective. You must first work with the staff, prepare the ground for changes, and only then gradually enter the digital reality (but in this case, it only sounds simple; the story is slow and painful).

LACK OF QUALITY SOFTWARE

Developing a good CRM and a good analytics system is a matter of more than one year, which also requires a particular type of developer familiar with commercial processes, etc.

To lead a truly successful digital transformation, you must have a comprehensive strategy with specific goals. It would be best to understand precisely what you want and what steps will lead to each goal. It is also important to remember that only interested and experienced employees can move the project forward, and the leader (or top managers) is sincerely interested in changes. Another critical factor is to find a reliable partner to feel all the benefits of digital transformation.

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