“Digital transformation is the adoption of digital technology by an organization. Common goals for its implementation are to improve efficiency, value or innovation.” - Wikipedia
Digital Transformation is the art and science of incorporating technological innovations into all areas of business operations, to make sure that the overall efficiency and productivity of the business improves, and innovates.
Digital transformation fundamentally changes the way any business operation is conducted, and it triggers a ripple effect: Revenues increase, profits soar, customers are more delighted, and overall, the status quo is challenged and transformed.
Once the decision has been made about digital transformation, the next big step is how to implement it?
And here, we are going to bust a very common myth: Digital transformation is not only about technology, but it’s about people, products, processes, and systems.
Also Read: Hotel digital transformation can help overcome the impact of COVID-19
How does digital transformation work?
Digital transformation incorporates a tremendous change, and this change is about how a business operates, how its employees think, and how processes and systems are altered and molded to adopt the digital way.
Technology is the catalyst that triggers these changes, and technologies keep on changing, year after year.
Hence, to understand deeply how digital transformation works, it’s important to map out the business model, and then accordingly map the digital transformation for a successful rollout.
In organizations where digital transformation failed, this mapping of the business model was ignored, because the experts in charge focussed more on the technological aspect, rather than understanding why technology is required in the first place.
Be it digital or mobile innovations or Internet of Things or metaverse: The first rule is to map out the business model and then accordingly map out the digital transformation.
And this brings us to the fascinating concept of Business Model Canvas.
Understanding business model canvas for digital transformation
In the late 2000s, Alexander Osterwalder and Yves Pigneur developed Business Model Canvas, which helped organizations to understand, map out and improve their business models, based on the 9 important pillars.
The entire Business Model Canvas has been divided into 9 elements, represented via blocks, and every business depends on all or some of these 9 elements for their operations and profit-making activities.
By creating such a model for business activities, the management can understand their key partners such as customers, vendors, and suppliers, map out their critical activities, forge meaningful relationships, and understand how they can increase revenues, control the expenses and develop innovations for long term growth.
At the heart of this Business Model Canvas is ‘Value Proposition’, which is understood from the point of view of the customer: what are the pain points being solved, and the gains delivered.
While the right-hand side of this canvas is about customers and understanding their objectives for connecting with a business, the left-hand side is about the elements that help the business to achieve its goals: key partners, key activities, and key resources.
At the bottom, the two most critical financial aspects form the foundation of the entire business model: cost structure and revenue streams.
The flow of energy is from left to right and eventually goes to the bottom: The key partners and key activities help the business to generate value for the customers, eventually leading to revenues.
Now, let’s explore how this business model canvas can help us to map digital transformation for fast-growing enterprises.
Benefits of mapping digital transformation via business model canvas
First, let’s understand the inherent benefits of using this business model canvas for mapping out digital transformation.
With this business model canvas, the mapping of digital transformation becomes comprehensive and error-free. The management can make sure that every element of this model is taken care of, and none of them are omitted.
The model explains and details how the elements are closely interrelated, and how changes made in one of the elements directly impact the other, and thus, transforming the business sentiments. For example, how an investment in a new product can alter cost structure, impact the customers, and accordingly alter the revenues and profits.
This way, the management can plan out the level of digital transformation needed for the business and have a crystal clear vision of the possibilities and the outcomes.
A deep understanding of the business model canvas implies that creating a business model is not a one-time activity, but an evolutionary process. Each and every element in this canvas is dynamic in nature, and every element impacts one another, leading to a constant flow of changes and transformation. And this is the fact and truth that every business owner should know, before deploying Digital Transformation.
Also Read: Digital Transformation in Automotive Industry – Strategies to survive and thrive
Mapping digital transformation via business model canvas
Now, based on the knowledge we generated from understanding Digital Transformation, and Business Model Canvas, we will explain the step-by-step process to map out digital transformation for your business.
Step 1: Map out entire business model
In the first step, the management is required to map out their current business model, as per this business model canvas, and fill in these 9 elements as per the business operations and business processes.
This will help the management of the business to clearly understand which segments and systems need to be focussed first for deploying digital transformation, ensuring roaring success and high ROI.
Such an accurate and in-depth description of their business model will enable the organization to prepare a budget, discover the key areas where they need to focus, and most importantly, scoop out the digital transformation opportunities.
Step 2: Discover transformation opportunities
Based on the business model canvas, the management can find out the opportunities where digital transformation can be deployed, and make sure that this deployment of new technologies triggers more efficiency and more revenues.
For instance, if a shoe wholesaler fills these 9 elements as per their current model, they will discover that the resellers and retailers are the ones who are in between their key activities and customers, thereby diluting the value proposition, and revenues.
What if they deploy digital transformation for their sales process first, and introduce an ecommerce store that can directly sell to the customers?
More revenues, less cost, and more profits.
Step 3: Execute digital transformation
The first two steps will reveal the true mission and vision of the business and will weed out the obstacles that are stopping the full-fledged growth of the business.
Based on that, an effective and efficient blueprint of the digital transformation initiatives can be mapped out and executed. In this step, the management can choose and pick the best, most relevant technologies they can deploy (website or mobile app?), and find out how this deployment will impact the overall business.
Processes and systems that need to be changed, altered, and molded can be discovered, and proper change management concepts can be deployed to ensure the smooth transition to the digitalization of the business.
Step 4: Measure, improvize, repeat
Once the deployment of digital transformation is completed, measuring its impact holds paramount importance and relevance.
Via measurement & monitoring tools such as CRM, Analytics, and ERPs, businesses can have real-time insights and intelligence to measure the result and find out how the digital transformation strategies are directly impacting the bottom line and made the changes accordingly.
If you are looking to start on your digital transformation journey, and are not sure where to begin, then we at TechAhead can help you, right away!
With 13+ years of experience in unleashing Digital Transformation for more than 700 enterprises, corporations and startups, we consult you and guide you for maximum impact.
Schedule an appointment with our Digital Transformation company right here.