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Digital transformation is the integration of digital technologies into all areas of a business. It includes the implementation of hardware—connected devices for production, smart sensors—and the use of mobile applications or additional storage capacity available in the cloud, i.e. cloud computing.
But a digital transformation does not stop there. It also looks at organizational capabilities and introduces new processes and ways of working within the organization. More broadly, it is not so much about using new technologies as it is about how this hardware or these applications are used, as well as their integration into the way the company and its employees do business. In fact, it represents a radical disruption that extends to the transformation of all areas of the business: processes, business lines, organization, even culture, thanks to information technology.
“Industry 4.0” is the digital transformation of manufacturing. Like the mechanization, electrification, automation and globalization that preceded it, Industry 4.0, or the 4th Industrial Revolution, promises to have a remarkable impact on how we make and sell goods.
The starting point: information and its meticulous analysis
Data mining and analysis are the cornerstone for digital transformation. Leaders such as Amazon, Google, Facebook, Netflix and Uber understand this.
Because they treat data as a strategic asset that is linked inseparably to technology, these organizations are outperforming their competitors. They achieve their business goals by optimizing their efficiency and productivity.
Although data analysis is the key accelerant of an organization’s digitization and transformation efforts, few companies are adopting this approach. In fact, a 2019 article published by Gartner reports that fewer than 50% of documented corporate strategies mention data and analytics as fundamental components for delivering enterprise value.
However, the analysis of the data collected and stored as well as the corporate information that a company possesses allows it to:
- Measure and analyze its processes to identify automation and reengineering possibilities;
- Better understand its target customer base and determine ways to attract new customers and retain existing ones;
- Identify new business opportunities and target markets, and create new products that meet customer and market needs.
So before embarking on a digital transformation, a company should take the time to analyze its data from all sources. This will generate an overview of their situation, the way they do business, the market in which they operate, their client base and their opportunities.
Real-world success stories
Many Quebec companies have demonstrated that a digital transformation is essential and only organizations that undertake such a process, as quickly as possible, will be able to aspire to a future. Here are a few striking examples:
- Desjardins multiplied its online services based on statistics and data.
- PG Hardwood Flooring Inc. in Lotbinière optimized its production by automating certain tasks and better managing its inventory.
- Montreal-based sealant and adhesive manufacturer Adfast accelerated its 4.0 shift in 2012 by automating production to meet specific customer needs. Its profits have quadrupled since then.
- The Webster Library at Concordia University designed different spaces for reflection, learning, the exchange of ideas and creation through the use of cutting-edge technologies.
Moreover, the same is true for our clients. For example, Mr. Simon Beaumont, Executive Director of A. Beaumont Transport (now part of TransForce, Canada’s leading trucking operator), says that his company has increased its productivity and efficiency by modernizing and daring to innovate. And at Distributions Franco, an import and distribution company that Classe Affaires has been working with since 2006, the company’s transformation and the automation of operations have led to sustained growth. The company currently holds a solid market position.
Investment and return on investment (ROI)
But what about the necessary investments and the benefits of such an adventure? Mathematically speaking, anyone who can determine the costs of the process by isolating all the elements to be taken into account and their real impacts is a clever one. However, not transforming one’s business has all sorts of harmful effects: a decrease in the company’s competitiveness, difficulty in retaining its workforce, increased spending on recruitment, to name but a few.
It is possible, though, to predict whether the results will justify such an ambitious project by evaluating:
- The risk of not investing:
- Added costs to keep the company competitive
- Performance breakdown
- Loss of skilled, scarce and expensive labour
- Continued production constraints
- Reduced response to consumer/client needs
- Organizational challenges
- Tighter financial margins
- The anticipated performance against desired nonfinancial targets:
This is the performance achieved by defining milestones and non-monetary goals. This allows for smooth progress without worrying about short-term profitability issues.
Performance, or profitability, is achieved through a genuine reflection on the goals set. This will also provide concrete answers to the question: “How can digital tools improve our production process, our relationship with our customers or the services we offer?”
The success—and the path to profitability—of a digital transformation process therefore requires a judicious use of data and a sound analysis of the defined goals and the challenges that the company might face.
There is only one way to eat an elephant: a bite at a time
If you’re running an SME, the mere thought of a digital transformation can have you quaking. The task probably seems daunting, if not impossible, since you can’t determine the exact costs. However, the status quo doesn’t seem viable. So what do you do?
Don’t worry! It can begin on a small scale. A careful analysis of the processes and information available, a realistic review of the business goals, an evaluation of the costs associated with not taking action, and the breakdown of the work to be done into projects will help you succeed in your digital transformation.
Digital transformation is above all an optimization of daily practices thanks to advances in information technology. The project gives meaning to the technology, not the other way around.
Where do you start? Contact us and we’ll help you get where you want to go.