By Drikus Van der Walt, Pre-Sales and Engineering Lead at Halo Dot

When I started writing this article, I was looking for the best definition of "Digital Transformation".

Intuitively the phrase makes sense by itself: Transformation, or some change that is technologically driven.

I felt, however, a more robust and complete definition was needed before we can start to discuss the impact Digital Transformation has on a company's bottom line.

Then I found it from one of the pioneers of everything Digital. From the Titans of Technology… IBM:

Digital transformation takes a customer-driven, digital-first approach to all aspects of a business, from its business models to customer experiences to processes and operations¹.

In other words, we look at our business through digital-tinted lenses. This could mean transforming the way we do business (the tools we use, the procedures we follow) or the way we engage with our clients (using an app versus a phone call) and everything in between.

You cannot answer the question of how Digital Transformation impacts your bottom line, without first establishing the fact that there is some impact.

Digital Transformation is inevitable and unavoidable. 91% of organizations have adopted or have plans to adopt a digital first business strategy². Prioritising a digital business strategy is no longer a luxury or a distinguishing factor – it is a necessity. Failing to adopt can have devastating effects, and equally, successful adoption of a digital strategy could pay off handsomely.

As far back as 2017 this was already an established fact: 80% of organizations that completed digital transformation report increased profits³. What I found particularly interesting is not just the fact that Digital Transformation positively impacts the profitability of your company, but rather how substantial of an impact can be achieved. Digitally mature companies are, on average, 26% more profit compared to industry competitors⁴.

Digital Transformation is firmly established as an integral part of today’s business strategy. It also contributes to a considerable increase in profitability when implemented and managed well. 

What are the factors that make Digital Transformation so influential? Why does a company that has a well-managed, digital-first approach to business achieve better results than an equivalent competitor that lacks the digital strategy. There are different explanations that can be made from varying perspectives.

Let’s look at four crucial factors, from four different perspectives:

• Operational Perspective: Improved business efficiency.
• Customer Perspective: Increased product quality and experience.
• Business Strategy Perspective: Enhanced decision making with data collection.
• Business Continuity Perspective: Product reliability and availability.

Operational Perspective
Computers were originally invented to reduce the load of complex calculations done by humans. It was intended to automate repetitive mathematical equations that were arduously done by hand. Digital transformation can achieve similar results. Automation of time-consuming manual tasks greatly increases the productive time available to an employee. This time should rather go towards a dedicated focus on novel, strategic work that helps achieve business success.

Automated workflows means more tasks get completed in a shorter amount of time, and reduces the overall scope for human error. This all contributes to a positive impact on the company’s bottom line.

Customer Perspective

Perhaps the first thing that comes to mind when thinking about Digital Transformation is the direct impact it will have on a customer experience. Forbes defines customer experience as the new “battlefield for business”⁵. This includes the quality of the product, as well as the experience a customer has interacting with the company. Research done by Salesforce highlighted the importance of the quality of customer experience to the final purchasing decision. According to the research 71% of those polled made a final decision to purchase based on the quality of the experience, and a massive 91% said they would make repeat purchases after a positive customer experience⁶.

A focus on customer experience also creates a higher quality value proposition to the customers. And products with a higher quality can be sold at a higher premium. Findings by American Express shows that 86% of customers are willing to pay more for products that provide them with a better user experience⁷.

Customer Experience has a significant impact on the bottom line in two ways: Firstly, it increases customer retention and reoccurring income and secondly, it allows you to fairly raise your asking price.

At Synthesis we believe in a customer-first approach to digital design. In partnership with Responsive, we take great care in understanding and crafting the experience of a potential customer of your business.

Business Strategy Perspective

Data is the key a business needs to unlock a winning strategy. Digital Transformation opens the door for data to flow into your organisation. But, masses of data is only useful after careful organisation and analysis has been applied to it. Digital Transformation is also need to create a the process of incorporating the gathered data in the business intelligence and decision making process.

How, specifically, does all this data collection and data driven decision making result in increased profit. One key example is the case of product personalisation. When you evaluate and understand the customer journey through the lens of collected data, you are able to make customer-centric content. McKinsey comes through with the data to support this⁸:

• 71% of consumers expect personalised content
• 78% of consumers are more likely to make repeat purchases from companies that offer personalisation.
• Companies on average report 40% more revenue from personalised marketing efforts.

Personalised content can massively bolster the bottom line of an organisation, and is achieved by data-driven digital transformation.

The Intelligent Data division of Synthesis specialises in the collection, optimisation and analyses of big data, enabling you to differentiate your business through customer-centric content and data-driven strategic decision making.

Business Continuity Perspective
How important is it for an application or mobile site to be reliably available and performant?

According to the statistics, it is imperative⁹.

61% of users are unlikely to return to a site if they experienced some sort of trouble accessing the site. And what’s even worse for your business is that a report 40% will visit a competitors sire instead. An unreliable product or site not only takes profit away from your business, but hands it on a silver platter to a competitor.

Digital Transformation can boost your bottom line but improving the performance and availability of your digital products. Businesses need to leverage technology for improved observability and troubleshooting. Observability in this context is not a single tool or technology, but an approach to quickly detect and resolve unexpected behaviour in an application. Observability starts with gathering metrics, application traces, key events and logs.

The key benefit comes from transforming the raw data into valuable insights and a situational awareness of where and why an anomaly occurred. A digitally advanced observability and troubleshooting strategy can highlight and resolve performance issues in a complex environment effectively. Thereby Digital Transformation can address the reliability and performance challenges of modern applications that could reduce profitability.

Synthesis Managed Service Providers are specialists in application and Cloud Native environment management. Taking care of your observability concerns and providing front-line defence.

Impact on the Bottom Line

We’ve considered the importance of Digital Transformation to the profitability of your organisation from four different perspectives. Mathematically the impact of Digital Transformation to the organisational bottom line can be divided into three categories:

1. Directly increasing revenue through improved customer experience and personalised marketing.
2. Reducing expenses and operational overhead through process automation and increased productivity.
3. Reduced potential losses in revenue through improved reliability and performance.