Digital Transformation Guide

In this guide, we cover the latest in digital transformation trends, best practices and case studies so you can start your own journey. Click within the featured topics below to jump to a section.

 

Featured Topics
What is Digital Transformation?
Why Are Companies Undertaking Digital Transformation?
Digital Transformation Trends
What Digital Transformation Challenges are Companies Facing Today?
Digital Transformation Case Studies
Benefits of Digital Business Model Transformation
3 Paths to Digital Transformation

 

 

What is Digital Transformation?

At CSG, we believe digital transformation starts with business model transformation. The business problem you’re trying to solve for, whether it’s modernizing operations or offsetting revenue loss with digital services, will dictate what technology and organizational structure you need to put in place for a successful digital transformation.

Technological innovation is only one part of digital transformation. Digital transformation also requires executive leadership and sponsorship, and buy-in from a company’s employees. But most importantly, true digital transformation requires companies to reinvent their business models. How a company chooses to go to market with a product and who they choose to sell it to will determine the technology, people and processes they need in place to make change happen.

 

Why Are Companies Undertaking a Digital Transformation?

There’s no easy answer to this—every company has a unique reason for undergoing a digital transformation. However, some common themes are:

  • Modernizing legacy operations—Companies that have emerged as digital players over the past decade or so, like Netflix and Spotify, aren’t burdened with a legacy IT stack and are able to respond faster to market changes. In response, some incumbents might want to digitize and streamline operations to not only to increase internal agility, but also to lower costs. Improving legacy operations can mean moving systems to the cloud or having a managed services team run systems for a company to help reduce opex. Over 40 percent of large companies say the biggest obstacle for offering digital innovation is their operational backbone.
  • Changing customer expectations—Voice and text are still popular customer service channels, but they’re far from the only ones. Many consumers have come to rely on digital customer service channels like web chat and digital messaging platforms. With more consumers homebound, having a variety of customer communication channels is critical to reach everyone on their terms.
  • Digital services opportunityThe digital services market (think internet TV, gaming and the Internet of Things (IoT)), represents $142 billion in additional operating profit for operators alone by 2025. As revenue from traditional offerings like voice and data decline, companies are looking for new ways to make money and monetize their existing content offerings. Many communications service providers who have a content line of business (e.g., AT&T and HBO Max) are launching direct-to-consumer streaming services to go head-to-head with Netflix.

The key takeaway here is that there is no single path toward successful digital transformation. Each business will need to analyze their unique business model and then determine what front-facing experiences and back-end systems will be required

 

The concept of a digital transformation is not new. Every forward-looking business has had discussions about implementing a transformation strategy at some level. COVID-19 has forced many companies to accelerate their plans. Communication and connectivity solutions that were years away from being implemented were suddenly at the top of the to-do list. Now is an ideal time for companies to take a step back and review how they responded to massive change during the pandemic and if they are built to handle disruptions in the future.

We see some clear digital transformation trends in 2021. They include increased budgets for IT and infrastructure, a movement toward cloud software and services, a rise in a dual business model approach, greater acceptance of digital solutions and a renewed focus on 5G preparedness. There has long been a consensus that companies need to embrace a digital transformation strategy to survive and thrive. COVID-19 has put those plans on the fast track. By adopting the right digital transformation strategy, companies can be the driving force behind trends instead of being affected by them.

Learn more about digital transformation trends.

 

WHAT DIGITAL TRANSFORMATION CHALLENGES ARE COMPANIES FACING TODAY?

Six out of 10 business leaders say the COVID-19 pandemic spurred their organizations to speed up digital transformation projects, like retooling networks to support work from home or automating more customer communications. The rushed rollouts, however, may have introduced new pain points in their organization. Here are three new long-term digital transformation challenges we see emerging:

  • Companies have less time to demonstrate value of new technology—If there’s one factor business leaders point to that’s driving their tech investments in the wake of COVID, it’s cash.  Reprioritizing for quick ROI, companies are now tackling their digitization projects in a different order than originally planned.
  • COVID “quick fixes” might create headaches later—Companies lacked the time to thoroughly vet and test new solutions they needed to keep their businesses running during COVID. Many of those new pieces will have a place in the company’s long-term tech stack. Some won’t.
  • Survival-mode thinking must be abandoned—Business leaders need to ask themselves, “How do we abandon the short-term, ‘survival-mode’ thinking that’s guided our decisions through the pandemic, and return to long-term planning to evolve the business?”

Learn more about digital transformation challenges companies are facing today.

 

Digital Transformation Case Studies

Successful digital transformation today will require a renewed focus on overall strategy and redesigned business models. Many businesses try to lead with the technology first, rather than looking at how technology will enable what and how they sell. But companies need to take a step back, and figure out which technologies can support their business models.

Different business models will require different approaches to digital transformation. There are three paths companies can take:

  • Digital engagement—This path focuses on launching digital services to engage customers, whether it’s a mobile banking app, a streaming service, or a new chatbot.
  • Digital optimization—This path focuses on driving down operational costs in order to increase profit margins
  • Dual business model transformation—This path focuses on companies’ desire to defend, protect and optimize their legacy businesses to offset revenue and margin decline, while at the same time innovating with new services.

Learn more about digital transformation case studies with some real-world, global examples from CSG.

 

Benefits of Digital Business Model Transformation

There is a tendency to focus on the digital and technological aspects of digital transformation. While implementing innovative technology is certainly important, a successful transformation requires strategic, cultural and business model changes alongside tech and operations.
Focusing on the correct business model now will pay massive dividends down the road. There are four main benefits of a transformative business model and how it can help navigate your company’s digital transformation:

  • Simplifying complexity—Working off of a common blueprint will give operators the advantage when launching new digital services and products.
  • Delighting customers—Understanding customers’ expectations will lead to the right technology and a better customer experience.
  • Nurturing a partner ecosystem—The ability to interoperate with other companies’ clouds is essential for a successful, long-lasting partnership.
  • Connecting the company—If the entire company is united and working from the same playbook, it will be easier to deliver new releases quickly and respond to customer demand.

Learn more about the benefits of digital business model transformation.

 

 

3 Paths to Digital Transformation

Successful digital transformations today will require a renewed focus on overall strategy and redesigned business models. Who is your target customer, and what are you trying to sell them? If you can’t see them face-to-face, how should you interact with them? How do they want you to? Are your back-office systems resilient enough to handle increased demand for connectivity?  

Different business models will require different approaches to digital transformation. We’ve mapped out three paths to digital transformation—and what success looks like. 

  • Digital Engagement If you’re focused on innovation and delivery of digital products and services, you’ll need to build digital-first customer experiences and fortify your back-office with systems that can scale. 
  • Digital Optimization and Cost Reduction— If you’re trying to reach the most consumers at the lowest cost, you’ll need solutions that can help you optimize operations. The key here is that technology should enable what and how you sell, instead of the other way around. 
  • Dual TransformationAs opposed to paths one and two, the dual business model dilemma means most incumbent companies across most industries need to defend, protect and optimize their legacy businesses to offset revenue and margin decline. At the same time, companies also need to innovate, develop and create new business models to drive new revenue streams and profits as fast as they can. 

Download the whitepaper to learn more about the 3 paths to digital transformation