Digital Maturity & Digital Transformation Go Hand-In-Hand

You can only have one with the other.

Digital transformation is a hot topic, but how do you know if it is something your company should focus on? 

It depends on the complexity of your company’s operations, which correlates almost directly to how long you have been in business.

What is digital transformation?

“Digital transformation can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models. The term is widely used in public-sector organizations to refer to modest initiatives such as putting services online or legacy modernization. Thus, the term is more like “digitization” than “digital business transformation.” - Gartner.

What is digital maturity?

“Digital maturity measures an organization’s ability to create value through digital. It is also a key predictor of success for companies launching a digital transformation.” - Boston Consulting Group.

Digital Transformation Without Digital Maturity

So why does your company’s level of digital maturity dictate its ability to transform digitally? 

An organization requires certain foundational maturities to have the technological know-how to recognize the need for digital transformation and innovation.

A digitally immature business won't have the systems, processes or mature talent yet curated to need digital innovation. Building a sophisticated system without the experience of at least five years of business under your belt will have you picking apps and platforms that you aren’t 100% sure you will use correctly.

Immature companies also likely won't feel the pains necessary to instigate the need for change that digital transformation requires. Data entry and swivel chair processes may seem like a small problem to a company starting out, but they can spell a loss of profits for mature businesses.

Want to get an assessment of your company’s digital maturity? Check out BDC’s digital maturity assessment.

Business Life Cycle and Digital Maturity.

What stage of growth is your business in? How do you know if you have the digital maturity to undertake a digital transformation project?

Each business life cycle, or stage, has unique technology requirements to help it reach the next level. 

The business life stages, according to Gartner.

In a 2018 report titled Identify Small Business Opportunities by Understanding Business Life Stage Requirement, Gartner, the world’s leading research and advisory company, found that “business IT investments, and hence product needs, are driven by pragmatic strategies aligned to business life stage, including startup, expansion, established and business maturity.”

• Startup — Less than two years of operation
• Expansion — Two to four years of operation
• Establish — Five to nine years of operation
• Business Maturity — 10 and more years of operation

To learn more about each of these life cycle stages and the digital assets they need, read Mike Hubbard’s article Ecommerce Business Life Cycle Technology Requirements.

Critical Indicators of Digital Maturity

As you can see from the infographic above, the younger an organization is, the less digital maturity it has. Being digitally immature is not a bad thing, by the way.

The start-up and expansion stages are all about growth. Building the foundational technologies a business will rely on to get them through the first five years of business is critical and messy. A company in the first two stages of the business life cycle builds processes, tests operational strategies and focuses on bringing in the dollars to get it to the following year.

The “establish” stage is when a company begins to understand its operational pains. It should also have enough experience under its belt to start acting on those pains. Around the five-year mark is when digital transformation can begin. Once you establish the core systems you need to run your business, you are ready to start integrating them into a cohesive, communicative structure.

Mature companies will already have some aspect of digital transformation under their belt. Optimization of systems and processes has started, but you can do more regarding automation and integrations. Iterative improvement of all core operational systems brings greater efficiency, cost savings and scalability.

Is my company ready for digital transformation?

How do you know if your organization is digitally prepared to consider digital transformation? 
Here are a few indicators that it could be time to start optimizing your operations:

• You can identify and organize around your core operational technologies (CMS, Commerce, PIM, ERP, etc.)
• Your business is focused on outcomes, not just features for your site.
• Your teams are focusing on customer outcomes and benefits.
• You no longer want to depend on the entire organization to make improvements. 
• Your teams are equipped to handle the changes that digital transformation brings.
• You have the resources (talent and financial) and the appetite to make dramatic changes.

Once you can identify with the points above, the decision becomes how big of a bite you want to take. Digital transformation is less about a rip-and-replace mentality than an incremental, iterative process. Changes happen through minor updates and upgrades where one microservice at a time can be improved to improve the whole technology ecosystem.

Conclusion

Digital transformation success depends on digital maturity. If your business is just starting out and entering the expansion cycle, focus on getting the most out of the technology you start with. It may mean a lot of manual processes and data entry, but that’s part of the process.

As your business hits the established life cycle, now is the time to look at the tech doing the most for you and figure out how to optimize your processes and integrate systems to increase efficiency.

If your business is ten years or older, you are primed to begin a digital transformation. And, if you haven’t already started on it, now would be a good time to talk to Acro Commerce. Let’s see how we can help you seize control of your transformation and work through it at your own pace.