Digital transformation is a broad term that can mean different things to different types of businesses. But, at its core, digital transformation refers to a drastic change in the way a company operates and delivers vital information.
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The Enterprisers Project – a joint effort between Harvard Business Review and software company Red Hat, which focuses on helping IT leaders in the business world, defines digital transformation as “the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure.”
We’ve done the research and will break down the changes 8 companies have made after deciding that a digital transformation was right for them.
1. Best Buy
Multinational electronics retailer Best Buy has a great success story of digital transformation. Gamelearn, a global company that develops games for corporate training, breaks down the changes that Best Buy made. “It took 7 years, but going digital has enabled Best Buy to become a company that uses technology to enrich people’s lives, not just sell them hot new CDs and the latest TVs. The company used digital technology to improve delivery times and began advising consumers and helping them get the most out of their digital devices.”
“Best Buy eschewed snail mail and embraced digital marketing, provided customized assistance and recommendations for consumers based on digitally gathered data, improved delivery times, introduced the Geek Squad, as well as a price matching program. As a result, their stock price rose from $23.70 in 2012 to about $74 today.”
Customer support software company Acquire focused on the major digital transformation that Ford went through: “Having previously been hamstrung by siloed IT, and its structure as a loose collection of regional business centers, in 2006, Ford was determined to unify. The goals were clear: simplify the product line and place focus on quantitative data and quality cars.” The auto giant proceeded to cut their IT budget by 30 percent. The article goes on to explain how the benefits Ford derived from this change helped the company overall. “It helped free-up resources previously locked into propping up an outdated and fragmented system. These resources could then be used to innovate. It was thanks to this that Ford were able to invest in novel projects such as Ford SYNC and MyFord Touch.”
Retail giant Target is another major company that has embraced digital change over recent years. In fact, Digital Magazine writes that Target’s digital transformation boosted its stock 50% over a 5-year period. Digital Magazine credits the changes to CIO Michael McNamara, who joined Target in 2015. The article describes several changes that McNamara made, including that “the first focus was to bring software development and IT in-house and focus on technology projects that added a competitive advantage or drove revenue growth.” Another major change cited by Digital Magazine was making a switch from outsourcing thousands of IT jobs to hiring full-time software engineers and developers.
The electric car and clean energy company Tesla helped spark digital transformation by making all of their electric vehicle patents available to the public. The Board of Innovation, a business design and innovation strategy firm that assists large organizations with fundamental changes, explains that Tesla made this information public for two reasons: “to accelerate the market and to make their technology the standard. Ford (Electric), BMW (Electric) and Toyota (hydrogen) followed their example.” If you’d like to read more about the letter from Tesla explaining their decision, click here.
Nike is a company that has fully embraced the potential of digital. Retail Info Systems writes, “Nike saw digital sales skyrocket 82% in its Q1, 2021 and revenue hit $10.6 billion, compared with the $9.11 billion estimate of analysts.” The article found that Nike’s digital sales represents over 30% of its total business, driven in part by innovations including, the Nike Training Club mobile app, The Nike Running Club app and the Nike commerce app. A Mousumi Behari, digital strategy practice lead at Avionos, a digital marketing, strategy and commerce company, told Retail Info Systems, “Nike smartly uses their app strategy to integrate into their larger e-commerce vision and doesn’t force users of one app to also download another. “They understand that each customer base has specific needs and targets messaging based on those needs. Using this data, Nike has started other services like their Nike Adventure Box which is a subscription service for kids sneakers. With all the data that Nike is gathering from purchases, customer behavior and social media, personalization is the next obvious play.”
Microsoft began its digital transformation when CEO Satya Nadella took over in 2014. A recent Forbes article describes the company’s major success, writing, “the company began a shift towards its cloud networking systems. It moved the focus away from traditional software to a more fluid cloud system for both personal and enterprise use. Instead of shying away from partnerships like it had in the past, Microsoft changed course to build relationships with other software and technology companies. Public view also changed, as Microsoft went from being seen as an outdated or stagnant company to a forward-thinking cloud solution. As it proves itself with more deals and growth, Microsoft’s star continues to rise.” Forbes found Microsoft’s stock prices and revenue spiked following its digital transformation: “In early 2014, right before Microsoft’s transformation began, stocks were selling around $38 per share. Today, they’re worth around $136. Over that same period, revenue increased from $93.5 billion to $122 billion…”
7. Home Depot
In 2017 Home Depot announced a plan to invest $11 billion dollars in a digital transformation. Digital Magazine explains that, “The retailer partnered with consumer identity management firm Infutor and marketing firm Vibes to improve its user experience and optimize mobile engagement. The new software matches customer profiles with expanded data, giving brands access to consumer attributes such as “homeownership, household income, marital status, and purchasing power.” Enriched customer profiles allow for more personalized interactions and therefore, increased conversions. Because of the streamlined experience, Home Depot is able to match a customer identity from a single data point.” The article cited Home Depot earning the top overall ranking last year in study of retailer mobile apps because of “advanced functionality and strong user experience.”
Lowe’s is another major retail company that committed to a huge digital transformation to stay competitive in the marketplace. Retail Info Systems n highlighted five key technology moves that Lowes is making as part of a digital transformation, including,
- improving lowes.com
- modernizing pricing tools
- mobile tools for associates
- predictive scheduling; and
- a new global technology center
Digital Commerce 360 found that Lowes is investing $1.7 billion dollars in a five-year update plan “to modernize its supply chain with digital technology.” CEO Marvin Ellison recently told Wall Street analysts, “This infrastructure improvement will be key to Lowe’s transitioning from a store base home delivery model to a market-based model.” As part of the digital investment, Ellison also discussed the updates Lowe’s is making to its ecommerce platform.
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