In recent years, the realization of digital transformation has become an urgent management issue in various fields. However, many companies remain in the area of so-called IT and digital utilization, and there are not many organizations that have achieved this. Therefore, in this article, we will explain the important points in promoting digital transformation.
Table of contents
- First of all, what is digital transformation?
- Why Digital Transformation Is Necessary for Company Organizations
- Elements necessary for promoting digital transformation in a company organization
- Key points in promoting digital transformation in a company organization
First of all, what is digital transformation?
“Digital Transformation” is a concept that means “transformation through the use of digital technology.” In general, it is abbreviated as “DX”, and in the social context, it implies that “people’s lives will be enriched in all aspects through the use of digital technology”. This is the definition of digital transformation proposed in 2004 by Eric Stolterman, then a professor at Umeå University.
Digital transformation in the field of business implies “management reform through the use of digital technology.” The Ministry of Economy, Trade, and Industry define digital transformation as follows in the “Guidelines for Promoting Digital Transformation” announced in 2018.
“Companies respond to drastic changes in the business environment, utilize data and digital technology, and transform their products, services, and business models based on the needs of customers and society. To transform our culture and climate and establish a competitive advantage.”
Why Digital Transformation Is Necessary for Company Organizations
It can be said that the “DX Report” announced by the Ministry of Economy, Trade, and Industry in 2018 has had a major impact on the digital transformation that has attracted attention in Japan. In the report, the Ministry of Economy, Trade, and Industry pointed out that many domestic companies have legacy systems and that aging IT infrastructure is a hindrance to digital transformation.
As risks such as the retirement of IT personnel and the end of system support continue to rise, it is estimated that continuing to hold on to legacy systems will result in an annual economic loss of up to 12 trillion yen from 2025 onwards. The Ministry of Economy, Trade, and Industry have warned that this is the “2025 cliff” and many companies are working to promote digital transformation to solve this 2025 problem.
In addition, Japan’s declining birthrate and aging population, as well as the declining working-age population, are accelerating the shortage of human resources in various industries. Furthermore, consumer needs are becoming more diverse and sophisticated as technology advances.
In such an era, the use of digital technology is essential for companies to create new market value and establish a competitive edge. is. Given this social background, many companies are facing the urgent management challenge of achieving digital transformation.
Elements necessary for promoting digital transformation in a company organization
There are three essential elements to achieving digital transformation. These are “technology”, “human resources” and “system”. From here, I will explain each element that is essential for promoting digital transformation.
Since digital transformation aims to bring about changes in the management system itself by utilizing cutting-edge digital technology, it is essential to introduce excellent solutions. The four most important elements are AI, big data, cloud computing, and data analysis infrastructure. In addition to these elements, it is necessary to use a wide range of digital technologies, including IoT and 5G, to create an environment in which the vast amount of data accumulated through business activities can be utilized in the management domain.
The essential purpose of digital transformation is not partial optimization such as so-called IT, but overall optimization of the management system itself through the use of digital technology. To that end, human resources with specialized knowledge and skills to promote DX are essential. Along with recruiting talented producers, business designers, data analysts, engineers, programmers, etc., it is necessary to develop an environment that fosters highly skilled personnel within the company.
To realize digital transformation, the organization must work together to develop an organizational structure suitable for promotion. For example, there is an IT department expansion type that reorganizes the existing information system management department, and a business department-led type that promotes digital transformation led by the department that develops the business. It is also effective to establish a new specialized organization dedicated to promoting digital transformation.
Key points in promoting digital transformation in a company organization
Although many companies are working to promote digital transformation, there are by no means many organizations that have achieved true management reform. There are a few key points to keep in mind to achieve digital transformation. Among them, the four most important points are “clarification of objectives,” “creation of a roadmap,” “commitment of management,” and “continuation of initiatives.”
Clarification of purpose
The first step in promoting digital transformation is clarifying the purpose. Based on your company’s corporate philosophy and management vision, you can set a clear goal by specifying why you are working on reforming the management system. Once the summit to be reached is concrete, the route to reach that goal and the necessary solutions will become clear, and the actions required of not only the management but also each employee can be grasped.
Create a roadmap
Once you have clarified the purpose of promoting digital transformation and created a concrete vision, the next phase is to put it into a roadmap. We analyze market and demand trends and clarify short-term and medium- to long-term goals while comparing them with your vision. By incorporating these elements into the roadmap, you can understand the path to digital transformation from a bird’s-eye view and a visual perspective.
Commitment from top management is essential to achieving digital transformation. Unless management takes the lead in tackling the transformation of organizational culture and corporate culture, it will remain in the so-called IT domain, and it will be difficult to achieve digital transformation. Rather than deciding on superficial measures and initiatives and leaving the rest to the field, management must present a clear vision to all employees and commit to taking a leading role in driving the entire organization.
Continuation of efforts
Efforts for digital transformation do not end with a single practice, but continue to rotate the “PDCA cycle” of “Plan” → “Do” → “Check” → “Action” Needs continuous improvement. In recent years, attention has also been focused on a method called the OODA loop, which stands for Observe (information gathering), Orient (situation judgment), Decide (decide), and Act (action). increase.
The essential purpose of “digital transformation” is to bring about changes in the management system itself through the use of digital technology. Please consider using a solution like “Microsoft Teams” to achieve digital transformation and establish a competitive edge in the market.