“Without big data analytics, companies are blind and deaf”
True indeed. Data enables an organization to see its processes closely and prepare them for any upcoming venture. Being the essence of every process, every function, and every interaction one has with any device, data cannot be neglected, especially when an organization is aiming for digital transformation.
Even Harvard Business Review counts data as one of the four key areas of any digital transformation efforts, in addition to technology, process, and organization’s capability to change. If technology is the engine of digital transformation, data is the fuel. And if your fuel aka data is not at par with the basic standards required, your journey to digital transformation will never take off.
Apart from HBR, a Gartner study also revealed that over 87% of companies currently have a low analytics and BI maturity, which means they lack data guidance and support. This could be a major setback in any organization’s digital transformation efforts.
So, if there are still questions around the importance of data analytics in digital transformation, let’s find out answers in this article.
Understanding Data Analytics & Digital Transformation
Before delving into the importance of data analytics in digital transformation, first, we need to understand the two phrases in context with the current business environment.
Both are no longer just buzzwords. They have deeper implications on any business’s current and future standing.
What Is Digital Transformation?
Digital transformation is the process of transforming the way a company does business or handles processes and operations to become at par with the advanced digital reality. In more technical terms, digital transformation can be defined as the rethinking of how organizations use technology, people, and processes to change their performance.
Digital transformation is no longer the buzzword that it was two years back. It is a reality that every business needs to be on par with. The importance of becoming digitally transformed has escalated in wake of the coronavirus pandemic. As the time spent on digital platforms increased and customers became more digitally conscious, businesses gave in to the pressing need to accelerate their digital transformation efforts.
Those looking to innovate and disrupt are eyeing digital transformation. And it’s not just for companies that are behind in the tech race, even companies at the forefront of technology are also undergoing digital transformation. Google is becoming AI-first, IBM is exploring AI, IoT, cloud computing, and much more.
However, every business starts from a different place in the journey to digital transformation. That’s why the definition of digital transformation is different for each organization. They need to have a deeper understanding of their business processes and tech maturity to define digital transformation for themselves.
Also read: Reimagine Digital Transformation In This Year
What Is Data Analytics
In simplest terms, data analytics is analyzing data to make better business decisions. The main focus should be on data here. Data is everywhere. From the interaction that human workers have with machines to the data that is fed into systems by customers’ continuous browsing, tapping scrolling, each human leaves behind a digital footprint, which can be termed as data. It can be in a structured form, fed into systems, or it can be in an unstructured form.
What data analytics does is that it takes all forms of data in its raw format and gives out useful information. It can be used to reveal trends, behavior, predict patterns, prioritize actions, share metrics, and much more. All of this would be lost if not for data analytics.
It starts by determining the format and grouping of data to create algorithms that separate it during collection. Next, it collects all the data from different sources and organizes it. This is followed by cleaning of data to eliminate any duplication or errors and enhance the data quality.
Earlier, this data would be sent to data analysts for analysis. However, now artificial intelligence, machine learning, and data science have made it possible for machines to analyze the data and share the final insights derived from it.
Data Analytics In Digital Transformation
Data analytics is the crux behind optimizing processes. And digital transformation is all about optimization to achieve advancements in technology.
As companies begin or continue to digitize, data start taking a bigger shape in the entire process. Every human-machine interaction generates data that helps you create the benchmarks, KPIs, workflows, for the transformation journey and even monitor the progress of the same.
More digital systems come up which add to the data collected by any particular company. This enhances the need for data analytics in order to make out what data means and how it can be used to drive effective digital transformation.
Embedded Analytics For Improved Business Intelligence
Digital transformation should not limit your data usage to the collection, analysis, and visualization. It should move beyond that and be embedded within the systems for true digital transformation with the help of data.
While data analytics is imperative for businesses to make data-driven decisions in their attempt to digitally transform, embedded analytics will help them serve their digitally-conscious customers better. With embedded analytics solutions, businesses can extend the use of data analytics from simply business-centric roles to customer-centric roles.
It enables individual visualization in a way. Depending on an individual’s role, KPIs, and daily tasks, embedded analytics provides them the required insights fed into their workflows, on the systems, or platform they are using.
This can accelerate the rate of adoption of digital transformation by making each person a part of the journey. It will provide the right information to the right person at the right time. As individuals make data-driven decisions in their respective roles, the organization will start getting better business outcomes with mature BI.
A good example of embedded analytics’ role in digital transformation is through digital experience platforms or DXPs. Most enterprises are now using digital experience platforms that club CMS, CRM, and other platforms. This enables them to offer a unified customer experience through all digital touchpoints in the user journey.
Such platforms collect data through each interaction and analyze it to offer insights in real-time. Moreover, no matter where the person is in the sales funnel, be it awareness, consideration, intent, purchase, or loyalty, such systems with embedded data analytics ensure that the business makes data-driven decisions for an enhanced experience.
Data Analytics Clubs With Cloud Migration For More Effective Transformation
The opportunity to move to the cloud is not new now. Businesses have been presented with this opportunity for many years. However, in the path to digital transformation, cloud migration plays a crucial role in breaking down data silos and accelerating true digital transformation.
Two years back, most organizations did not have any effective cloud strategy in place. Even the organizations that intended to migrate to the cloud, approached it with a reactionary rather than a purposeful approach. Cut down to today, 68% of CIOs consider cloud migration as a top IT spending driver in 2020.
Most companies are now hosting their Business Intelligence environments on AWS, Azure, or Google Cloud. The data and analytics move the data from legacy infrastructure to the cloud. This enables them to ensure everyone in the organization has faster access to more accurate data.
By shifting the data environment to the cloud, the scale of digital transformation can be accelerated. From the C-level executive to the store salesperson, everyone would have the data at their hand to make smarter decisions.
By migrating the data centers to the cloud, the organization no longer needs to invest in maintaining its expensive and cumbersome infrastructure. It can leverage the power of cloud computing by migrating to the cloud to minimize time, effort, and resources instead of using traditional computing architectures.
In addition to that, there is a lot of data stored in silos in an organization. By migrating to cloud-hosted platforms, these silos can be broken down and data can be made available to each one.
Entice The Digitally-Conscious Customers
Most organizations are planning their b business transformation to transform for their customers. Today’s customers have become digitally conscious and are aware of their digital activities as well as the digital footprints they leave.
They are actively tapping, scrolling, and clicking, on their mobile screens. And they have been spoilt by getting exactly what they desire on the internet, thanks to personalization offered by automation, AI, ML, etc. So, now they yearn for a more personalized experience from every brand they interact with.
In fact, a PwC study claims that one in every three customers today will not hesitate to leave a brand they love after a single bad experience. Every organization has the pressing need to entice and please this digitally conscious customer. This is where data analytics comes into the picture of digital transformation for businesses. With data analytics tools in place, businesses can do the following:
- Analyze the overall customer behavior to know how they interact with the brand like channels used, timing, intent, usage of products, the flow of use, etc.
- Identify the business opportunities to deliver operational efficiency by capturing data and interpreting it across different stages of the buyer journey.
- Predict the customer behavior to increase customer retention and deliver as they expect from the brand.
With information from data in hand, any organization can build a better experience for its customer and entice them to stay loyal to the brand.
Prepare For Data-First & Data-Sharing Culture
Digital transformation is not just about incorporating technology in the way organizations work or take business decisions but is a cultural change that needs to be penetrated deep within the organization.
Data is the lifeblood of digital transformation. There are no two ways around that. What data analytics does in digital transformation is that it prepares the organization for cultural change. It enables them to embrace a data-first and data-sharing culture so that it is ingrained within the system and each one is ready for the change.
Data analytics tools deliver real-time insights within the individual’s workflows, which change the way they intake and share information. By integrating data analytics into systems, an organization can bring about a cultural change where everyone would make data-driven decisions, promoting digital transformation.
Also read: Big Data Vs. CRM: How Can Small Business Leveraging?
Helps Manage Mitigate Risks
Any new initiative that a business takes involves risks. And digital transformation is not different. There can be several risks involved when a business decides to transform its operations, processes, and the way of making business decisions digitally.
Data can help manage these risks effectively.
Every organization has millions of bytes of data stored in its systems. This data is collected from the customer interaction as well as how the process participants work with the machines. Before taking the leap, data analytics can offer a complete insight into the process’s bottlenecks, etc., to help make strategic decisions. It can tell an organization the exact opportunities for automation or where security is low to add blockchain technology or any other opportunity to digitize the system and process.
When trying to innovate, the biggest challenge organizations face is technical debt and insufficient maturity in terms of people, processes, and technology. With data analytics tools embedded within the systems, they can know exactly what to innovate, when to innovate, and how.
Today, most companies have data analytics tools and functionalities embedded in their systems during the product development phase. Data analytics provides crucial insights into systems, processes, and actions to the very core, enabling organizations to make smarter and data-driven business decisions. No matter what your industry, the use of data and analytics can help you innovate digitally while also mitigating all risks.
CIOs need to start leveraging data in every way possible to gain insights into future growth opportunities, be it for digital transformation or to achieve any other business outcome.
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