Digital transformation has become a cornerstone of business strategy in recent years, as leaders look for new and more effective ways to deliver results. Nearly 70% of business leaders responding to Deloitte’s “Measuring Value from Digital Transformation”survey believe that digital transformation is “the single most important investment now and into the future that organizations can make to drive enterprise value.”
Get digital transformation right and the potential benefit is huge, with Deloitte estimating in its “Unleashing value from digital transformation” report that the right combination of digital transformation actions can unlock as much as $1.25 trillion in additional market capitalization across all Fortune 500 companies. But the stakes are high. The same report warns that taking the wrong actions can put more than $1.5 trillion of market value at risk. This means business leaders are in an unenviable position where digital transformation is an essential investment, but also a risky one.
What does digital transformation mean?
Before looking into the steps needed to make digital transformation a success, it’s important to consider what we really mean by digital transformation in the first place.
Simply put, digital transformation is the process by which companies adopt and embed technologies within their processes and services to drive efficiency and create value.
This can take many different forms, from moving data onto the cloud, to automating processes using artificial intelligence, and even building entire virtual twins of business operations to analyze and improve performance. In each case, new technology is introduced that profoundly changes the way that a business works, with the aim of creating more value, more quickly.
While the concept itself is relatively new, the trend toward digital tools is one that’s been happening for many years. Computer-aided design first started transforming engineering and product design processes in the 1960s, and other examples include the popularization of customer relationship management software to replace paper-based files in the 1990s.
In recent years, however, the development of cloud computing has driven the transformation process into overdrive.
What role does cloud technology play in digital transformation?
There are a variety of definitions of cloud computing, but it can generally be thought of as the on-demand access, via the internet, to computing resources such as software, hardware, databases, storage and networking. These resources will typically be managed by a cloud computing provider such as Amazon, Microsoft or Google in their own data centers.
The cloud has rapidly become a fundamental part of many businesses’ operations, with more than 78% of executives that participated in PwC’s 2023 Cloud Business Survey saying that their company have adopted the cloud in most or all parts of their business.
This has transformed the way we work, moving away from the model where all a company’s IT resources had to be focused on maintaining a secure on-premises environment for employees to work within. With the cloud, work can be carried out securely from any location, a capability which became a necessity during the pandemic and has given companies much greater flexibility in the use of their IT resources. That flexibility also poses a question to businesses: how can they use these newfound capabilities to deliver value? Making the leap from simply implementing cloud technology for basic infrastructure to embedding it throughout all business processes is the crucial next step for companies to achieve digital transformation.
What are the benefits of cloud digital transformation?
Moving a business’s operations to the cloud is itself a process of digital transformation that has several significant benefits. They include:
- Costs of maintaining on-premises IT services are largely eliminated.
- Network performance is typically significantly better.
- Resources can be scaled up rapidly to meet demand.
- Better collaboration is possible through real-time access to workplace data and systems
- Sustainability is improved by only using the required processing power.
- Security services provided by cloud providers deliver global coverage against cyber threats at a lower cost.
You can read more about the benefits of cloud computing in the Dassault Systèmes blog post “Exploring the advantages and benefits of cloud computing”.
The capabilities of the cloud have been crucial in accelerating further digital transformation. Cloud-based automation tools can optimize development workflows, allowing a company to release code into production thousands of times per day and therefore deliver new capabilities much more quickly. The scalability of the cloud then allows an organization to roll out a digital service in seconds rather than weeks, making the initial implementation process drastically shorter.
Digital transformation using the cloud also helps to alleviate some of the biggest concerns surrounding such dramatic change within a business. Cloud providers invest in the latest security features, from encryption to advanced incident detection, to ensure that any data moved onto their platforms is kept secure from attack. They also make sure that data is distributed over multiple data centers so that even if a natural disaster or network outage were to damage one, no data would be lost and businesses could continue to operate.
Examples of cloud digital transformation
Across the globe, digital technologies are being deployed to redefine how their industries operate. In car manufacturing, for example, the move toward electric and autonomous vehicles is progressing at speed thanks to cloud digital transformation initiatives by major carmakers. The development of the next generation of vehicles requires creative design, integrated collaboration and a broad systems engineering approach that is facilitated by cloud-based platforms.
New customer experiences – that meet the desire for more comfort, safety and performance and sustainability – are also possible thanks to solutions that enable vehicle innovation teams to develop and virtually validate new options, and achieve compliance with regulatory requirements much more simply and quickly.
Austrian company HeliAir, for example, is using the Dassault Systèmes 3DEXPERIENCE platform, to fit essential medical equipment into air ambulance helicopters. It can create interior designs in virtual reality on the cloud, share those across internal departments, and give customers access too, so they can be involved in the design process. The platform helps keep team members aware of what needs to be done and when during HeliAir’s complex projects, while the platform’s full data traceability supports the company in remaining compliant with aviation regulations.
“We work in parallel with the helicopter OEM so that as soon it’s off the production line, we’re ready to install the interior,” said Marco Sattlegger, design engineer at HeliAir. “These types of projects are only possible because we have the 3DEXPERIENCE platform on the cloud. Without it, they would take too long and medical equipment would become outdated. This way we can handle more complex projects and get helicopters off the ground and into the skies faster.”
German industrial sensors specialist Pepperl+Fuchs wanted to replace more than 100 different software systems with a single source for all development and product data, so that it could be at the forefront of advances in the field of virtual twins. By implementing the 3DEXPERIENCE platform on the cloud, the business can fully digitalize its existing workflows to improve efficiency, transparency and quality across the entire product lifecycle, and implement sophisticated new digital, data-driven business flows.
Similar advances are possible in government organizations too – for example, in the delivery of services to citizens and the development of smarter cities that are resilient and sustainable. Virtual twins of cities allow officials to assess the potential impact of climate change or infrastructure development and make better decisions accordingly.
Steps to get started with cloud digital transformation
Cloud digital transformation can help deliver a wide range of benefits for an organization. Below we provide four crucial steps to help make sure your project is a success.
1. Create a clear strategy
It can be difficult to produce measurable results in a digital transformation project without establishing clear objectives. A successful transformation should be focused on delivering greater efficiency in specific areas that will create the most value for the company.
Business leaders should therefore investigate what the most pressing needs are for their customers and employees, then set out a roadmap that identifies the solutions and resources that can help meet those needs most effectively.
A survey of 1,700 C-suite executives by consultancy firm McKinsey found that respondents who had set out key themes tied to measurable outcomes were 1.7 times more likely to report that the results of a transformation surpassed expectations.
2. Change the culture
Employees at all levels of an organization, not just the leaders at the senior executive level, need to be convinced that change is worthwhile and will deliver value. Without buy-in from the workers who will be using the new digital tools every day, it will be difficult to achieve their full potential.
Leaders should therefore be looking to communicate with employees about the introduction of a digital tool to provide a clear understanding of its capabilities and benefits. Providing a strong vision of the future gives credibility to the project to employees.
There should also be a willingness to allow employees to take risks to achieve innovation. Cloud digital transformation allows for many different solutions to be tried quickly at a limited cost but with the chance to produce valuable results. To take full advantage of the benefits of digital transformation, companies should therefore empower their employees at all levels to try their ideas. This sense of ownership also helps projects to succeed.
3. Redefine roles and develop skills
A company that has successfully digitized processes may free up valuable capacity within its workforce.
The roles and responsibilities of individuals need to be redefined to align with the goals of the transformation. For example, if an employee was previously responsible for a task that has now been automated using a cloud-based tool, they should be given new responsibilities to make the most use of the time they’ve saved.
Programs can also be developed to educate employees in the use of new digital tools, giving them the skills to make full use of their capabilities. This is an important step in helping individuals adjust to the change in their roles and working environment, putting them in a position to deliver the gains in productivity and efficiency that were envisioned at the start of the project.
4. Remain agile
Technology is constantly being developed and updated, especially with the power of the cloud accelerating the pace of innovation. It’s possible that a new solution for achieving the business goals you set out at the start of your transformation project could present itself after the project is already in progress or has been completed.
It could be tempting to remain committed to an existing solution, but competing in an era of cloud operations requires constant transformation to avoid being left behind as your competitors take advantage of new technologies. Similarly, changes in the market could mean that the challenges your customers are facing, and therefore the capabilities they require, could rapidly shift.
It’s essential, therefore, that organizations keep up with the latest developments and update their strategy frequently to take account of them. Successful digital transformations rely on an agile, innovative mindset that strives to find the best tool to create value. The “KPMG 2022 CEO Outlook” survey found that 70% of CEOs believed they needed to be quicker to shift investment to digital opportunities and divest in areas where they faced digital obsolescence.
Start embracing cloud digital transformation today for your business
Progress on a digital transformation journey is essential for companies to succeed in today’s fast-paced, competitive business environment. However, it’s also key to have the right tools and strategy in place to deliver the full value of a transformation. Most crucial is the switch to cloud-based operations, with the cloud’s capacity to implement digital services more quickly, on a larger scale, and more securely being essential in the effort to keep up with the pace of change.
The Dassault Systèmes 3DEXPERIENCE platform on the cloud leverages the capabilities of the cloud to provide access to a complete suite of digital tools on a single platform. Apps and software available on the platform can meet a range of industry needs including design and engineering, simulation, governance and collaboration, manufacturing and operations, and marketing.
By integrating these tools into their business processes as part of their digital transformation journey, users can deliver value to customers with greater flexibility and speed, finding creative and impactful solutions to meet their needs.