What are the future challenges of the digital transformation of companies?

The digital transformation of companies
October 12th, 2021
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Digital transformation is revolutionising every organisation. Whether in terms of the economic model, jobs, corporate culture, or even the working structure, everything is being called into question. Today, businesses have no choice but to embrace this change to stay competitive. A real lever for development for companies, digital transformation is also synonymous with business agility and resilience in the face of a crisis, such as the one the world have experienced recently. However, the big questions are, how to manage this digital shift? What challenges will companies have to overcome to make sure they enjoy a successful transformation?

The opportunities of digital transformation

In just a few decades, digital transformation has become increasingly essential for the prosperity of modern economies. Every sector is affected: energy, transport, telecommunications, industrial production, healthcare, agrifood, etc.

The development of new technologies (such as Artificial Intelligence, Big Data, robotics, etc.) is considered to be one of the major manifestations of digital transformation, a positive contribution to the productivity of organisations and economic growth. The World Economic Forum estimates that the potential value of digital transformation to society and industry could be as high as $100 trillion by 2025[1].

Whether it is to stand up to new competitors in the market, to adapt to new customer behaviour, or to take advantage of new technologies that encourage innovation or boost productivity, it is essential that companies make this digital shift and completely rethink their operations without delay. This is a phenomenon that has also been highlighted by the health crisis! However, this digital transformation will raise various human, technical, economic, and social responsibility issues, which need to be anticipated.

The human challenges of digital transformation

In the future, employees will have to work with computers on a daily basis and may even, in some cases, become dependent on them. For people to be fully integrated into the digital transformation of companies, three major themes must be addressed.

The adoption of digital

It is not only employees that will have to wholeheartedly embrace this digital shift, but also managers and directors. This level of commitment will be absolutely necessary for the success of the digital transformation of any company, and for the return on investment that such an approach brings. Ways to persuade everyone to commit to this change will have to be identified in order to develop appropriate deployment strategies for all the company’s stakeholders.

The development of skills

With the introduction of digital tools into the heart of businesses, employees can expect to have to take on more strategic roles and tasks, with higher added value. It will, of course, be necessary to plan for the new team skills that will be required, especially digital ones. In fact, more than 90% of jobs already require basic IT skills[2]. To requalify their workforce, companies will have to allocate a budget to training, rethink their human resources model, and encourage lifelong learning. However, it should be remembered that soft skills will also take centre stage. This is particularly the case for buyers who will, in the near future, have to become more creative, expand their relationships, extend their influence, etc. Unlike technical know-how, these interpersonal skills will not become obsolete or be taken over by machines.

Adaptation to the job market

It is time to put an end to the myth that Artificial Intelligence will definitely replace office workers. That is very unlikely to be the case. However, a lot of professions will need to be revamped, while new ones will be created. It is already happening as Purchasing Directors are being transformed into Value Directors, and with the emergence of new professions such as Chief Data Officer and Data Scientist. In addition, new ways of working are becoming more prevalent, with people working as self-employed, freelancers, or even interim managers. "As frontrunners of the new ways of working (agility, continuous learning, value-focused), freelancers can act as catalysts for companies’ digital transformation and their new working model,” as Vinciane Beauchene, the Managing Director & Partner of Boston Consulting Group (BCG) points out in a report co-authored with Malt.

The challenges of social responsibility

Digital transformation also raises issues in terms of corporate social responsibility, both in human and in ecological terms.

The protection of personal data

It is essential to establish a climate of trust in the new digital environment, in particular with regard to the protection of personal data. Otherwise, some of those involved may be reluctant to take part, hampering the economic development of companies and slowing down the rate of innovation. This subject is all the more important as the amount of personal data being shared over the Internet and on social media is increasing and, in the near future, will increase still further with the introduction of connected objects (IoT). This is why personal data, which has been called “the gold of the 21st century”, must be protected. The European Union took up the challenge with the introduction of the European General Data Protection Regulation (GDPR) on May 25, 2018, forcing companies to rethink the way in which they collect and use data. However, international cooperation will be essential with the globalisation of data exchange.

Ecodesign to reduce the carbon footprint

At a time when the topic of Corporate Social Responsibility (CSR) is gaining momentum, the digitalisation of companies is also raising environmental issues. It is important to stress that the development of digital tools will inevitably come with an environmental cost. This is all the more true if the rebound effect is taken into account. This is a paradoxical phenomenon in which the reduction in the environmental impact brought about by the introduction of a new technology is partially, or even fully, offset by the overuse of this very same technological solution. In order to limit the environmental impact on the planet, companies will have to rely on the eco-design of their products and services, while controlling their application and use to limit this rebound effect. However, it is also important to note that these same technologies offer great opportunities to reduce the environmental footprint of companies through the analysis and sharing of data in real time. The smart grid is a flagship example: this intelligent electrical energy distribution system automatically matches production to demand, thereby promoting the rational consumption of resources.

Technical and economic challenges

Digital transformation will also disrupt the way organisations operate, from the management of the transition to the creation of value.

A whole new organisational system

The digital transition requires a company to completely rethink the way in which it is organised, including its processes, practices, and job descriptions. To do this, companies will have to define a new model of governance and management and align the new technology with their company strategy, to ensure that they have the key skills they need in-house. Often, a dedicated department is set up to be responsible for implementing the strategy and leading the digital transformation, relying on the executive committee to validate the process.

Turning digital capital into economic value

New technologies are set to transform the economic models inherited from the Industrial Revolution. As already mentioned, the collection and processing of data will be milestones for companies. If they manage to do this while complying with regulations and reassuring their stakeholders, it could take the form of intangible capital. Just as brand equity can now be translated into a financial value, the era of digitisation could allow companies to redefine and add value to their digital assets.

The digital revolution, with the abundance of information and network effects it brings, calls into question the institutional framework as it is currently understood. If its challenges are met, it will be synonymous with increased productivity, efficiency, and job opportunities within companies, heralding a better future for society.

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[1] European Parliamentary Research Service, Digital Transformation, 2019