Digital transformation is a powerful tool that can help companies create more efficient processes and accelerate business growth. Digital transformation involves integrating technology into all areas of the business, changing how the organization operates, and ultimately improving the customer experience. Whether it’s a restaurant, hotel, or events company, digital transformation is a vital component for modern, thriving businesses.
Ready to find out more? Let’s take a closer look at digital transformation in companies and how studying a hospitality degree with a focus on digital can equip you with the skills needed to support business growth.
What’s the difference between digitization, digitalization, and digital transformation?
When looking at digital transformation definitions it’s easy to get confused between digitization, digitalization, and digital transformation. Although they sound similar and are sometimes used interchangeably, there are differences that are important to recognize.
Digitization
Digitization is the process of converting analog information like text, images, or sounds into a digital format. Information that would normally be recorded on paper or formats like VHS, is electronically coded with zeros and ones so it can be processed by computers.
Examples of digitization include creating an Excel spreadsheet from data on paper records, scanning contracts and converting them to PDFs, or converting film from a VHS to an MP4 file.
Digitalization
Digitalization is about making sense of digitized information. It moves a manual, analog process to a digital one, using software and computers to automate and improve existing business processes.
Examples of digitalization include creating an online hotel check-in process or integrating diary management and allowing direct booking via a website.
Digital transformation
Digital transformation involves more than a few isolated digitalization projects. It’s a more strategic, cross-cutting, customer-driven approach to business change that is enabled by digital technologies. It requires strong leadership and cultural change to shift to a more agile work environment that focuses on the end customer.
Examples of digital transformation projects include integrating sales volumes of food and beverages and feeding through to suppliers to automatically reorder stock. This increases efficiency and supplier response rates, ensuring customers’ food and drink needs are always met.
Why does digital transformation matter?
There are lots of reasons businesses might choose to undergo digital transformation, like aiming to improve business processes and employee experiences or wanting to capture and analyze data that can enhance business performance. But mostly, digital transformation in companies is important for survival.
A digital transformation program can be pricey, and any significant change to business strategy naturally comes with risk, but it’s often essential for businesses that want to continue to survive, evolve and succeed.
Digital transformation is essential for understanding how your business is performing. Digitalized processes allow you to capture data analytics that can be used to better understand your customer base and market dynamics and feed into hospitality digital marketing strategies. It can also help you better understand and manage numerous business functions and processes like staff rotas, financial forecasting, and inventory management.
Digital transformation, of course, helps you do things more quickly and efficiently, saving you time and money; but ultimately digital transformation efforts matter because it’s all about driving a positive customer experience. And in hospitality, the customer experience can make or break a business.
Why is digital transformation important?
Digital transformation in companies is important for future-proofing your business. More than just introducing shiny new technology, it’s about implementing a business strategy that creates a culture of change that’s flexible enough to meet evolving customer demands.
For example, in the modern day, customers expect real-time transactions and to be able to manage their bookings or services online. Manual approaches, old tech, or inflexible environments are unlikely to provide an optimal customer experience and so customers might be tempted – or forced – to take their business elsewhere.
What drives digital transformation?
A vital component of digital transformation is, of course, technology. But the key driver is innovation. Companies need to continually adapt and let go of outdated processes and technology that are no longer working or relevant – so-called “legacy technology” – if they are to continue to grow.
Legacy technology can be a costly barrier to improving services. Many companies spend vast amounts of money on fixes and workarounds for old technology that isn’t flexible enough to meet the demands of running a modern business. It’s therefore the desire to shed expensive legacy tech, innovate and grow that underpins digital transformation and the need for technology investment.
What are the goals of digital transformation?
There are various goals you might consider when implementing a digital transformation program. Let’s take a look at some of the key ones:
1. Optimizing business processes and operations
Automating and digitalizing business functions, with cloud computing, for example, can mean quicker and more efficient processes with less time, resources, and money wasted.
2. Gaining a competitive advantage
The modern world is a digital one and ongoing advances in technology are creating new business models. Digital transformation technologies can help you use analytics and data insights to better understand market demands and stay ahead of the curve.
3. Increasing profits
Digital transformation can streamline customer services and interactions, ultimately reducing financial waste and allowing you to achieve more; for example, secure more bookings or sell more products. This all means more profit for your business.
4. Improving the customer experience
Although you might be aiming to streamline processes or increase your profit margins, the ultimate goal of digital transformation should be to improve the overall customer experience. This might mean targeting various different areas; for example, creating more user-friendly apps or automating hotel check-out.
What are the benefits of digital transformation?
Digital transformation in companies can bring many benefits, such as:
- Increased customer satisfaction
- A better quality user experience
- Increased operational efficiency
- Better collaboration and communication
- Greater adaptability
- Less human error
- Continued digital growth
How to develop a digital transformation strategy
When developing strategies for digital transformation in companies it’s wise to have a cohesive strategy and roadmap in place before you get started. Isolated digitalization projects without any overarching strategy can be inefficient or, at worst, do more harm than good. Here are a few key steps to take to ensure your digital transformation strategy is a success:
- Get buy-in across the organization. You need a united team, from senior decision-makers down to the staff at the front desk, if the change is to be a success.
- Secure funding. Meaningful change takes time and money, so make sure you budget for the ongoing work that digital transformation investments involve.
- Assess your current state. It’s important to baseline your current processes, operations and structure so you can identify where things could be automated or improved and measure your success.
- Identify your goals. Be clear about what you want to achieve and why you’re undertaking the program.
- Create a roadmap. Outline how you’re going to achieve your goals. As well as implementing any new technology, you’ll also need to consider restructuring, reskilling, and recruiting new talent.
How do you measure the ROI of digital transformation?
A vital part of any transformation project is calculating and measuring your return on investment (ROI). This helps you demonstrate a case for change in the first place and allows you to understand what’s working or where things might be going awry. Here are some steps you can take to measure digital transformation ROI:
- Identify the digitalization project, for example implementing an online process for ordering room service.
- Review what goals you’re trying to achieve with the project, for example, improving customer satisfaction.
- Determine the cost of digital transformation investments including upfront and ongoing costs, for example, the technology and software costs, staff training, marketing, and consultant costs.
- Determine the value metrics. To understand the difference your investment has made, you’ll need to baseline and then recalculate certain metrics, for example, average sales of food and drinks via room service per day.
- Set a timeframe. Set a realistic timeframe, for example, six months, for recalculating metrics so that the changes have time to take effect while still tracking the success of your digitalization project.
What are the technologies driving digital transformation?
In the age of the digital revolution, emerging technologies continuously impact customer expectations, needs, and services.. While you don’t need to follow every new fad, it’s important to stay up to date with technological advances and keep ahead of the game.
Key technologies driving digital transformation over the next few years are:
- Artificial Intelligence (AI). AI used to be associated with sci-fi movies, but it’s becoming increasingly mainstream. It has applications in cloud processing, boosting operational efficiency and customer service.
- Automation. Automation has always been a key focus of digital transformation efforts, but we’re now moving to “hyper-automation” where AI and machine learning can be used to quickly identify and automate all business processes.
- Blockchain. Most of us have heard of blockchain but might not necessarily understand its impact on business. Blockchain is evolving as a secure database that can be used by multiple consenting parties (contractors, suppliers, and clients) to agree on contracts and record financial transactions.
Types of digital business transformation
To help better understand digital transformation it can be useful to break this down into different types. These are:
- Process transformation to lower costs, reduce waste, or improve quality
- Business model transformation to adapt the foundational building blocks of an organization
- Cultural transformation that redefines the ethos of a company to create a more flexible, decentralized business ecosystem
Digital transformation in the hospitality industry
Digital transformation plays an important role in the hospitality sector, helping businesses compete by improving the overall customer experience. In the hotel industry, for example, the transition from physical to digital platforms is already transforming how guests interact with accommodations. Customers can take 3D or virtual reality tours of hotel resorts before they book or use augmented reality in conjunction with wall maps to explore local places of interest.
AI concierges or chatbots offer a quick and convenient solution for quests to check in, order room service, or book sightseeing attractions. Only by understanding and using these kinds of digital tools can hotels hope to stay ahead of the curve.
Study a Master’s in Hospitality Strategy and Digital Transformation at Les Roches
Whether your career ambitions lie in financial services, hospitality management, or hotel management, all modern thriving businesses must stay ahead of the technological curve if they’re to survive and grow.
At Les Roches, you’ll learn by doing, with real-world consultancy projects. You’ll also gain sought-after skills, like effective leadership, revenue management, and strategic planning that are all vital to help any hospitality business innovate and excel.
