Digital transformation is a hot buzzword in business today. It’s on every organization’s to-do list, and it’s expected to be the top strategic business priority in almost all industries. But what exactly is digital transformation? It’s a broad term that has been a part of business operations for decades, yet organizations still struggle to define it.
One of the most significant opportunities for digital transformation is digitizing customer communications and document automation. Most organizations are bogged down by bespoke technological systems and legacy architecture – meaning they're likely still using manual processes and outdated methodologies. New document automation platforms provide a cost-effective and unique starting point for accelerating digital transformation efforts.
Silicon Valley-based technology research and advisory firm Constellation Research has reported that one of the most significant opportunities for digital transformation is the digitization of customer communications and document automation. Constellation surveyed over 100 business leaders to understand their successful digital transformation efforts with document automation. This research looks at the top obstacles to digital transformation in document automation that organizations face today.
What is digital transformation?
Digital transformation can be difficult to define because it is unique to the organization or industry and a moving target. Every starting point is different, and each organization has different priorities. There’s no cookie-cutter roadmap, and there is no real endpoint.
Digital transformation refers to integrating digital technology into all business areas, fundamentally changing how the business operates and delivers value to customers. It goes beyond simply adopting new technologies; it involves a cultural shift that requires organizations to challenge the status quo and experiment continually. This transformation affects every part of an organization, leading to changes in processes, workflow, and customer interactions. Digital transformation aims to improve efficiency, manage risk, and discover new monetization opportunities.
Think of digital transformation as a mindset: a lens through which to examine your organization and identify where digital technologies can deliver efficiency, convenience, visibility, and transparency.
Digital transformation obstacles
In conversations with more than 100 business owners, finance directors, operations directors, office managers, and operations leaders, Constellation asked the respondents to identify their top five obstacles to much-needed digital transformation—this is what they cited.
1. Old systems and manual processes that don’t scale
You see this in businesses still using legacy systems despite the availability of newer, more agile platforms. After all, they have invested substantial capital in these systems. Some businesses don’t have any technology in place at all and still rely on manual processes. Of those surveyed, 87% said that outdated systems and manual processes are the bottleneck for growth and change. Their operations are often slow and inflexible, making adapting to transitions and integrating with new technologies harder. While the current process may be functional, it doesn’t mean it’s optimal and may prevent companies from truly evolving and digitally transforming.
2. Lack of integrated systems
Constellation reported that businesses continue to spend a lot of time on typical document-based
processes – about a third of employee time is spent weekly on document-related tasks. Of those surveyed, 71% reported that a lack of integrated systems creates never-ending tasks. Back-office staff often pull and enter information and documents manually from multiple sources. Documents are either system-generated from an ERP or as ad hoc individual documents from a desktop. They generally go through the preparation phase first, where business rules are applied. This ties back to legacy processes, one-off variables that are generally managed manually by employees preparing these communications for the processing stage. The preparation stage may include sorting documents into piles, pulling out exceptions, or collating different documents for the same customer. Once these tasks are complete, employees move to the processing stage, the physical activity of folding and stuffing documents into envelopes. As the volume increases, the level of complexity also increases, leading to bottlenecks in the process.
3. Too deeply entrenched in paper-based processed
Many businesses still largely process documents using traditional paper. According to Constellation, 64% reported that their businesses have many workflows where paper is still very prominent. Although the transition to digital often leads to the elimination of paper-based documents, the transition can be challenging, often involving a mix of cultural, technological, and financial factors. Constellation also reported that 64% were open to flexible solutions as they know they need to meet changing customer preferences.
4. Visibility silos in financial documents
Of those surveyed, 57% reported they simply do not have clear, transparent, and timely access to their documents overall – the majority of this includes financial transactions related to billing and invoicing. When businesses lack visibility into their billing and invoicing processes, they cannot accurately track when money is expected to come in (receivables) or how much is owed (payables). As such, finance directors often encounter late payments, lengthy accounts-receivable timeframes, and stretched order-to-cash lifecycles. This lack of clarity can result in difficulties in managing the cash flow and an inability to operate effectively, leading to blockage when adopting better digital processes.
5. Inefficient data management
Most organizations don’t begin with the end in mind when it comes to storing data and retrieving invoices, statements, bills of materials, and other customer documents. Of those surveyed, 41% reported poor data archiving hampered efficient information retrieval within their business. Data management is one of the foundations of digital transformation—effective data management can give your organization a competitive edge. In contrast, ineffective data management leads to flawed business decisions and lost customers.
Digital transformation allows your organization to reimagine how your business is run through new digital processes and tools. However, there are challenges throughout every stage of the process. As a business leader, you must understand that digital transformation challenges are not always directly related to technological concerns or technical barriers. They also include people-centric issues, organizational structures, and other non-tech factors. The best way to overcome them is to identify and assess which problems affect your business.
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