Author：Phil Ren, Founder of Nocoly.com Limited

Enterprise Digital Transformation, a term that has gained significant attention and interest over the past two decades, has been interpreted through two different lenses. First, technical professionals and business leaders diverge — the former emphasizing technological innovation, the latter prioritizing business models and management innovation. Second, interpretations vary across industries, with each sector developing context-specific understandings rooted in its operational logic.

In fact, this concept originates from the interaction between Technology Progress and Business Development and Operations. Whenever a new technology emerges, technology practitioners eagerly strive to promote it within some enterprises, leading to the development of typical applications and attracting more enterprises. With the evolution of these applications, enterprises encounter new challenges combined with a rapidly changing market, which promotes the development of technological innovation in turn. After two decades of such intertwined progress, the content of digital transformation has been enriched, enabling almost all business operators to find options tailored to their needs.

This article is a guide aimed at specifying the concept of digital transformation through examples, making it more relevant to the needs of enterprises.

1 Customer Experience

1.1 Optimize Digital Touchpoints

The priority of enterprise digital transformation is customer centricity, which requires enterprises to optimize digital touchpoints as these are key to a seamless customer journey. Optimizing digital touchpoints involves several key strategies: verifying official accounts on social networks, providing dedicated customer portal applications, and enabling customers to access related data such as historical orders, pre-orders, bills, work orders, and knowledge bases. These enhancements will ensure a smooth and enjoyable customer experience every time.

Typical examples are airlines and O2O (Online to Offline) companies, which established such standardized digital touchpoints several years ago and are the core of their operational competitiveness. At present, these industries have engaged in higher levels of competition. For example, Cathay Pacific allows passengers to order for special meals before their scheduled flights.

The touchpoints in these industries are highly complex, but for other industries, especially the industrial and B2B (Business to Business) sectors, the establishment of digital touchpoints itself represents a significant innovation. Think about it, how many suppliers are able to provide a customer portal for procurement clients to query order details from the past decade and the current status of ongoing orders?

1.2 Effective Digital Marketing Channels

Compared to traditional marketing channels, directly reaching the target customer groups through new media, known as private traffic, reflects the advancement of digital capabilities.

Private traffic involves not only creating potential customer databases, but also establishing channels that can effectively reach target audiences. Twenty years ago, the method to database marketing in the B2B industry was to collect business cards, while the B2C industry had little ways to carry out such marketing activities. Nowadays, 90% of users’ time is spent on social media. With such evolution of the marketing environment, enterprises need to take multiple measures to capture their target audience in the sea of marketing messages.

In terms of marketing technology, major platforms (such as TikTok, Facebook, LinkedIn, Amazon etc.) have offered numerous solutions, leaving traditional businesses feeling overwhelmed. Despite the complexity of digital marketing, the essential capability that enterprises need is the ability to reach their target customers at a lower cost than their competitors. In other words, regardless of the industry, businesses should strive to attract their target audience with high-quality marketing materials and capture their profiles. Only by doing so can enterprises achieve retargeting through social networks and feed-based advertising platforms. Without this capability, they will be left to engage in targeted dissemination on social media platforms based on demographic characteristics, which comes at a high cost, just like many of their competitors.

Representative e-commerce platforms include Amazon, eBay, SHEIN, Temu, and so on. The user profiles of these platforms can not only be easily utilized within their own ecosystems but also be transferred to other social networks, such as Twitter, Instagram, and WhatsApp. Some people are concerned that such precision marketing infringes upon consumer privacy or leads to ineffective marketing due to overfitting. However, it cannot be denied that digital precision marketing has fueled high growth for enterprises.

Although other enterprises may not possess the massive user profiles like e-commerce platforms, the essence of marketing objectives remains the same. During digital transformation, enterprises must seize every opportunity to collect data on potential and existing customers’ characteristics and behaviors. By fully leveraging this data, they can effectively engage target audiences. Furthermore, they should meticulously operate each campaign, every channel, and even every keyword.

1.3 Identify and Address Customer Pain Points

Digitalization goes beyond merely addressing marketing and service issues; it also entails actively leveraging it to address customers’ pain points. In recent years, the “smart” strategies of home appliance, electronics, and automotive companies have connected isolated devices through Internet of Things (IoT) technology and provided user-friendly services through internet. Various hardware products prefixed with “smart” have adopted this approach. However, not all digital innovations address customers’ pain points.

Opportunities like these abound beyond the smart hardware market. For instance, the home decor market, furniture market, and household product market can utilize virtual reality and 3D modeling technologies to provide product simulations for customers. The hotel industry can offer keyless entry services by customer’s own smart phones, while the catering industry can provide QR code-based ordering services. So, the primary direction for the application of digital technology should be to address customers’ pain points, even if it’s just a wireless charger at the bedside in a hotel room.

Again, when you are thinking about the direction of enterprises digital transformation, the first thing you need to do is identify customer pain points in your industry and find ways to address them. Fortunately, there are many references worth learning from.

2 Operations

2.1 Business Objects Digitization

Next, we will move from customer experience to the operations of the digital enterprises. A key characteristic of digital enterprises is their abundance of data. Essentially, any business object involved in business processes will have a real-time and accurate database. Business objects can be simply understood as all people (or organizations), items, and activities in the whole of operation. For instance, customers, suppliers, and employees represent people; purchased materials, sales materials, inventory, inspection reports, equipment, warehouses, vehicles, and funds represent items; while behaviors of procurement, inspection, processing, quotation, order signing, delivery, and payment represent activities. Moreover, you will notice that these business objects are interrelated. For example, customers are related to sales materials, sales materials are related to orders, and orders are related to deliveries. Creating digital records for all business objects and organizing them into a relational database forms the IT foundation of a digital enterprise.

The process of business objects digitization initially existed through unconscious documentation and Excel files. However, to become a truly digital enterprise, these digital business objects must reside within an IT infrastructure that allows for real-time recording, secured sharing, and interactive querying. Here, HAP, the no-code application platform offered by Nocoly, is a powerful tool to meet the requirements, which enables enterprises to achieve a high level of business object digitization at low cost, tailored to their specific business practices.

If the challenge of data silos can be overcome, allowing all business data to be accessed and written on a single platform, then the so-called Data Middle Platform can be achieved, which is crucial in many industries. If data from different channels cannot be aggregated, it will be difficult to be analyzed and to improve operational efficiency.

2.2 Business Process Automation

After business objects have been digitized and are running smoothly, it is possible to identify the steps in the business process that rely on manual repetition and automate them. For example, business process can be triggered by data changes and schedule. Nocoly HAP achieves business process automation through its powerful workflow which is called Hyper Automation.

While product design, creativity, marketing management, quality control, B2B sales, and other business activities always require human involvement, lots of automation applications can be seen throughout almost the entire value creation process of the online businesses. That’s why there are vertical applications for product management on e-commerce platforms, logistics services, and campaigns management in advertising industry.

In offline businesses, intelligent operational processes can also be achieved by aggregation of software and hardware. For instance, in a movie theater, theoretically, processes such as ticket checking, broadcasting control, and product sales can be fully automated, minimizing labor costs and achieving over 90% automation. Another example is a parking lot that supports mobile payments. Ideally, such a parking lot would not require any staff.

Currently, a large number of traditional enterprises still involve a significant amount of repetitive manual labor, such as placing purchase orders, shipping and tracking logistics, invoicing, notifying customers, and so on. In reality, it is easy to automate these processes.

In the software business of Nocoly, whenever a new customer order is signed, the system automatically sends a personalized welcome email to the new client on my behalf, introducing the background and development history of our company. If I were to do this manually, the cost would be extremely high. Certainly, when I receive enthusiastic replies from clients, I am more than happy to respond to them personally.

2.3 Data-Driven Decision Making

Data-Driven Decision Making (DDDM) does not mean letting data have the final say; rather, it means using data as an important reference in the decision-making process for managers. Therefore, it should be a combination of objective data and proactive strategies.

In business operations, enterprises often face challenges in key decision-making areas such as R&D investment, marketing investment strategies, pricing and commission rates, investment and financing activities, operational quality attribution, personnel recruitment and appointment and removal of management personnel. In addition, project-based enterprises also grapple with managing resource allocation and time cycles. Many enterprises rely on their experience, often leading to suboptimal outcomes. The introduction of data-driven decision making can help enterprises make more accurate decisions, provided that there are complete and reliable data records for business objects and activities. As machine learning technology matures, massive historical operational data has become a valuable input for data intelligence, empowering enterprises to make higher quality decisions.

In industries where Yield Management Models are applied, data-driven decision-making has become a standardized operational mode. Take the hotel industry as an example, setting daily room rates is a meticulous process based on dynamic predictions. Does this mean that other industries also hold such potential for lean operations? The answer is undoubtedly yes. In the wave of digital transformation sweeping across all walks of life, there are always pioneers delving deep into the operational wisdom behind data. Once these secrets are unveiled, they have the opportunity to build platform enterprises with high added value.

3 Organization & Culture

3.1 Task-Oriented Leadership

By now, we have covered the technical aspects of enterprise digitization. However, the next part may be even more crucial, as it pertains to organizational and cultural changes during the digital transformation. Some people may wonder, isn’t digital transformation just an IT project? Why must it necessarily involve the topic of organization and culture?

The reason is simple. To master these digital methods and technologies, enterprises will rely on a large number of employees who are proficient in digital tools. These new generations prefer a specific organizational environment. In other words, these elements constitute the organizational foundation for a company’s digital transformation. Similarly, digitization work differs from other tasks in that they rely on specialized teams and forms of project organization. Traditional enterprises’ hierarchical structures rarely possess readily available capabilities in this regard. So they must bring in a group of talents with new skills who will engage in complex collaboration with existing managers who possess industry experience.

Therefore, the first thing regarding organization and culture is to implement Task-Oriented Leadership. A task-oriented leadership can also be understood as a decentralized or flat organization. They weaken hierarchical relationships, reduce departmental barriers, and establish collaboration around key projects and tasks. These organizations should allow rookies manage important projects, increase their authority, be tolerant of them, and enable them to cross internal organizational boundaries to mobilize teams and utilize resources.

During the digital transformation, a series of key projects and tasks will emerge, such as order digitization, work order digitization, quality control digitization, and performance digitization. The implementation of these projects and tasks requires enterprises to decide on the pace and scale based on their own rhythm. Importantly, when these projects can bring together relevant functional managers, key employees, and digital technology personnel, and enable them to achieve transparent communication and smooth collaboration, digital transformation can truly commence and make progress.

3.2 Crowdsourcing and Remote Work

The adaptability of different companies to remote work varies, depending on their pre-existing capabilities. Only those enterprises that have sufficient delegation of authority and clear agreements in place, and are accustomed to operating in a digital environment, can smoothly adapt to remote work. On the other hand, enterprises whose basic business objects lack digital records and whose communication and collaboration rely heavily on hierarchical structures are often slowed down by remote work.

In addition to remote work, the scope of talents that participates in the work may also differ. Traditional enterprises can typically only mobilize their own employees, whereas digital enterprises possess the ability to easily recruit and manage a large number of part-time or full-time participants from outside the company. Even if the output is the same, enterprises with crowdsourcing capabilities certainly possess greater agility. Moreover, based on their own choices, fully motivated crowdsourced personnel often demonstrate stronger combat effectiveness compared to employees recruited by enterprises.

For example, many internet design companies are able to mobilize designers from all over the world. Some manufacturing enterprises place great emphasis on digitizing labor employment, enabling them to quickly hire hourly workers from a finely managed labor pool, significantly enhancing their order delivery capabilities. Some e-commerce platforms have employed tens of millions of people as their business promoters through the internet.

To organize and manage a large number of external workers, sophisticated digital business process management and collaboration tools are indispensable. They are mutually reinforcing, making it easier for enterprises that prioritize digitalization to acquire crowdsourcing capabilities.

3.3 Flexibility at Work

Flexibility at work is rarely associated with enterprise digitization, but there is indeed a close relationship between the two.

Firstly, comprehensive digitization of management makes the management and control actions of supervisors unnecessary. When automated processes are in place and business data and decision-making information are comprehensive, employees are naturally more inclined to make their own decisions. Furthermore, digital records of all operational activities make subsequent inspection and supervision less costly.

Secondly, the abundant data resources within enterprises are inherently meant to empower teams. Therefore, digital enterprises tend to avoid unnecessary controls, as otherwise they would be unable to fully benefit from their digitalization. Data of enterprises can be stored in systems with clear access permissions and interactive query capabilities, naturally eliminating the need to worry about employees copying a few Excel files. Digital management makes administrative tasks easier, freeing managers from excessive administrative overhead.

Furthermore, digital operations bring numerous opportunities for innovations. Such innovative outcomes can only be nurtured in a management culture with a relatively high degree of employee autonomy. It is one of the greatest benefits of digital enterprises.

4 Business Model Innovation

Whether enterprises across different industries and of various sizes can disrupt their business models and create competitive advantages in the process of digital innovation depends on many other factors as well.

The purpose of upgrading a business model is ultimately to establish a business with higher sustained gross margins and higher barriers to entry. It is often related to subscription-based revenue, platform transaction revenue, cost leadership brought about by high automation, and differentiated value-added services. Not every enterprise has the opportunity to achieve such a significant leap, but enterprises with a sufficient level of digitization can at least optimize their existing business models to some extent.

For instance, a retail enterprise, through comprehensive intellectualization of customer and transaction data, may establish a membership fee model, creating a win-win mechanism with customers. In addition to continuous project income from clients, professional service firms may also lower the entry barriers for clients by establishing online knowledge bases and lightweight consulting services. SaaS enterprises can help clients complete closed-loop business transactions, thereby expanding their revenue sources.

Business models are a highly complex topic, and the transition from a manager’s conception to implementation involves a challenging process. During this process, the level of digital management determines whether an enterprise can identify and seize such opportunities. Therefore, upgrading the business model is often the final leap for digital enterprises, setting them apart from later entrants.