Many of today’s businesses face intensified consumer demand, increased competition and a rapidly changing technology landscape. Adopting a digital transformation strategy and implementing it effectively can give businesses the speed and agility they need to react quickly to changes in the market and to capitalize on new opportunities, experts and consultants say.

Indeed, numbers demonstrate the rewards of a successful digital transformation. Companies that become digital enterprises see a 26% increase in profitability, a 12% increase in valuation and a 9% increase in revenue to asset ratio, according to research from Capgemini Consulting.

"For businesses, digital transformation will be as disruptive as the industrial revolution, and companies must either adapt to win or risk becoming obsolete," said Nick Utton, CMO of BMC.

But perhaps the biggest concern is the potential consequence of not transforming.

"Organizations that do not transform will inevitably be overtaken by more agile digital businesses, probably much faster than they would imagine," said Gustavo Gómez, CEO of Bizagi.

"To put this in perspective, 40% of top businesses are projected to be displaced by 2020, according to Cisco. So it’s vital to ensure that digital transformation is firmly on the agenda,"  Gómez said. "Businesses that fail to break away from the pre-digital status quo simply won’t be able to offer customers the experiences that they are demanding in 2016 and beyond."

The push for digital transformation often starts with the customer. According to Bizagi’s May 2016 survey of more than 1,000 customer service professionals and IT decision makers, 79% of respondents with high levels of digital change already underway cite new customer expectations as a key driver.

Transformational challenges

Digital transformation is not easy. It is considered a "strategic challenge" for 87% of enterprises, according to Bizagi’s research.

"The top roadblock is the complexity of upgrading legacy IT systems and architectures, and the time delay associated with that process," said Gómez. "This is proven by 70% of businesses we spoke to stating that internal complexities undermine their ability to transform."

"Many enterprises also struggle to achieve effective collaboration across the business, which would enable them to identify problems and create solutions faster," Gómez said.

Digital transformation should begin with a clearly defined strategy. But even that can prove difficult. Only 35% of businesses currently have a "clearly defined digital transformation strategy," despite 80% of businesses citing digital transformation as a priority, according to a June study of 81 executives worldwide from IDT in collaboration with SAP.

Organizations looking to implement a digital transformation strategy often struggle with time-consuming obstacles. According to Bigazi’s research, 70% of respondents believe efforts to transform the business are undermined by internal complexity, and 51% are either resistant to or have mixed views towards transformational change.

Talent often serves as another common obstacle. The IDT/SAP study found only 58% of IT executives possess the right knowledge for digital transformation, and only 17% of respondents said they had a sufficient number of employees to make a successful digital transformation happen.

Defining your strategy

"Having a strategy is a global imperative," said Utton. "Companies need to transform themselves using technology in a strategic way to become more agile in the digital age, but the question is how do you approach it strategically?"

"If you move too slowly you are in trouble and if you move too quickly and make a mistake you could get hurt," said Utton.

But how does one define a successful digital transformation strategy, and what is needed to make it a reality? Experts say businesses should learn from what others are doing.

"The first step towards a successful digital transformation is to identify the biggest risks and barriers you are likely to come across in your transformation, and create a strategy that will help you avoid the most common pitfalls companies are caught up in," said Gomez.

BMC recently teamed with think tank PSFK to develop The Digital Transformation Playbook, a compilation of third-party research about digital transformation designed to act as a guide with actionable steps for business executives to follow as they seek to enhance customer experiences, processes and business models through digital transformation.

The bottom line, according to Utton, is simply to start doing something.

"Today’s businesses need to come up with ways to drive new revenue streams and get into markets they haven’t gotten into traditionally," Utton said. "Everyone will be forced to tweak their business model, because now everything has to be digital."